The Attorney General’s office has approved the proposed 500 mw thermal power plant at Sampur, Trincomalee, to be built by India in consultation with the Ceylon Electricity Board, an Indian media report said today.
The approval has been granted around six years after the project was conceived and two years after a joint venture company was formed to take it forward.
The AG go-ahead was a major hurdle for the project, particularly considering the two neighbouring countries are not in the best of relations.
“With the AG’s office giving the go-ahead, the approval from the power ministry is expected soon, while a revised Power Purchase Agreement has been worked upon,” said an official at India’s National Thermal Power Corporation (NTPC).
The project is estimated to cost about $500 million (`3,000 crore), with NTPC and Ceylon Electricity Board having 50% stake each. It would be funded with a debt equity ratio of 70:30, the DNA news agency in India reported.
The plant would use imported coal and consists of a transmission line, to be built from Trincomalee to Madurai, including 39 km of submarine cable.
But hurdles remain, with some alleging undue benefits were granted to NTPC. Though the charges are unsubstantiated, the high cost of power remains a sore point.
In fact, Coalition Against Corruption, an affiliate of Transparency International, had charged that the power plant would incur a loss of Sri Lankan Rupee 76 crore per year. “We urge the government to forthwith annul the proposed Sampur power project,” it had said.
Officials of Ceylon Electricity Board have alleged that each unit of power produced at the joint venture project would cost Sri Lankan rupee 18, much higher than the cost of Sri Lankan rupee 13 from for a similar project at Norochcholai.
There were also disagreements over the high heat rate — signifying higher consumption of fuel to produce a unit of power — and the maintenance cost. The heat rate has been brought down to an acceptable level by the parties, NTPC officials said.