The Sri Lankan and Indian teams engaged in drawing up the agreements for a joint venture to build the country’s second coal power plant in Trincomalee are in the process of finalising details.
According to a senior official involved in the process, the agreements, which run to between 400 and 500 pages, may be ready for signing within the next couple of weeks. Under discussion, among other things, is how risks are to be shared and who will have the final say, in case of a dispute, in the 50-50 venture between the Ceylon Electricity Board (CEB) and India’s National Thermal Power Corporation (NTPC).
The official said that if progress on the joint venture continued with the current momentum, it might be possible to offer tenders by December. Construction of the 500MW plant in Sampur, Trincomalee is expected to take between three and four years. The country’s first power plant, under construction at Norochcholai, is expected to be completed by 2012. The Norochcholai plant, which is being built with Chinese expertise, is expected to take longer to complete because of the complex infrastructure required, including a jetty and other facilities.
According to sources, the CEB is in the process of securing 500 acres, mainly state land, for the project, and conducting related surveys. It is understood that no residents will be displaced by the project, which is sited inside Trincomalee’s high security zone. The government will pay compensation to owners of privately owned land coming under the high security zone.
For its part in the joint venture, Sri Lanka is securing the land to be used in the project, providing tax concessions under Board of Investment (BoI) terms, building a jetty to unload about 2.5 million tonnes of coal per annum, and building a 220kv line from Trincomalee via Habarana to Veyangoda/Kirindiwela.
The CEB and NTPC will each have an equity stake of US$75 million in the project. Balance funds will be raised through borrowings, making a debt-equity ratio of 70:30. The plant, which will be expandable to 1000MW, will have a 500MW capacity when the first phase is completed, thus increasing CEB’s power capacity by 20 per cent.
The two countries signed an agreement in December 2006 to construct a joint venture coal power plant, after security forces wrested Sampur from the LTTE in September that year. Deciding on a site for the plant became a problem when the pro-LTTE Tamil National Alliance (TNA) raised political and environmental objections to the project.
As recently as March this year, the CEB was trying to secure a site north of Trincomalee town, at Veloor.
The NTPC had expressed a preference for a site that would be close to the Indian Oil Corporation oil complex there. It is believed that the Indians finally agreed to the Sampur location when the CEB made it known that it planned to invite bids to build a third coal power plant at Sampur, where the Sri Lanka government was going ahead with its plans to build a jetty for the second joint venture power project with the Indians. |
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