The Memorandum of Understanding for the setting up of the controversial Sampur Coal Power Project (SCPP) in Trincomalee will be signed this later this month sequent to the cabinet approval on Thursday, Power and Energy Ministry Secretary M.M.C. Ferdinando said yesterday.

He said a team from National Thermal Power Company (NTPC) India will be in Sri Lanka for the signing of the MoU.

“CEB engineers have completed negotiations after several rounds of talks with the NTPC in Colombo and New Delhi. An agreement has been reached on the 500 MW coal power project without compromising the interests of both parties,” Mr. Ferdinando said.

The agreement between the CEB and NTPC will be signed soon after the cabinet approval is granted to a Cabinet paper submitted by Power and Energy Minister Pavithradevi Wanbniarachchi.

Meanwhile CEB Engineers Union President Nandika Pathirage said the Indians have agreed to reduce the heat rate (the quantity of fuel – coal in this instance – required to generate a unit of electricity) at full load to 2,160 from earlier 2,605 during the first year of operation. This was the main sticking point which was strongly opposed by former Power and Energy Minister Patali Champika Ranawaka.

 “The Indians also agreed to reduce the O&M (Operation and Maintenance) rate drastically during the negotiations for 50-50 equity between the CEB and the NTPC. The project will be completed at an estimated cost of Rs.2,225 billion. The CEB and the NTPC will each invest US$75 million while a loan of Rs.350 billion will be obtained from a consortium of international lending agencies.

At the discussion held on March 8 it was agreed that during the interim period the CEB and the Sri Lankan Government will compensate the NTPC with an additional financial commitment of some Rs.1.3 billion in lieu of the difference between heat rate 2.650Kcal/kwh and 2,160Kcal/kwh, and therefore there will be no additional financial burden to the CEB.

With regard to the Operation and Maintenance the first three years, will be based on 0.041 US$ million MWS per annum and the cost of the difference of Rs.2.9 billion will be paid to the NTPC by the Treasury.

Mr. Pathirage said the machinery, consultancy and construction of the SCPP will be solely through open global tender procedure and said priority would be given to European and Japanese technology and machinery.

He said Sri Lanka would face a major power crisis unless the government took immediate action to commission the SCPP at least by 2018.

“We can manage the increasing demand up to 2018 with the commissioning of the phase two and three of the Lakvijaya Coal Power Plant at Puttalam with an additional 600 MWs. I hope the Upper Kotmale Power Plant will also provide an additional 150 MWs by then. But if Sri Lanka is to prevent power cuts, the commissioning of the SCPP is extremely necessary at least by 2018,” Mr. Pathirage said.

He said the CEB will be able to reduce power tariff with the commissioning of the coal power plants as the CEB would be in a position to gradually phase off costly thermal power plants by 2018. (Sandun A. Jayasekera)