- Cancellation of Petronet LNG MOU proposed
- Petronet plan unsuitable for short-term needs
- Cabinet decision pending
- India still a potential supplier
Amid rising regional competition, the Energy Ministry has sought Cabinet approval to cancel the Memorandum of Understanding (MOU) signed between India’s Petronet LNG Ltd. (PLL) and Sri Lanka’s LTL Holdings for Liquefied Natural Gas (LNG) infrastructure development and supply, The Sunday Morning reliably learns.
It is also learnt that India’s Petronet proposal was assessed and found to be unsuitable for Sri Lanka as a short-term solution, both in terms of scale and timing.
Given that the long-delayed and often controversial LNG tender has already been awarded to a Chinese company, the ministry holds the view that proceeding with the Petronet proposal would result in redundancy and excess capacity.
The decision comes amid growing competition between India and China for strategic energy and infrastructure influence in Sri Lanka – especially following the recent awarding of the controversial LNG terminal and pipeline project to a Chinese company.
In August last year, Petronet LNG Ltd. and LTL Holdings Ltd. signed an MOU to develop LNG infrastructure and supply LNG to Sri Lanka.
The project was planned to deliver LNG through a multimodal supply chain using ISO tank containers, including the development of unloading, storage, and regasification facilities in Kerawalapitiya.
LNG was to be supplied from PLL’s Kochi LNG Terminal via ISO tank containers to fuel the Sobadhanavi Power Plant’s 230 MW gas turbines, aiming to provide cleaner, reliable, and continuous power generation.
When contacted by The Sunday Morning, Ministry of Energy Secretary Prof. Udayanga Hemapala confirmed that the ministry had formally sought Cabinet approval to cancel the MOU with Petronet LNG. He noted that the Cabinet’s decision on this matter was expected within the coming weeks.
Prof. Hemapala said that Sri Lanka was yet to officially communicate this decision to the relevant parties but intended to do so once the Cabinet granted its approval.
He explained that the Petronet proposal was ultimately deemed unfeasible as a short-term solution due to issues related to scale and timing.
Furthermore, the Government has opted to honour the earlier tender process that was formally approved, reinforcing its commitment to following established procurement protocols.
The Secretary also highlighted that, despite the cancellation of the MOU, India remained a potential supplier of Sri Lanka’s LNG needs.
He said that once the necessary LNG infrastructure development was completed, the Government would float new LNG supply tenders in which Indian companies, including Petronet, would be eligible to participate and compete on equal footing with other bidders.
This approach, he said, reflected the ministry’s intention to maintain transparent and competitive procurement practices while exploring all viable options for ensuring Sri Lanka’s energy security.