The Board of Investment (BOI) has expressed dissatisfaction over a decision by the Power and Renewable Energy Ministry to go ahead with plans to set up a Liquefied Natural Gas (LNG) terminal in Colombo Port at what the BOI claims is a “colossal cost” to the Government. Its objection comes on the basis that several [...]

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LNG terminal: BOI slams moves by ministry

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The Board of Investment (BOI) has expressed dissatisfaction over a decision by the Power and Renewable Energy Ministry to go ahead with plans to set up a Liquefied Natural Gas (LNG) terminal in Colombo Port at what the BOI claims is a “colossal cost” to the Government.

Its objection comes on the basis that several BOI projects  for LNG terminals and plants were already in the pipeline.

BOI Chairman Upul Jayasuriya told the Sunday Times that several investment proposals received by the BOI to set up LNG power plants and terminals were being held up at various stages while the Ministry of Power and Renewable Energy was attempting to award a new tender to set up a terminal utilising Government funds.

The Sunday Times last week reported that the Government was moving ahead with plans to construct an LNG terminal in the Colombo North Harbour with tenders for the project due to be advertised in the coming weeks. The terminal is expected to cost the Government about US$ 500 million.

According to the BOI, it had received six investment proposals to set up LNG power plants and terminals which would have provided 2,128 Megawatts (MW) of power with a total investment of US$ 3,753.8 million. They include investments by companies based in Canada, the United States, Hong Kong, India and China.

Mr. Jayasuriya claimed he had written many letters urging the Ceylon Electricity Board (CEB) to give the investors the required permission in terms of the CEB Act. He had also requested that the CEB enter into Power Purchase Agreements (PPA) with the investors and/or permit them to set up LNG storage plants and generate power through LNG.

Some of the investors were interested in setting up an LNG storage plant in the country and to sell LNG overseas or locally as needed, he added. He asserted that he was not pushing for any particular investor, but wanted all to be considered equally.

“These investors don’t want money for idle power. They are willing to take the risk,” the BOI chairman said.

Mr. Jayasuriya said that, on his initiative, President Maithripala Sirisena had called a meeting last year with all these investors. Taking part in the meeting were Power and Renewable Energy Minister Ranjith Siyambalapitiya, Development Strategies and International Trade Minister Malik Samarawickrama,  Power and Energy Ministry Secretary B.M.S. Batagoda and senior CEB officials.Given the situation, the BOI chairman claimed that the Power and Renewable Energy Ministry was now trying to call a tender “through the back door” at a cost of millions of rupees. He warned that he would not hesitate to expose Ministry and CEB officials if they went ahead.

Power and Renewable Energy Ministry Secretary Batagoda, however, insisted that the Ministry had no objection to any investor setting up an LNG power plant. “But Sri Lanka needs only one LNG terminal.”

He said the Government had still not taken a final decision on awarding the tender for the LNG terminal. Companies from India, Japan, China, South Korea and Australia had expressed interest in the project, but nothing had been finalized yet.

He said he personally believed a competitive tender process was the best way to go to reduce the cost of the terminal as the company winning the tender would have a monopoly on LNG.

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