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CEB in JV with India’s NTPC to set up 500 MW coal plant in Trinco

Sep 6, 2011 4:41:11 PM - www.ft.lk

NTPC Limited, the largest power generation utility of India and the Ceylon Electricity Board (CEB)  yesterday signed a  Joint Venture and Shareholder Agreement 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.

The project is the biggest joint venture between the two countries hence landmark in economic cooperation between India and Sri Lanka.
This project will go on stream by 2016 and meet growing demand for power in Sri Lanka. Land for the project shall be provided by the Government of Sri Lanka to the Joint Venture Company on long term lease. The coal for the project shall be imported and supplied by Lanka Coal Company (LCC). The power generated will be supplied to CEB through the CEB grid system.
The capacity of the project may be enhanced by another 500 MW in future.
A Joint Venture Company (JVC) will be incorporated in Sri Lanka, with equal equity (50:50) contributions by NTPC and CEB, for implementation of the Power Project. 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 finalised.  The JV Agreement was signed by Arup Roy Choudhury, CMD, NTPC and Prof. Wimaladharma Abeywickreme, Chairman, CEB for their respective organisations in the presence of Patali Champika Ranawaka, Minister of Power & Energy, Government of Sri Lanka, Ashok K. Kantha, High Commissioner of India, P. Uma Shankar, Secretary (Power), Government of India and M.M.C. Ferdinando, Secretary (Power & Energy) Government of Sri Lanka.
Background to teh project is that in 2006 December a Memorandum of Agreement was signed by the Government of Sri Lanka, CEB and NTPC. Subsequently, during the visit of the President of Sri Lanka to India in June 2010 the progress on discussions on various agreements pertaining to the Power Project was reviewed and it was agreed that the parties concerned would expeditiously complete discussion on the agreements so that work on the Power Project could commence without delay. The Government of India also offered a concessionary line of credit of US$ 200 million to the Government of Sri Lanka to enable them to fulfill their commitments under the Implementation Agreement, including with regard to the construction of a jetty at Sampur and of transmission lines from Sampur to Habarana as also the initial equity of the Ceylon Electricity Board (under the Joint Venture Agreement). 
Speaking on the occasion Ashok K. Kantha, High Commissioner 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. The High Commissioner said that the cooperation between the two companies would take the bilateral economic cooperation to a new level.
In his address, P. Uma Shankar, Secretary (Power), Government of India 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 the Government of India. He mentioned that the project would be completed by mid 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.
Arup Roy Choudhury, CMD, NTPC speaking during the ceremony said that NTPC as an equal Joint Venture partner will bring the best practices of his company during the implementation as well long term implementation of the project. He noted that NTPC as a responsible corporate citizen accords environment a high priority and all power stations of NTPC is a testimony to that. NTPC would like to replicate its environmental friendly way of doing business in this project. NTPC’s involvement in this JV project will automatically ensure technology transfer in implementation and running of the power plant.
India’s largest power company, NTPC was set up in 1975 to accelerate power development in India. NTPC is emerging as a diversified power major with presence in the power generation value chain. It ranked 341stin the ‘2010, Forbes Global 2000’ ranking of the world’s biggest companies. NTPC has been conferred with the coveted Maharatna status by Government of India for its outstanding achievements over the years.  The total installed capacity of NTPC is 34,854 MW, with 15 coal based, 7 gas based power stations and 6 joint venture power projects located across India.  It generated 220.54 billion units (BUs) of electricity during 2010-11, contributing more than 27% of total electricity generated in India with about 18 % share of country’s total installed capacity. NTPC is currently working on many new projects for rapid capacity addition and plans to become 128,000 MW plus company by 2032.    In the financial year 2010-11, NTPC had a total income of approx. INR 570 billion (i.e. USD 12.5 billion approx.) and profit after tax approx. INR 90 billion (i.e. USD 2 billion approx.).
The Ceylon Electricity Board is a corporate body established in Sri Lanka in 1969. It is empowered to generate, transmit and distribute electricity to all categories of consumer in Sri Lanka. CEB operates 24 power plants with an aggregate installed generation capacity of 2058 MW. The transmission network of CEB dispatches a total of 3100 MW, including generation from IPPs. The annual revenue of CEB in 2010 was about SLR 121 billion (i.e USD 1.1 billion approx.). The annual sales of CEB distribution network was 9,268 GWh in 2010, and the maximum peak demand met in 2010 was 1,955 MW.