More than 40 years after it was first conceived, and more than five years after the first concrete proposals were worked out, India and Sri Lanka entered into a joint venture to produce electricity from coal from a plant that will be set up in Sampur in East Sri Lanka.
The remaining paper work, and processes that lead up to the financial closure of the project will take an additional year to get done. “I am hoping that they [National Thermal Power Corporation] begin work sooner; by the middle of next year,” said the Indian High Commissioner to Sri Lanka, Ashok K.Kantha, who relentlessly pushed for the project ever since he was posted here. He hoped that the US $700 million project, which will produce 500 MW, would be on-steam by the first half of 2016. As if to underline the new sense of urgency, the first meeting of the steering committee of the two sides, to iron out differences and firm up the plans, was held soon after the conclusion of the ceremony.
Allaying apprehensions that the power generated here would be transmitted to India, he said that there was no such move. Sri Lanka needed to augment its energy as it embarked on a higher growth trajectory and India was aiding this process. The power was for Sri Lanka’s consumption; to aid its growth.
Representatives of the National Thermal Power Corporation (NTPC) and Ceylon Electricity Board (CEB) on Tuesday signed a Joint Venture and share holder agreement in Colombo to set up the plant, the second coal power plant in the country. This will be NTPC’s first overseas venture. This will also be India’s largest project with Sri Lanka.
The Agreement was signed by Mr Arup Roy Choudhary, Chairman and Managing Director , NTPC and Prof. Wimaladharama Abeywickreme, Chairman , Ceylon Electricity Board (CEB)
India will offer a concessionary line of credit of $ 200 million to Sri Lanka to fulfill its commitments under the Implementation of Agreement, including that of the construction of jetty at Sampur and of transmission lines from Sampur to Habarana.
The capacity of the Project may be enhanced by another 500 MW in future.
The 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 shortly sign other agreements including Power Purchase Agreement with CEB, Board of Investment and Implementation Agreement with Government of Sri Lanka. These agreements have already been finalised.
The Memorandum of Agreement for the project was signed in December 2006. When Sri Lankan President Mahinda Rajapaksa visited India in June 2010, the progress on discussions on various agreements pertaining to the Power Project was reviewed and it was agreed that the parties concerned would expeditiously complete discussion on the agreements so that work on the Power Project could commence without delay.
P. Uma Shankar, Secretary (Power), Government of India, said that signing of the Joint Venture and Shareholder Agreement between CEB and NTPC was a ‘historic occasion.’ Arup Roy Choudhury, CMD, NTPC, said that NTPC will bring the best practices of his company during the implementation of the project.
India’s largest power company, NTPC has a total installed capacity of 34,854 MW. In 2010-11 it contributed more than 27 per cent of total electricity generated in India.
