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

Sri Lanka India coal project hit by legal queries: report

Feb 18, 2011 (LBO) - A state joint venture coal power plant between India and Sri Lanka which has been negotiated for several years has been hit by further delays following legal queries from the island nation, a media report said.
India's National Thermal Power Corporation and Sri Lanka's Ceylon Electricity Board has been talking on a 500 MegaWatt 50:50 joint venture coal plant in the Eastern coastal town on Trincomalee from 2006.

The Times of India newspaper quoting an unnamed source said Sri Lanka's attorney general had raised 70 queries "on basic issues at the nick of time" delaying the signing of the deal.

India's foreign ministry had "advised NTPC against responding to the queries for the time being," the report said.

Sri Lanka is building a 900 MegaWatt fully CEB-owned coal plant with Chinese finance in the West coast reducing the urgency for a additional capacity. The first 300 MW stage is almost complete and is being tested now.

The Times of India report said queries on 'basic issues' included Sri Lanka's government budgetary support for CEB's part of the investment, government guarantees, laws governing the joint venture and place of arbitration.

But analysts say power purchase agreements, a key component of power deals in particular are complex documents running into several hundred pages and Sri Lanka's power officials have earlier expressed unhappiness at some of the clauses in earlier deals.

The CEB is running massive losses partly due to its inability to pass on the costs paid to independent power producers.

Sri Lanka's attorney general is also battling two cases of arbitration and court proceedings in three countries relating to a disputed energy deal relating to the island's state run petroleum utility.

(sourced:lbo.lk)