Sri Lanka amends Sampur coal power purchasing agreement
Having ironed out differences over the efficiency, operation and maintenance cost of the power plant, Sri Lanka is set to implement the Indian-aided 500 MW Sampur coal power project in eastern Trincomalee.
The widely-debated Power Purchase Agreement (PPA) between the Ceylon Electricity Board (CEB), and the Indo-Lanka Joint Venture Company (JVC), has been amended following negotiations with Indian officials, a top official said.
The amended PPA endorsed by the Attorney General is now before the cabinet of ministers for their approval, Power and Energy Ministry Secretary M.M.C. Ferdinando revealed.
Necessary provisions have been made in the amended PPA to approve the specification and design to procure the most efficient and state of the art technology plant through an open competitive international bidding process, he added.
Mr. Ferdinando rejected claims that the power plant to be procured by the JVC has only 33 per cent efficiency, in view of the heat rate of 2600 keal/kWh.
This heat rate in the amended power purchase to generate a unit of power from the plant is high, according to energy experts.
For each power plant, the heat rate depends on the plant’s design, its operating conditions, and its level of electric power output.
He noted that Indian and Sri Lankan authorities have agreed that the heat rate is applicable only for the first year of commercial operation.
By keeping this heat rate the CEB will have to incur a loss of Rs.2.6 billion for the first year of commercial operation. Half of this amount Rs.1.3 billion will be payable to National Thermal Power Corporation (NTPC), the Indian company which is a major partner of the JVC, through the funds provided by the Treasury .
The balance Rs.1.3 billion will come through the dividends for the CEB from the joint venture or setting off from the future tariff payments payable to JVC by CEB.
Under this arrangement there will be no loss for both parties, he said adding that the power plant when fully operational will add 500 MW to the national grid and this additional input will help reduce the cost of a unit of electricity while enhancing the quantity of power available for distribution, he said.
The Sampur coal power project is the largest Indian funded project to be implemented in Sri Lanka.
Mr. Ferdinando blamed a former Minister for failing to raise the issue of excessive heat rate for operation and maintenance cost of the power plant.
He said that these matters should be handled by the CEB Technical Evaluation Committee and energy experts adding that he had to intervene in sorting out the matter.
It would also mark India’s entry into the country’s power sector. The Chinese in fact went ahead of the Indians in entering Sri Lanka’s power sector through the Norochcholai coal power plant.
India is to offer a US$ 200 million line of credit to Sri Lanka for the joint venture project.
The power purchase agreement is to be signed between the CEB and NTPC shortly, and the implementation agreement will be signed with the Treasury.
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