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News


Trinco coal power deal finalised

Signing anytime after Cabinet approval

The long drawn out negotiations to hammer out a joint venture agreement between the National Thermal Power Corporation of India (NTPC) and the Ceylon Electricity Board to build the country’s second coal power plant at Sampur, Trincomalee has finally come to fruition, but the deal will not be signed next week as claimed in a report.
According to authoritative sources at least five different agreements pertaining to the two stage 1000 MW project runs to hundreds of pages and they are now in the process of going over their final drafts to ensure that there are no mistakes and the task is expected to take at least one more week.

Then it has to be placed before Cabinet for approval and thereafter only the two sides can sign the deal hopefully in Colombo. For the NTPC however, there is no necessity for it to obtain Indian Cabinet approval other than its own Board sanction, they said.

Among the separate documents now being readied for Cabinet approval and signing by the two joint venture partners, The Nation learns, are the 500 acre land lease, coal supply agreement with Lanka Coal Supply Co, Ltd., power purchase pact, implementation agreement and the all-important BOI joint venture deal, which will assure it among other things a 25 year tax holiday.

Observers said Indians were earlier very keen to get this proposed largest coal power plant in Sri Lanka off the ground, along with the proposed high voltage under sea power cable project between the two countries, especially after the Chinese clinched the deal to build the country’s first such plant, a three stage 900MW project at Norichcholai no sooner this government came into power, however appeared to be dragging their feet in the run up to their general election early this year, probably fearing some repercussions in Tamil Nadu.

Unlike the Norochcholai plant the bulk of whose financing has come as soft loans from China, the Sampoor project is a 50-50 joint venture between the CEB and NTPC and envisages each pumping in approximately $75 million, while the balance US$ 350 million required for the completion of the USD$500 million Stage 1 of the project will come from lending institutions, both multilateral and commercial.
Sources said negotiations with the lending bodies would begin no sooner they get armed with the power purchase agreement as without it no lender will entertain them.

Meanwhile, the CEB has already got cracking on the acquiring and securing of the necessary 500 acres for the project, the bulk of which come from state lands in the region, while the balance requirement lying mainly in the periphery is in the process of being acquired from private owners. It is also in the process of getting the other necessary infrastructure in place like building a jetty to land the coal, doing up access roads to the site and the building of the new connecting power lines from the project to the national grid via Habarana.