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Kerawalapitiya 300 MW LNG Plant: CEB-Lakdhanavi PPA yet tobe signed 

11 Apr 2021

 

  • Delay due to fuel purchasing agreement, etc. 

  • EIA underway 

  • Minister to probe delay 

    Despite the commencement of the construction of a 300 megawatt (MW) liquified natural gas (LNG) power plant at Kerawalapitiya at the beginning of last month, the relevant power purchasing agreement (PPA) between the Ceylon Electricity Board (CEB) and Lakdhanavi Ltd. has not been signed yet, The Sunday Morning learnt.  Nevertheless, a grand launch ceremony was held marking the beginning of the construction work of the first LNG power plant in Sri Lanka under the patronage of Prime Minister Mahinda Rajapaksa on 5 March.  When contacted, a senior official of Lakdhanavi Ltd. told The Sunday Morning that the opening ceremony was held on a request made by the Government.  He also confirmed that the particular PPA was yet to be signed between the CEB and Lakdhanavi Ltd.  “The PPA is already finalised. There’s a little delay with regard to several other agreements including the fuel purchasing agreement (FPA). We have completed our part already and the agreements should be finalised by the CEB,” he explained.  Nevertheless, Lakdhanavi said that they have already commenced the documentation process and begun the environmental impact assessment (EIA) as well.  “We hope that we will be able to sign the PPA within the next two weeks,” he added.  However, The Sunday Morning learnt that without signing a PPA, the company cannot process any loan whatsoever with regard to the construction of the said power plant and that therefore, the construction would be delayed if the PPA signing is postponed further.    The controversial project got delayed by nearly two years due to issues pertaining to the awarding of the contract. The final cabinet approval was received last week after the project was reviewed thrice by the cabinets of two governments.  In February last year (2020), the Government awarded the contract to construct the second phase of the power plant to Lakdhanavi Ltd., overturning a cabinet decision of the previous Government made just over a year prior.  Originally, cabinet approval was granted to award the tender to set up two 300 MW LNG power plants in Kerawalapitiya with the Procurement Appeal Board (PAB) approving the awarding of the second contract to Lakdhanavi Ltd. At the time, then Power and Energy Minister Ravi Karunanayake said the decision to award the power plants to the first and second bidder in a single tender for an independent power producer, was bipartisan.  Lakdhanavi Ltd. filed a petition at the Supreme Court soon after the decision was reached in February last year, as it was the lowest bidder, while the consortium of GCL, WindForce, and RenewGen was the second lowest bidder.  Once commissioned, the 300 MW LNG power plant would be the first to commence construction following the commencement of the Norochcholai coal power plant.  Speaking to The Sunday Morning, Power Minister Dullas Alahapperuma said that he has obtained the necessary cabinet approvals for the construction of the power plant without any delay, adding that there was no issue with regard to signing the PPA.  “I’ll look into this and see whether there is any delay on the part of the CEB,” he added.  When contacted, CEB Chairman Eng. Vijitha Herath acknowledged that the PPA for the power plant had not been signed with Lakdhanavi Ltd. as of yet but that it would be signed soon.   


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