Legal tangle tightens on LNG power plant in Hambantota
The Sri Lankan Government’s ambitious plans to establish Liquid Natural Gas Power (LNG) plant in collaboration with Chinese companies have to be put on hold till the clearing of a legal issue of a breach of contract with Greenlink Global Consulting Inc. (Greenlink) on a Hambantota LNG Energy Project (HEP).
The government, particularly Ministry of Power and Energy, has been put on legal notice by Greenlink through a Canadian law firm to not consider or entertain any proposal for development of any power project at Hambantota in breach of rights granted to Greenlink, official sources said.
In 2010 Greenlink introduced a power and energy developer which is a subsidiary of a renowned US blue chip asset management company to Sri Lanka.
In 2012 this energy developer entered into an exclusive MOU with Board of Investment of Sri Lanka (BOI) for the LNG facility, gas pipe line and 500MW-1000MW power plant project in Hambantota, The project cost was US$1.4 billion.
However in March 2013 the Ceylon Electricity Board (CEB) requested an independent study of the use of LNG as a fuel and hence the approval process was delayed, the company said.
Even after granting exclusive rights by the BOI for the development of the energy project at Hambantota to this developer, another company received cabinet approval for the use of Hambantota land and a Letter of Intent for a development of a 1000 MW power project without conducting due diligence or a feasibility study.
This circumvention of rights of the developer and Greenlink was brought to the notice of the government in 2015, Greenlink said.
Government officials have recommended at that time to initiate a government-to-government deal for the HEP. Thereafter Greenlink approached the Canadian government in February 2016 and facilitated the entry of Crown Corporation of the government of Canada to take up the project.
All proposals, studies, reports, presentations and information provided to the government Greenlink were and remain the exclusive property of the provider and were delivered to the government or any applicable Ministry or agency on a strictly confidential basis not to be released in part or in its entirety to any other person, the company has said through its legal notice sent to Minister Ranjith Siyambalapitiya.
Accordingly, the Greenlink Company says it requires clarification and confirmation that the Ministry has not considered or approved the development of a power project at Hambantota or any power project using the HEP concept without the prior written authorization from the company.
Greenlink also demanded confirmation of the ministry that no Chinese government owned or controlled corporation has entered into or attempted to enter into any agreement for the development of a power facility in Sri Lanka in contravention of their contractual covenants to the company.