Breaking Ground

May 11 (LBO) – Sri Lanka began construction of it first coal power plant on Thursday in Norachcholai on the island's West Coast, amidst protests by environmental lobbies. The 300 Megawatt plant is being built at a cost of 455 million dollars, largely funded by a 20-year concessionary loan from the China Export and Import Bank.

The plant is expected to become operational in 2010, with the capacity to be expanded to 900 Megwatts.

The coal power is expected to reduce dependence on expensive diesel power and keep up with electricity demand growth of about eight percent each year.

"The cost of generating power using coal is about five rupees a unit compared to the cost of using oil which is about 12 rupees a unit," Ranjith Fonseka, General Manager of state utility the Ceylon Electricity Board, told LBO on Thursday.

"Over the long term, this will help to bring our costs of generation down."

Currently, Sri Lanka's energy mix is about 35 percent cheaper hydropower to 65 percent thermal.

A second coal plant in Trincomalee, also expected to cost in the region of 450 million dollars, is on the cards with funding by India's National Thermal Power Corpor