Sri Lanka India coal plant back on track

Apr 22, 2013 (LBO) - A disputed power purchase agreement (PPA) for a joint venture coal plant with India's National Thermal Power Corporation, has been re-negotiated on fairer terms paving the way to the plant to go ahead, officials said. Industry analysts and the public at a recent public hearing has warned the CEB not to acquire genarting plants by negotiation but go for open tender following the experience of expensive plants like that in Kerawalapitya.

"We have reduced the heat-rate and the O&M terms," Sri Lanka's power ministry secretary M M C Ferdinando said.

Sri Lanka's former power minister Champika Ranawaka pulled the plug on the project after CEB engineers discovered that the heat-rate (the guaranteed efficiency of the plant) on the first PPA was not good enough and operations and maintenance fees were too high.

The 500 MegaWatt coal plant to be built in Sampur, in northeastern Sri Lanka is estimated to cost about 600 million US dollars. It is will be 50 percent owned each by NTPC and state-run Ceylon Electricity Board, which is also the grid operator.

An unfavourable heat rate in the PPA will allow a plant to potentially make profits not only on the capacity charge but also on the energy charge.

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