The long drawn out negotiations to clinch the joint venture between National Thermal Power Corporation of India (NTPC) and the Ceylon Electricity Board to build Sri Lanka’s second coal power plant at Sampoor, Trincomalee has finally come to fruition with Power and Energy Ministry Secretary M.M.C. Ferdinando Friday initialing the all-important .Implementation Agreement in New Delhi last Friday with his counterparts there.
According to authoritative sources out of at least five different agreements pertaining to the 500 MW first phase of the project running to hundreds of pages had been held up since they were finalized more than an year ago over some terms in the implementation agreement.
Officials are tight lipped as to what really caused such a long delay while the country is grappling with serious power shortages and being forced to turn to costly thermal power in the interim to meet the shortfall.
They simply explained it as being due to differences over technical and legal jargon. Earlier there were allegations that the Attorney General’s Department was taking far too long to give its okay to agreed terms on various agreements.
CEB sources said yesterday that they now hoped to sign the joint venture agreement with NTPC for the US$500 million project before this month is over and thereafter begin official negotiations with the banks to find the balance funding.
Under the proposed agreement the NTPC and the CEB each will invest US$75 million as equity capital, while the balance US$350 million will be raised from banks as loan capital.
Although the original target date to commission the plant was in 2016, sources said due to the unexpected delays in finalizing the deal it is now expected to be completed in about 2017.
They, however said there was a slight brighter side to the delay as that costs of building coal power plants has since come down slightly and the local plant may now cost anything between US$450 million and $475 million
Among the other agreements involved in this deal The Island learns are the 500 acre land lease, coal supply pact with Lanka Coal Supply Co, Ltd., power purchase agreement, and the BOI status deal, which will assure it among other things a 25 year tax holiday.
The joint venture sources said negotiations with the lending bodies had already commenced unofficially and once the agreements are signed clinching the bank finances would not be a problem
The CEB has already acquired and secured the necessary 500 acres for the project, bulk of which came from state lands in the region, while the balance requirement lying mainly in the periphery is in the process of being acquired from private owners. It is also in the process of getting the other necessary infrastructure in place like building a jetty to land the coal, doing up access roads to the site and the building of the new connecting power lines from the project to the national grid via Habarana.
~ www.island.lk ~ by Rohan Abeywardena