NTPC hopes to start on 500-Mw project in Sri Lanka by Feb-end

With the re-election of Sri Lankan President Mahinda Rajapaksa, India’s largest power generator, NTPC, hopes the implementation of a 500-Mw imported coal-based power project in that country should begin by the end of this month.

NTPC sources told Business Standard, "All formalities from our government and NTPC have been completed. The opinion of the Sri Lankan attorney general (AG) was awaited. With the re-election of President Rajapaksa, the AG’s opinion will come soon, which will help both NTPC and Ceylon Electricity Board to start the project implementation by the end of the month."

With the AG’s opinion in, the way would be clear, said the sources, for the joint venture agreement between CEB and NTPC, a power purchase agreement between the JV company and CEB, and an agreement between the Board of Investment and the JV company. An implementation agreement and a coal supply agreement would also be in place. Though NTPC and CEB had signed a memorandum of understanding in 2006 for the project, both parties time to sort out various issues on the payment security mechanism and selection of project site. Each is to contribute half the equity. The project would be funded with a debt to equity ratio of 70:30.

According to sources, a site at Sampur, in Trincomalee district, has been finalised. NTPC plans to import coal from Indonesia or South Africa for the proposed project. Meanwhile, NTPC is also exploring options to take equity or acquire coal mines in Australia, Indonesia, Mozambique and South Africa. Similarly, NTPC and Bangladesh are exploring options of setting up a 500-Mw imported coal-based power project there. NTPC is also interested in operation and maitenance contracts for new power projects in Bangladesh. "A team is visiting Banladesh this month to work out further details," NTPC sources said.

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