News

Deal with US New Fortress Energy: Cabinet nod despite 3 objections

  • Ministers Vasudeva, Wimal, and Udaya object in writing
  • Govt. scuttled national LNG aspirations: TUs

By Maheesha Mudugamuwa

The Cabinet last week approved the controversial share transfer of the 300 MW Yugadanavi Power Station in Kerawalapitiya to New Fortress Energy Inc., a US-based energy company, The Sunday Morning learnt.

The Cabinet had approved the cabinet paper presented by Minister of Finance Basil Rajapaksa despite objections raised by three Cabinet Ministers, namely Vasudeva Nanayakkara, Wimal Weerawansa, and Udaya Gammanpila.

The three ministers had written three separate letters expressing their concerns and objections over the relevant cabinet paper and the proposed deal with New Fortress Energy.

The ministers, after criticising the manner in which the cabinet paper was presented to the cabinet meeting outside of the meeting agenda without first distributing the paper among the ministers, had noted that there had been a violation of good governance principles since the deal was awarded to an outside party after a tender was called for the project.

The ministers had also pointed out that the proposed deal would create a monopoly in local liquefied natural gas (LNG) supply.

However, the Ministry of Finance would now transfer a total of 40% of shares of the power station owned by the Treasury to New Fortress, together with the rights to supply natural gas to the existing Yugadanavi Power Station.

Through the transaction, the Treasury would raise nearly $ 300 million, it is learnt.

Speaking to The Sunday Morning, Deputy Secretary to the Treasury R.M.P. Rathnayake said the country’s dollar situation had now improved and the Government was expecting several other investments in the coming months as well.

“The (foreign) reserves have improved. The Government is expecting some investments also. During the next few months, we will be in a better position,” he added.

When asked about the Yugadanavi Power Station, Rathnayake said the Cabinet had approved the share transfer.

However, trade unions (TUs) attached to the Ceylon Electricity Board (CEB) alleged that the Government had also sought cabinet approval to hand over yet another power plant at the Kerawalapitiya Power Station, namely the Swabadanavi Power Plant, to the same US company.

Speaking to The Sunday Morning, Janatha Vimukthi Peramuna (JVP)-affiliated Lanka Viduli Sevaka Sangamaya (LVSS) General Secretary Ranjan Jayalal alleged that by handing over the Swabadanavi Power Plant, the Government had ruined the country’s LNG plans.

He stressed that now, both LNG supply and storage had been handed over to the US.

“LNG was the only solution Sri Lanka had to overcome existing energy shortages. But it was handed over to some other country while the Ceylon Electricity Board (CEB) was about to complete the competitive tender process to find a suitable LNG supplier,” Jayalal said.

He also alleged that the cabinet paper that was submitted seeking approval for the Swabadanavi Power Plant, situated at the same premises as the Yugadanavi Power Station, was submitted at the end of the cabinet meeting without it being listed in the agenda of the previous cabinet meeting.

However, when contacted by The Sunday Morning, Co-Cabinet Spokesman Udaya Gammanpila denied any discussion about a proposal on the share transfer to New Fortress Energy at the cabinet meeting.

US-based New Fortress Energy Inc. recently announced that it signed a Memorandum of Understanding (MoU) with Lakdhanavi Ltd. (LTL), a private company in Sri Lanka, to jointly develop a 350 MW gas-fired power plant in the Kerawalapitiya Power Complex located in Colombo. LTL was previously awarded a 20-year power purchase agreement (PPA) with the Government of Sri Lanka through a competitive tender to provide electricity to the national grid.

On 8 July, New Fortress Energy announced the signing of a Framework Agreement with the Government of Sri Lanka to build an offshore LNG receiving, storage, and regasification terminal located off the coast of Colombo, and rights to supply gas to the existing 300 MW Yugadanavi Power Station. New Fortress Energy will utilise this same LNG terminal to also supply natural gas to the new 350 MW power plant.