Sri Lanka gets Chinese loan for coal power expansion

June 30, 2009 (LBO) – Sri Lanka has got Chinese financing to add 600 Mega Watts of coal powered capacity to a generation complex where the first stage is scheduled to be completed next year, a government minister said.

The loan will carry an interest rate of only two percent and is repayable over 20 years.

“We hope to generate power at the coal power plant at a unit cost of 7-8 rupees which will allow the CEB to turn its present losses into a profit and allow it to reduce consumer tariffs,” he said.

“The main reason for power to cost so much now is because of our dependence on petroleum – 60 percent of our power is generated by diesel, so when diesel prices are high, the cost of power is also high.”

The CEB is now losing 1.50 rupees a per unit of electricity which it sell at 13 rupees but which costs 14.50 rupees to generate, Seneviratne said.

The coal power project will make a “tangible difference” in the CEB’s generation costs and enable it to reduce dependence on and use of high-cost diesel power plants.

Power and Energy Minister John Seneviratne said the two governments had signed a commercial agreement for the second phase of the Norochcholai coal power project in the north-western Pu