ISSN: 1391 - 0531
Sunday February 24, 2008
Vol. 42 - No 39

Fears resurfacing over controversial power project

The storm raised by the Ceylon Electricity Board engineers over attempts to go ahead with an unsolicited and uncompetitive wind power project in the Puttalam district by an Indian firm may have forced its promoters to shelve it temporarily.

The 50 megawatt project controversially approved late last year to be built by Enercon India Power Development Ltd, and actively pursued by CEB Chairman Udayasiri Kariyawasam has virtually become redundant after the Government set up the Sustainable Energy Authority with powers to approve all such projects.
Contacted in this regard yesterday Sustainable Energy Authority (SEA) Chairman Ananda Gunasekera said SEA had not received any application so far from Enercon India for approval as required by law.

Energy sector sources, however said with the Cabinet last week approving a new tariff structure for renewable energy purchases by the CEB, the Indians are now likely to pursue their project once the new prices are gazetted. The proposed controversial project was opposed tooth and nail by the Board engineers for among other reasons that the Government had agreed to purchase its power in dollars, whereas three other parties who were issued Letters of Intent earlier for establishing three other wind power projects totalling 30 MW had agreed to accept rupee payments.

“If we are developing an indigenous resource with the objective of stopping the drain of valuable foreign exchange why pay for it in dollars?” asked one source. It was pointed out that earlier a ten-member committee comprising representatives of the CEB, Treasury, the Board of Investment, the Ports Authority and the Institute of Bankers had rejected the proposal as being too expensive.

Enercon had reportedly asked for 13 US cents a kilowatt for the first six years, seven cents for the next nine years and five cents for the next five years. A four member Cabinet appointed negotiation committee (CANC) had then approved the project with the price of 13 US cents a kilowatt for the first six years, but with the price for the next nine years cut to six cents and the price for the balance five years down to four cents.

But the Board engineers charged that surprisingly the Cabinet had issued a letter of intent to Enercon on its original prices quoted. Engineers point out that if there was an open tender not only would we have got the best technology on offer, but also a lower price.

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