Surprise change of heart in Delhi over power site in Sampur

In a surprise development, New Delhi has agreed to build the country’s proposed second coal power plant in Sampur, the site originally proposed by Sri Lanka, partners in the joint-venture. Early this week the Ceylon Electricity Board (CEB) and India’s National Thermal Power Corporation (NTPC) shook hands in New Delhi over India’s acceptance of the site, according to a well-placed CEB source.

The controversial site is in the North Eastern province, across the Koddiyar Bay from Trincomalee. Although the two countries signed an agreement in December 2006, after the Army reclaimed Sampur from the LTTE in September that year, the location of the plant in Sampur became an issue, with the pro-LTTE Tamil National Alliance (TNA) raising political and environmental objections.Under the agreement, NTPC is to soon launch a feasibility study on the proposed 500MW plant, estimated to cost US$500 million, while Sri Lanka will conduct a survey and secure 500 acres in Sampur for the project.

Sources said there was plenty of government land in Sampur to accommodate the project, adding that no persons would be displaced by the project because the area comes within a high security zone. Accommodation would be found for any persons who had been displaced earlier because of the proposed project.

The Tamil National Alliance alleged that there was a hidden agenda to the project to permanently evict Tamils from the Muttur east region. The TNA claims that about 30,000 Tamils were forced to leave the southern Trincomalee region when the military launched a major operation in 2006 to retake the area.

Up to as recently as March this year, the CEB was busy trying to secure Veloor, a site north of Trincomalee town, for the joint-venture power project. The NTPC had expressed a preference for a site that was near the Indian Oil Corporation complex.It is believed that Delhi’s sudden change of heart came after the CEB made it known that it would invite bids to build a third coal power plant at Sampur, where the Sri Lankan government was already making arrangements to build a jetty to unload coal for the second joint venture power project with the Indians.

Sources believe the Indians, fearing the presence of other powers in the strategic port region, had quickly decided to accept the CEB designated location.

The project, which is expected to be completed in May 2012, will see CEB and NTPC each taking an equity stake of US$75 million, while the balance money will be raised through borrowings, making a debt equity ratio of 70:30.