Sri Lanka, India ink agreement to set up coal power plant in Eastern Province

Sri Lanka's power authority Ceylon Electricity Board (CEB) and India's National Thermal Power Corporation (NTPC) this morning inked a joint venture agreement to build a coal power plant in the Eastern Province.

NTPC Limited, the largest power generation utility of India and Ceylon Electricity Board (CEB) signed the Joint Venture and Shareholder Agreement today in Colombo for setting up a 500 MW (2 X 250 MW) coal based power station at Sampur, Trincomalee in the Eastern Province of Sri Lanka, High Commission of India in Colombo said in a press release.

Arup Roy Choudhury, Chief Managing Director of NTPC and Prof. Wimaladharma Abeywickreme, Chairman of CEB signed the joint venture agreement for their respective organizations in the presence of Minister of Power & Energy Patali Champika Ranawaka, High Commissioner of India Ashok K. Kantha, Indian Secretary of Power Uma Shankar and Sri Lanka's Secretary of Power and Energy M.M.C. Ferdinando .
The Project considered as a landmark in bilateral economic cooperation between India and Sri Lanka, will be operational by 2016 and meet growing demand for power in Sri Lanka.
Under the agreement, the Government of Sri Lanka must provide the land for the project on long term lease to the Joint Venture Company (JVC) to be incorporated in Sri Lanka, with equal equity (50:50) contributions by NTPC and CEB, for implementation of the Power Project.
Lanka Coal Company (LCC) is to import and supply the coal for the project. The CEB through CEB grid system power will supply power generated. The capacity of the Project may be enhanced by another 500 MW in future.
The JVC upon incorporation will shortly sign other Agreements including Power Purchase Agreement with CEB, Board of Investment Agreement with Board of Investment and Implementation Agreement with Government of Sri Lanka. These Agreements have already been finalized.
Speaking on the occasion High Commissioner of India Ashok K. Kantha, said that it was the largest Joint Venture project being undertaken by the two countries. He noted that CEB and NTPC are premier institutions in their countries and have come together as equal partners to form the Joint Venture Company.
"Cooperation between the two companies would take the bilateral economic cooperation to a new level," the High Commissioner has said.
Indian Secretary of Power, Uma Shankar has said that signing of the Joint Venture and Shareholder Agreement between CEB and NTPC was a 'historic occasion' and the project will have full support of Government of India and it would be completed by mid of 2016.
He also noted that a Joint Steering Committee (JSC) at the level of Secretary from both sides has been constituted to oversee the implementation of the project and the first meeting of the JSC will take place later today.
The Managing director of NTPC Arup Roy Choudhury, speaking during the ceremony has said that NTPC as an equal Joint Venture partner will bring the best practices of his company during the implementation of the project.
Noting that NTPC accords environment a high priority and all power stations of NTPC is a testimony to that, Choudhury has assured to replicate its environmental friendly way of doing business for the Sampur project as well.
"NTPC's involvement in this JV project will automatically ensure technology transfer in implementation and running of the power plant," he has added.
India has offered a concessionary line of credit of US$ 200 million to Sri Lanka to fulfill Sri Lanka's requirements under the agreement. This includes construction of a jetty at Sampur and of transmission lines from Sampur to Habarana and also the initial equity of the CEB under the Joint Venture Agreement.
The Memorandum of Agreement for the project was signed in December 2006, by the Government of Sri Lanka, CEB and NTPC. Further discussions on the agreement to expedite the project and review took place during Sri Lankan President's visit to India in June 2010.