KLS Energy and CEB blame each other over halted solar hybrid plant in Jaffna

10 February 2016 08:42 am - 0     - {{hitsCtrl.values.hits}}


By Chandeepa Wettasinghe
KLS Energy Lanka (Pvt) Ltd’s US$ 150 million wind/solar hybrid power plant in Jaffna has been cancelled as the company had not continued its investment in the project, a top government official said.

KLS Energy had last week complained to the Finance Minister that the Ceylon Electricity Board (CEB) was delaying the project despite the company having invested US$ 22 million, and has communicated its intention to continue investing, if approved. “Nothing had stopped. The government hadn’t stopped. They (KLS Energy) hadn’t done it. I don’t know why they didn’t invest,” Power and Energy Ministry Secretary Dr. B. M. S. Batagoda said.  He added that the CEB approved the 35MW power plant in 2008, going beyond its ability to provide approvals for only projects below 25MW, as specified in the CEB Act. “But they extended the project 2 times. Then in 2012 the Sustainable Energy Authority (SEA) appointed an expert panel led by Moratuwa University’s Professor K. W. W. Perera, to evaluate the project. 

They said it’s not moving. The project is cancelled’,” Dr. Batagoda added.

KLS Energy said that the project had been halted until 2011 by the government, as the war-torn area had to be de-mined, and despite providing a Power Purchase Agreement (PPA), an interconnecting proposal, which allows the electricity to be supplied to the grid, it had not been furnished, delaying project designs. “That’s not true. CEB has given approval. A PPA signed means that’s the end of the approval cycle, with approvals for interconnecting proposals and energy permits,” Dr. Batagoda said.
He added that the company is going around and making accusations despite the matter being in court.

However, both KLS Energy and the Board of Investments (BOI) have said that the matter is not in court, since an injunction order has been obtained only to maintain the current status quo of the agreements, and the judiciary had requested KLS Energy and the CEB to resolve their differences privately.

KLS Energy said it had opted for an alternative dispute resolution method, and if CEB did not cooperate, it would invoke the Sri Lanka-Malaysia Investment Protection Agreement.

Finance Minister Ravi Karunanayake was of the view that the CEB was not being supportive, and the CEB General Manager would be summoned before the Committee for Economic Affairs, and Prime Minister Ranil Wickremesinghe is expected to make a policy decision on the matter. 

Yet, Dr. Batagoda said that the CEB had always been cooperative. He further said the official who defended the CEB before the Finance Minister was confused over certain  technical aspects relating to the project, including the validity of the PPA. 

“The PPA is valid for 20 years, but the energy permit issued by the SEA has expired. If that expired, the PPA is also automatically cancelled,” Dr. Batagoda said.

He said that since this project didn’t continue, the CEB had approved Manjula Perera’s Joule Power and Beta Power to construct two 10MW wind power plants in Kilinochchi.

“Since this project was not coming, the CEB gave 20MW out of this to a local guy. He built the plants in 8 months, and those plants have been running for the past 2 years. Why couldn’t they (KLS Energy) do that?” Dr. Batagoda asked.

KLS Energy had said that the CEB had made up the excuse of there not being any more room in the grid to provide 35MW of power. 

Dr. Batagoda accepted the grid limitation, but said that the Ministry is still willing to offer them the remaining 15MW of power, but at a new tariff. 

KLS Energy is a local subsidiary of Energy Sdn Bhd of Malaysia. The initial investment had been for US$ 250 million, before the project was downsized.



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