Sri Lanka, India US$500mn coal plant deal inked

Tue, 06Sep, 2011

Sept 06, 2011 (LBO) - Sri Lanka's state-run Ceylon Electricity Board and India's National Thermal Power Corporation inked a deal to build a 500MegaWatt coal plant in the island's northeast coast.

The 50/50 joint venture will begin construction at Sampur in Trincomalee, in late 2012 and is expected to be commissioned in 2016, CEB chairman Wimaladharma Abeywickrama said.

Sri Lanka's power ministry secretary M M C Ferdinando said the plant would cost 500 million US dollars.

Each partner would put 15 percent of the cost - about 75 million US dollars - as equity and the balance would come from multilateral and bilateral lenders and commercial sources.

The shareholder agreement was inked Tuesday in Colombo. The plant is structured as a build operate own (BOO) project.

India's power secretary Uma Shankar said financial closure would be in achieved in the next few months.

India is also giving a 200 million dollars loan to Sri Lanka's government to cover CEB's equity, jetty construction to unload coal and interconnection to the national grid.

India's envoy to Colombo Alok Kantha said the joint venture company would be registered after the signing and the preliminary work will be wrapped up for remaining agreements to be signed early in October.
The power purchase agreement, an agreement with Sri Lanka's Board of Investment and an implementation agreement have been already negotiated, he said.

The power purchase agreement (PPA) is based on 80 percent availability (plant factor), Shankar said.

Ferdinando said about 65 percent of Sri Lanka's power comes from thermal and the rest from renewable sources, mainly large hydros.

Officials say the plant will try to reduce its environmental impact.

"Ambient temperature around the plant will be about two degrees higher," NTPC chairman Arup Roy Choudhury said.

"We will try to make it as environmentally friendly as possible."

Sri Lanka is now operating a 300MW coal plant on the west coast of the island with Chinese financing, which will be upgraded to 900MW.

sourced Lankabusinessonline