Shelved Power Projects in Sri Lanka Could Be Revived

Meeting between India’s and Sri Lanka’s leaders could bolster long-standing power projects.
Published: Tue 24 Feb 2015

National Thermal Power Corporation Ltd. (NTPC) of India’s 500MW coal-based power project at Sampur, Trincomalee and Power Grid Corporation’s over-sea and sub-sea transmission line project connecting India and Sri Lanka could get a much needed push during the upcoming meeting between Prime Minister Narendra Modi and new Sri Lankan President Maithripala Sirisena.

The 283km high voltage DC (HVDC) transmission line from Trincomalee to Madurai in Tamil Nadu will comprise of 264km of overland line and 39km of subsea cable which will eventually connect India’s and Sri Lanka’s grids.

Generation plans

The coal power plant is a joint venture project between the Ceylon Electricity Board (CEB) and the NTPC of India. A Joint Venture Company (JVC) will be incorporated in Sri Lanka, with equal equity (50:50) contributions by NTPC and CEB, for implementing the power project.

The JVC, upon incorporation, will sign other agreements including a Power Purchase Agreement with the CEB, Board of Investment and an Implementation Agreement with the Government of Sri Lanka. These agreements have already been finalized, says Sri Lanka’s Power and Energy Minister, Patali Champika Ranawaka.

A feasibility study report on the coal project will be handed over to the Power and Energy Ministry soon. Sri Lankan power and energy experts and the ministry will study the report before giving the green light for Ceylon Electricity Board (CEB) and National Thermal Power Corporation (NTPC) of India to proceed with the project.

Minister Ranawaka noted that international tenders will be called to purchase required parts of power generator including turbines, control systems, and boilers for the coal-fired power plant. He adds that all procurement and construction work will be carried out by duly selected contractors in a transparent tender procedure. The coal for the project will be imported and supplied by Lanka Coal Company (LCC) and the power generated will be supplied to CEB through CEB grid system.

The original plan of developing the Sampur coal power project up to 3,600MW in several stages has been curtailed and limited to 500MW. The construction will begin this year and the power generation will be linked to the national grid by mid 2016. The Sampur coal power plant project will get many benefits including priority status and tax exemptions after being recognized as a Strategic Development Project under the purview of Sri Lanka’s Economic Development Minister Basil Rajapaksa.

This will be NTPC’s first overseas venture. It will also be India’s largest project with Sri Lanka. India considers this project as a massive strategic significance as China has already made an entry into the country’s electricity sector, through the Norochcholai coal power plant.

India will offer a line of credit of US$200 million to Sri Lanka for the joint venture project.

Developing hydropower in Sri Lanka

The growing demand for electricity and the limited generation potential of existing hydro plants have reduced the relative contribution of hydropower in Sri Lanka’s electricity generation.

As a solution to this, Sri Lanka has taken a policy decision to move towards thermal and coal for electricity generation. The share of hydropower is estimated to reduce from 40.2% in 2007 to 19.5% by 2020, while coal-fired thermal generation is estimated to reach 70.9% by 2020. This trend is quickly leading to issues such as rising electricity prices and negative environmental externalities.

It may be too early for Sri Lanka to give up on its hydropower potential for coal energy. Even though hydro will not be sufficient to cater to the growing electricity demand in Sri Lanka, there is additional potential that can be explored.

With focused research on better management practices and innovations, the contribution from hydro could well be more than the 19.5% by 2020 as currently predicted by energy planners. The challenge for countries like Sri Lanka is to redefine the water-energy nexus in order to find sustainable solutions for the future.