- No response from Australian investor
- LOI issued based on investor documents: SLSEA
- Australian bank provides funding proof
- Payment deadline elapses in April
The State-run Ceylon Electricity Board (CEB) yesterday (3) said that the mega-scale floating solar power project proposed for establishment on the Poonakary Tank by the Australian investor United Solar Energy SL Ltd. (United Solar) would be scrapped as per the conditions laid down in the Letter of Intent (LOI) issued by the Sri Lanka Sustainable Energy Authority (SEA).
A senior official at the CEB who wished to remain anonymous noted that the investor had failed to obtain the on-grid renewable energy permit mandated by Sri Lankan law.
If the investor fails to obtain the permit before the deadlines specified in the LOI, the board will cancel the LOI and remove the project from the Renewable Energy (RE) lineup.
As previously reported by The Sunday Morning, it has come to light that the investor, despite numerous reminders from the SLSEA, has yet to make the required payment for obtaining the permit.
The deadline for this payment, set at nearly Rs. 700 million under Paragraph (a) of Subsection (2) of Section 18 of the Sri Lanka Sustainable Energy Authority Act No.35 of 2007, elapsed on 30 April.
The project, worth a total of $ 1,727 million, aims to develop a mega-scale 700 MW solar power plant on the Poonakary Tank. Initially, the Australian investor was scheduled to inject the first tranche of $ 500 million before March this year.
The SLSEA issued provisional approval for the project’s implementation to United Solar on 17 August 2022. The LOI was issued by the CEB on 16 August 2023 and Cabinet approval was granted on 11 September 2023.
As confirmed by United Solar, the company had arranged a total funding requirement of $ 1,727 million and had stated that it would be ready to commence project construction on-site in March this year. The entire investment of $ 1,727 million was to be brought in as 100% Foreign Direct Investment (FDI) within 12 months from the signing of the Power Purchase Agreement (PPA) with the CEB.
The Cabinet of Ministers approved a proposal to enter into a PPA with the Australia-based company United Solar Group last December.
When contacted by The Sunday Morning, SLSEA Chairman Eng. Ranjith Sepala said the SLSEA had issued the LOI and proceeded with the project based on the documents submitted by the investor.
“They had submitted documentation proof for funding purposes from a bank in Australia. We make decisions based on the documents provided by the investor. Therefore, as per the documents, there was no reason not to grant permission to proceed given that Sri Lanka needs more RE,” he stressed.
However, Sepala explained that there had been no response from the investors regarding the project as of yet.
In December, Power and Energy Minister Kanchana Wijesekera announced that a unit of solar power would be purchased at Rs. 49, covering both solar panels and battery storage. This project aims to replace thermal power during peak times, potentially saving Rs. 10 per unit.
The Poonakary solar project is set to generate about 1,100 GWh annually, meeting 6.5% of the country’s electricity demand and supporting the cultivation of 20,000 acres.
Meanwhile, National People’s Power (NPP) Leader Anura Kumara Dissanayake criticised the cost, noting that coal power was cheaper at Rs. 22 per unit and alleging that the project lacked proper tender procedures.
President Ranil Wickremesinghe defended the project, highlighting its benefits for the Poonakary Tank and agriculture while noting resistance from CEB engineers who preferred cheaper fuel options.
Opposition Leader Sajith Premadasa accused the Government of corruption for bypassing proper tender processes in favour of United Solar.
Engineers attached to the CEB have also raised serious concerns about the Poonakary solar project. They described the project site as a water tank and paddy field, raising environmental concerns while questioning whether Environmental Impact Assessments (EIAs) had been properly conducted. They also alleged a violation of the SLSEA Act, claiming that the project only paid a fee for 100 MW capacity instead of the full 700 MW, suggesting possible financial misconduct.