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Power sector: More Indian-funded projects in pipeline  

2 years ago

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By Maheesha Mudugamuwa    Despite the recent $ 100 million credit line investment made in Sri Lanka’s solar power sector, India is yet to secure a considerable share in the country’s electricity sector as compared to Sri Lanka’s largest development partner, China. The projects that were initially planned to be funded by India have not seen considerable development during the past several years, for unknown reasons, while its competitor China has been able to secure a considerable portion during the same period including the second phase of the Lakvijaya Coal Power Plant, even without following the approved procurement process.    Sampur/LNG Initially, Sri Lanka and India entered into a Memorandum of Agreement (MoA) in 2006 to develop a coal power plant in Trincomalee as a joint venture between the Ceylon Electricity Board (CEB) and National Thermal Power Corporation Ltd. (NTPC) of India.  Both parties even established a joint company called Trincomalee Power Company Ltd. (TPCL) for the implementation of the Trincomalee Power Project with the total capacity of 500 MW while a site near Sampur village was identified for the feasibility study.  They had signed agreements for power purchase, implementation, land lease, coal supply, as well as agreements with the Board of Investment (BOI), while the feasibility study of the project was completed. The project had acquired around 500 acres for its implementation and consists of the main power block, coal handling plant, coal storage yard, ash disposal system, sea water cooling system, other building facilities, and a green belt.  However, the project was not granted approval by the Public Utilities Commission of Sri Lanka (PUCSL) in the Long-Term Generation Expansion Plan 2015-2034, indicating the undertaking given to the Supreme Court in the case with SCFR No. 179/2016.  Later, as compensation for the cancelling of the Sampur power plant, Sri Lanka agreed to hand over the construction of 300 MW of Liquefied Natural Gas (LNG) in Kerawalapitiya.  The Sunday Morning learnt that even though India was keen on funding an LNG power plant of around 500 MW, the system could only accommodate another 300 MW.   It is learnt that several rounds of discussions have been held between the two parties but no final decision has been taken as yet.  As learnt by The Sunday Morning, only a 300 MW LNG power plant has been given approval, despite the CEB’s Long Term Generation Expansion Plan (LTGEP) 2020-2039 identifying the requirement of commissioning two 300 MW dual-fuel combined cycle power plants in the western region by 2023.  Furthermore, two additional 300 MW natural gas-fired combined cycle power plants have also been identified as required for 2024 and 2025. It also highlighted that the land acquisition process and all other necessary approvals are required to be obtained immediately to commence the project procurement activities for these two power plants.   Nevertheless, the Government has not yet announced the final decision on the handing over of the LNG power project to India.    Power Minister Dullus Alahapperuma, on an earlier occasion, confirmed to The Sunday Morning that the Indian proposal was included in a cabinet proposal from the Ministry together with other proposals from Japan and Korea.  “The 300 MW LNG power plant project is an agreement between the Governments of Sri Lanka and India in 2016. This is proposed instead of the Sampur Coal Power Project, which was cancelled at the last moment in 2015,” he told The Sunday Morning.  When asked whether the Government would be going ahead with the proposal, the Minister said no decision has been taken by the Government as yet.  “We have included this in a recent cabinet paper too as a proposal. There are several other proposals from Korea and Japan and the Indian one is also mentioned as one such proposal received by the country,” he noted.  “But as a country, we have given a commitment to India as by the time the Government decided to cancel the Sampur project, the Power Purchasing Agreements (PPA) between the two countries had also been signed,” the Minister said, adding that therefore, there was a government pledge made for the 300 MW LNG power plant to India.    Indo-Lanka electricity grid interconnection  In the meantime, India and Sri Lanka signed a Memorandum of Understanding (MoU) in 2010 to conduct a feasibility study for the interconnection of the electricity grids of the two countries.   This feasibility study was carried out by the CEB and Power Grid Corporation of India Ltd. (POWERGRID) jointly with the main objective to provide the necessary recommendations for the implementation of the 1,000 MW HVDC (high-voltage direct current) interconnection project.  According to the LTGEP, the pre-feasibility study for electricity grid interconnection was carried out by Nexant with the assistance of USAID (United States Agency for International Development) in 2002.  In 2006, POWERGRID India reviewed and updated the study with USAID assistance. Various line route options and connection schemes were analysed during the pre-feasibility studies.   Technical, economical, legal, regulatory, and commercial aspects in trading electricity between India and Sri Lanka were also considered.  However, the latest working group discussions between the two countries were initiated in 2017.  Both HVDC technologies, Conventional Line Commuted Conversion (LCC), and Voltage Source Conversion (VSC) are to be considered in future studies. The interconnection has been envisaged to be implemented with 2 x 500 MW HVDC blocks in two phases: Phase I – 1 x 500 MW Monopole, Phase II – 2 x 500 MW Bi-pole. The cost of each alternative for each technology for combined stage I and II development has been estimated and power flow studies have been conducted from the Indian and Sri Lankan side during the latest studies.  The feasibility study will be initiated once the option is finalised.    Hybrid renewable energy project In the meantime, India raised diplomatic concerns over the government decision to select a Chinese company for the $ 12 million proposed hybrid renewable energy systems project on three islands off the coast of the Jaffna Peninsula considering the geographic locations of the islands concerned – the Delft Island, Analativu, and Nainativu.  It was earlier said that India showed an interest in funding the project as a grant but there’s no decision from either side and the CEB predicted that the project would most probably go to the Chinese company.    Indian credit line  In such a backdrop, ending more than a year-long negotiations, Sri Lanka finally entered into an agreement with India to obtain a $ 100 million credit line to boost solar power energy in the country last week.  The funding will be from the Export Import (EXIM) Bank of India and the credit line will be granted for a 20-year repayment period with a five-year grace period at an interest rate of 1.75%.  Speaking to The Sunday Morning, State Minister of Solar Power, Wind, and Hydro Power Generation Projects Development Duminda Dissanayake said Sri Lanka would have to purchase solar panels, inverters, and cables from India at a cost of 65% of the total credit line and the remaining 35% will be spent on the installation.  He said the equipment would be supplied by an Indian company with the approval of Sri Lanka.  “The solar panels would be installed on government buildings and religious places to which the CEB is providing electricity free of charge,” Dissanayake said, adding that the project would be launched in six months.  Meanwhile, when contacted by The Sunday Morning, CEB Chairman Engineer Vijitha Herath said: “The CEB was currently focusing on the tendering process and that the already approved power projects including the 300 MW LNG power plants had been handed over to the independent power producer Lakdhanavi.”  However, unsolicited proposals, such as government-to-government ones, will be considered in the future if there is a request, Herath added. 

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