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India, Lanka in heated row over coal power plant
Construction of the Sampur coal power plant, already a year behind schedule, has been further delayed by the Ceylon Electricity Board (CEB) which is asking India’s National Thermal Power Corporation (NTPC) to revise some crucial cost estimates.
CEB officials met their NTPC counterparts in New Delhi recently but failed to reach agreement.
Power and Energy Ministry Secretary M.M.C. Ferdinando told the Sunday Times the CEB wanted the NTPC to lower its operation and maintenance cost estimates. He said engineers were also urging the Indians to reduce the “heat rate” so that less coal would be burned up per unit of electricity. The CEB would have to bear these expenses.
Power and Energy Minister Patali Champika Ranawaka said the CEB was concerned about some interest rates that had been cited in the NTPC’s feasibility report.
Power sector officials said the NTPC wanted an “exorbitant” return on investment while quoting steep rates of interest on loans for the project.
“Discussions are still going on,” Mr. Ranawaka said. “The CEB and NTPC must reach a consensus. Otherwise it will be a huge loss for the CEB and the country and will create a bad name for the Indian government as well.”
Indian officials, however, expressed frustration at the slow pace of talks. “At every forum they said India is delaying. They say look at the Norochcholai coal power plant and how its adding to the grid. But since 2006, we are still sitting on paper,” an Indian official said.
Mr. Ranawaka stressed that there must be no diplomatic or political pressure on the CEB to conclude the agreement with NTPC. “These are purely technical matters to be handled by experts and engineers from either side. Sri Lanka is not delaying but the CEB has two roles to play—that of shareholder and that of the sole buyer of electricity,” he said.
Asked when the final documents would be signed, Mr. Ranawaka said he did not know. “I can’t put timeframes to this but we will implement our long-term generation plan to avoid a power deficit in the future.”
Ministry Secretary Ferdinando was optimistic. “I was informed that the two parties signed a memorandum of understanding in which the NTPC agreed in principle to change the heat rate,” he said. “If things are okay, we are ready to sign the power purchase agreement and the implementation agreement and to start the project immediately.”
Power sector officials, however said it was not that simple. Talks had limped so much that the CEB board even passed a resolution stating that the Government must have a viable alternative in case the NTPC deal did not work out.
They said that open tenders should be called for the setting up of a 500 megawatt CEB owned power plant in Trincomalee.
The memorandum of understanding between the CEB and the NTPC was signed in December 2006. The joint venture and shareholder agreement —setting up the Trincomalee Power Company —was signed in September 2011. The land in Sampur has been sectioned off. Building cannot start, however, till the power purchase agreement and the implementation agreement are signed.
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