Sampur coal power project set to start with foreign funding
Having settled 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 through the Trincomalee Power Company Ltd, an Indo –Lanka joint venture company, a top official said.
India has extended a line of credit for the project amounting to US$ 200 million while the joint venture company is to raise $400 million through a foreign loan for the project, Power and Energy Ministry Secretary M.M.C. Ferdinando disclosed.
The 50:50 joint venture company, made up of India’s National Thermal Power Corporation (NTPC) and Sri Lanka’s Ceylon Electricity Board (CEB), will built and operate the power plant.
The first stage of the plant is estimated to cost around $600 million out of which $400 million will be covered by a foreign loan while the rest would be jointly funded by NTPC and the CEB. The CEB will also call for tenders for the construction of the transmission cable network.Necessary provisions have been made in the amended Power Purchase Agreement (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.
In an interview, Mr. Ferdinando noted that the CEB will purchase power from the company in accordance with the PPA.
According to the agreement the chairman of the company and top managerial positions will be appointed by the Sri Lanka side while the Managing Director and some other senior officials will be appointed by the Indian side during the first eight years of operation, he added.
Thereafter the managerial positions will be rotated among the two sides.
The company should submit to the CEB for agreement, preliminary designs of the facility and the specification for the tender documents before going ahead with the procurement process.
All procurements and other necessary services will be carried out under the government approved tender procedure in a transparent manner, Mr. Ferdinando emphasised.
He disclosed that international tenders for the coal power plant project would be called shortly and the two, 250 MW coal power generators will be installed as the agreement between the two countries has already been signed.
A 240 km-long 220 kV transmission line will be laid from Sampur to the grid substations at Veyangoda to connect the power plant to the national grid. A coal unloading jetty will also be built in Sampur for coal shipments.
The Power and Energy Ministry expects to link the power plan to the national grid in 2017.
The linking of power generation to the national grid will minimise the CEB’s dependence of purchasing power from private suppliers and the operation of fuel and thermal power plants.
He rejected earlier claims that the power plant to be procured by the joint venture has only 33 per cent efficiency, in view of the heat rate of 2600 keal/kWh.
For each power plant, the heat rate or the efficiency 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 the NTPC 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 the company by the 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.
The Sampur coal power project is the largest Indian funded project to be implemented in Sri Lanka.