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CEB engineers oppose China power plant in H’tota
View(s):By Namini Wijedasa
China Machinery Engineering Corporation (CMEC), the company that built the coal-power plant in Norochcholai, has proposed to set up a liquefied natural gas (LNG) power station in Hambantota as a Government-to-Government project. But Ceylon Electricity Board (CEB) engineers have opposed the idea saying there is no provision in the country’s Long-Term Generation Expansion Plan (LTGEP) for an LNG plant in Hambantota. They also reject any suggestion an LNG plant for Hambantota should be included in the LTGEP when it is revised by April 2017.
“How can politicians or businessmen do planning of electricity generation and transmission,” a spokesman for the Ceylon Electricity Board Engineers’ Union (CEBEU) said. “It is a professional job which should be done by qualified and trained energy planners. If the Government does not trust in the capabilities of CEB planner, it can even hire qualified professionals from other countries.”
In a letter to the Cabinet Committee on Economic Management (CCEM), Wang Ludong, CMEC representative, has observed that the parties were moving to “the very concrete stage, namely the negotiation of the MOA [Memorandum of Agreement]” for developing the LNG plant. The company has even submitted a pre-feasibility report.
It is envisaged that the project will have two phases and be a Build, Operate and Own (BOO) venture. Phase I will see the construction of an LNG receiving terminal l–where the gas arrives in tankers–and a 400 megawatt combined cycle power plant. Phase II will see the expansion of the receiving terminal and the addition of another 600MW combined cycle plant.
CMEC has justified the project by pointing, among other things, to Sri Lanka’s strategic plan to develop the South with Hambantota as the centre. The proposal also envisages the construction of a natural gas pipeline between Hambantota and Colombo, something CMEC says it is ready to come forward for on an Engineering, Procurement and Construction (EPC) basis.
The idea is for the LNG plant to provide electricity for the Special Economic Zone that Sri Lanka and China hope to set up in Hambantota. The extra power generated is to be sold to the CEB. The draft MOA says: “CEB and the Power Plant JV will enter into a power purchase agreement (the “PPA”) under which the Power Plant JV will, in return for a tolling charge, produce electricity for CEB with the fuel gas supplied by CEB through CEYPETCO. The PPA shall have an initial term of no less than 30 years subject to extension on terms to be agreed.”
The CEB engineers objected to this. “When we discussed this with the Prime Minister two months ago, he said the plant would be constructed to cater to the Chinese industrial zone which is under discussion,” a senior CEBEU member said. “He said it is a ‘merchant plant’–that is, we have to pay for fuel (running) cost only if they have additional electricity to sell after providing main power to their own industry.”
“But CMEC has clearly told CEB officials its plant proposal is to sell power to CEB and it is a normal IPP (Independent Power Producer) so that we have to pay for its investment (fixed charge) plus fuel (running) cost,” he said. “Also, when we discussed this with the PM, the idea was for there to be an industrial zone close to the harbour with the power plant on the adjacent land, so that lengthy transmission lines are not required,” he continued. “But we have now realised that the industrial zone will be scattered around the Hambantota and Moneragala district. Only the CEB has the ability or licence to provide power to these industries. Therefore, this ‘merchant plant’ scenario is no longer valid.”
The prevailing legal situation does not allow the CEB to accommodate an LNG plant at Hambantota, CEB Chairman Anura Wijepala said. “Under the Sri Lanka Electricity Act, to implement a project it must be in the Long-Term Electricity Generation Plan,” he explained. “At the moment, the plan which is valid from 2015 through 2034 does not have a 400MW LNG power plant at Hambantota.”
“But our plan is being revised to cover the next 15-20 years,” he continued. “The revision is being done on least-cost generation basis so all candidate plants are under consideration. I don’t know whether it will include a plant of this scale at Hambantota.” The Government has already called tenders for a 300MW LNG plant at Kerawalapitiya and several more are planned in the same area.