The cabinet has approved the provisions of a draft Memorandum of Understanding, which will set up a joint venture company to build a 500MegaWatt coal plant in the eastern port city of Trincomalee.
"The power station will have two 250MW coal plants to be built in two stages," Minister Seneviratne said.
"We hope that it will be able to generate a unit at around Rs4.50 to Rs4.75 a kilowatt (US cents 4.5 to 4.75)."
This is based on current coal prices, which can also change in the future, though coal prices are less volatile than petroleum.
CEB now pays about Rs10 per unit as variable cost (without counting capacity charge) for power generated in combined cycle plants.
The 50/50 joint venture coal plant with NTPC is estimated to cost around US0 million to build, with an equity component of US0 million.
"The CEB will have to put in US million and NTPC will have to put in US million," Seneviratne told LBO.
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Another 3X300MW coal plant at Norochcholai, in the west