He said the floating terminal to be located in Kerawalapitiya, north of Colombo has been proposed by Lanka Transformer Ltd, an associate company of state-run Ceylon Electricity Board, which is partly owned by private investors.
Several feasibility studies have found that the cost of the terminal makes LNG uneconomical and the fuel is not included in the grid operator's long term generation plan.
However a more recent feasibility study has found that LNG could be justified under certain conditions, industry analysts say.
A floating storage and regassification unit (FSRU) costs less than a land based terminal. Minister Ranawaka declined to reveal the estimated cost of the terminal saying LTL's financial proposal was still being evaluated.
LNG is also cleaner than heavy fuel or diesel.
Minister Ranawaka said an existing 300MegaWatt heavy fuel plant built by the LTL group in Kerawalapitiya as well as 700 MWs of of furnace oil fired plants owned by the CEB, located it its Kelanitissa complex could be converted to run on LNG.
Another 300MW power plant was also planned in Kerawalapitiya, he said.
The LNG power plant should be close to the areas with the maximum power consumption/demand. SO it makes sense to build it close to the western province.
Transmission losses will be substantial if it is located in Hambanthota or Trinco.
BTW: How does a floating power plant take advantage of transport infrastructure?