The Asian Development Bank (ADB) will fund a feasibility study and survey to explore the possibility of Sri Lanka adopting liquefied natural gas (LNG) for power generation to help diversify the energy mix of the island nation.
ADB said the project would be facilitated with a technical assistance special fund of US $ 225,000.
According to ADB, the project will include a detailed study by considering the demand for natural gas in Sri Lanka, global LNG market, LNG pricing and contracts, possibility of supplying LNG to regional markets and other social and environmental aspects.
With the Maldives considering importing LNG for power generation and other uses, an LNG terminal in Sri Lanka with sufficient storage and adequate supply will benefit from lowering the energy cost of both countries, ADB said.
The study is being embarked following a written request by the Sri Lankan government, through the External Resources Department, to ADB to support the Ceylon Electricity Board (CEB) in its efforts in exploring LNG as a fuel for power generation.
ADB in its project outline highlighted that the Power and Renewable Energy Ministry also sees a greater role for LNG in its goal of reducing the use of oil and coal in the country, particularly for power generation.
“This is also in line with the government’s key development priority to diversify the existing generation mix to include cleaner energy resources and climate change mitigation actions. A small-scale TA was preferred to initiate the necessary activities for the LNG study quickly as requested by the government,” ADB said.
The development lender said the CEB does not have in-house capacity to undertake the mentioned tasks since LNG is entirely new to Sri Lanka. “The technical assistance will provide external consultants to assist in preparing the feasibility and survey report for LNG import, LNG terminal and seaside facilities, infrastructure and other allied facilities for LNG transmission to the prospective power plants,” it said.