Norochcholai gets bank acceptance

The Export and Import Bank of China has disbursed a down payment of 15 per cent early this week, to the building contractor of the proposed US$455 million Norochcholai coal power plant, to begin work. Power and Energy Ministry Secretary M.M.C Ferdinands told The Sunday Times the contractor - China National Machinery and Equipment Import and Export Corporation - had informed him in writing on Wednesday of the receipt of the down payment and the coming into effect of the contract.

There have been some considerable delays in recent months on the part of the Chinese in proceeding with generous aid projects pledged to Sri Lanka, which some sections alleged was due to certain elements here demanding kickbacks. When The Sunday Times asked the Chinese Embassy in Colombo in early June whether there was any truth in these allegations, a spokesman simply said ‘no comment’, but added that assistance was provided “without any pre-conditions, to help Sri Lanka to develop its economy and to raise the living standards of its people”.

Though the disbursement was delayed, the loan agreement on the Norochcholai project was signed as far back as September 2006 between Treasury Secretary P.B. Jayasundera and the Assistant General Manager of the Export and Import Bank of China. Since then the Ceylon Electricity Board has kept its side of the bargain by speedily resettling some 74 affected families on extremely generous terms in a new housing scheme with all facilities while additional lands too had been granted to them for cultivation. Even the new 12 kilometre road from Palavi junction to the project site is nearing completion.

The Sunday Times learns the Government had recently paid a premium of US$ 6million as insurance cover. Power and Energy Ministry Additional Secretary (Technical) Tissa Herath yesterday said that despite the initial delays the project would be on target to complete the 300 mw first phase by 2010 and the second and third phases, each of 300 mw, by 2011 and 2012.

It has been calculated that Sri Lankan consumers pay the highest electricity tariffs in the world barring those of Singapore, largely due to alleged mismanagement and corruption in the CEB. The country now depends on costly thermal power for more than 60 per cent of its electricity needs.

Many of these power purchase agreements were hastily entered into in the 90s under highly questionable circumstances. With the production of l ow cost power from coal at the Norochcholai plant, the authorities expect to bring down electricity tariffs by 13 per cent with the completion of the first phase and by 22 percent and 32 per cent by the completion of the other two phases.