New Fortress confirms 40% stake in Yugadanavi
- Secures gas supply rights to Kerawalapitya
- Plans to build offshore LNG receiving, storage and regasification terminal
New Fortress Energy Inc. and the Government of Sri Lanka (GoSL) jointly announced yesterday (21) that they have executed “a definitive agreement” for New Fortress’ investment in West Coast Power Limited (WCP), the owner of the 310 MW Yugadanavi Power Plant based in Colombo, along with the rights to develop a new LNG Terminal off the coast of Colombo.
As part of the transaction, New Fortress will have gas supply rights to the Kerawalapitiya Power Complex, where 310 MW of power is operational today and an additional 700 MW scheduled to be built, of which 350 MW is scheduled to be operational by 2023, the company said in a press release.
New Fortress will acquire a 40% ownership stake in WCP and plans to build an offshore liquified natural gas (LNG) receiving, storage and regasification terminal located off the coast of Colombo. New Fortress will initially provide the equivalent of an estimated 1.2 million gallons of LNG (~35,000 MMBtu) per day to the GoSL, with the expectation of significant growth as new power plants become operational.
The 310 MW Yugadanavi Power Plant currently has a long-term power purchase agreement to provide electricity to the national grid that extends through 2035. This power plant consists of General Electric turbines and is configured to run on natural gas in a combined cycle.
“This is a significant milestone for Sri Lanka’s transition to cleaner fuels and more reliable, affordable power,” said New Fortress Energy Chairman/CEO Wes Edens. “We are pleased to partner with Sri Lanka by investing in modern energy infrastructure that will support sustainable economic development and environmental gains.”
The Kerawalapitiya Power Complex is the foundation of the baseload power that serves the country’s population of 22 million people. Delivering cleaner and cheaper fuels to Sri Lanka will support the country’s growth for years to come.
The Terminal is expected to begin operations in 2023.
The deal has come under intense criticism from both the political opposition and the Government’s coalition partners. The Sunday Morning reported this week that objections were raised by three ministers who had stated that the deal would monopolise the Liquefied Natural Gas (LNG) supply and that the Treasury Department is due to earn approximately $ 300 million as a result of this transaction. Yesterday, Ministers Dayasiri Jayasekara, Vasudeva Nanayakkara and Wimal Weerawansa along with former Minister Prof. Tissa Vitharana, expressed their intent to meet the President and the Prime Minister regarding the agreement signed with New Fortress.
Meanwhile, Janatha Vimukthi Peramuna (JVP) Leader and National People’s Power (NPP) Parliamentarian Anura Kumara Dissanayake earlier this week claimed that GoSL and New Fortress signed the agreement past midnight on Friday (17) and demanded the Government explain why New Fortress was selected outside of the open tender process that was called by the Government in February of this year.
“A tender process is opened to promote transparency and to ensure, through a competitive process, that the most suitable bidder is awarded the development project. New Fortress Energy did not submit a tender. Is that a transparent process then?” questioned Dissanayake.
Dissanayake also claimed that the Minister of Finance Basil Rajapaksa had provided the Cabinet Ministers with the cabinet paper only at the moment of approval.
New Fortress Energy Inc. is a global energy infrastructure company which funds, builds and operates natural gas infrastructure and logistics to rapidly deliver fully integrated, turnkey energy solutions that enable economic growth, enhance environmental stewardship and transform local industries and communities.