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| Sunday, 20 November 2005 |
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Business |  |
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US, Canadian investors await approval for 600MW power project US and Canadian investors awaiting approval for the 600MW power project said its offer will remain unchanged irrespective of world Liquid Natural Gas (LNG) price fluctuations. After the Ports Authority wanted to locate LNG discharging facilities outside the port limits, the investors agreed to construct a separate Jetty off-shore at Kerawalapitiya at an additional cost of US$ 145 million. Investors hope to commence work within 90 days once approval is received and agreements are signed. The US$300 million investment in the power sector is grappling to get approval since last February. The investment proposal of the 300MW Liquid Natural Gas (LNG) power plant in Kerawalapitiya reached the Ceylon Electricity Board (CEB) for approval after seven months. Investors are disillusioned over the long delay in the process of getting approval for the project and face difficulties since they have already reserved the requisite machinery. The proposal was submitted to the BOI in February this year. The BOI forwarded it to the CEB for evaluation on September 27, 2005. The joint venture of BPH International of Canada and the Allenborough Energy Corporation of USA has offered to supply electricity at US$0.059 or Rs.5.90 per unit and is Rs.2.93 less than the average thermal unit cost of the CEB. The new company offers a very competitive price compared to the present purchasing rates of the CEB. The US$ 0.59 rate is offered for the first five years and thereafter the rate will be further reduced to US$ 0.0575 or Rs. 5.75 per unit. The investors also agreed to provide electricity at this rate for 20 years irrespective of world LNG price changes. The investors hope to expand the capacity to 600MW under the second phase of the project. Today the CEB purchases a unit of electricity from Lakdanavi at Rs. 9.19, Asia Power Rs. 9.60, Colombo Power Rs. 9.51, Ace Power Matara Rs. 10.04, Ace Power Horana Rs. 9.85, AES Kelenitissa 13.02, Heladanavi Rs. 7.85 and Ace Power Embilipitiya Rs. 8.34. Accordingly the average unit cost is Rs. 9.67. It took eight months for the proposal to move from the BOI to the CEB. But nobody knows how long the CEB would take to evaluate and approve the proposal. The local representative of the investor has to canvas BOI, CEB and all other line agencies for approval as well as media institutions and journalists to influence the authorities by publishing the advantages of the project. After the Sunday Observer highlighted the long delay in obtaining approval at the BOI under the heading "BOI red tape delays $300 million foreign investment on power" July 24, 2005 the officials of the BOI said that the article was biassed as it did not have the BOI opinion. On contacting BOI officials we were told that one reason for the delay is that the investor had not submitted a formal application and it had been submitted via email. However, the BOI website provides on-line application facilities. The others were technical matters in that the generators are used generators and also their frequency is higher than the frequency used in Sri Lanka. The investor said that he submitted an e-application as well as a formal application. He said that the generators are brand new and they had submitted the manufacturers' guarantee for convertibility of the frequency. BOI officials also had misgivings over the proposed rates and supply power at the same rate over twenty years. BOI officials are also not happy with the investor's influence through political means and through media publicity on the advantages of the project. Sri Lanka is in dire need of FDI for rapid economic development. Local
investors have called upon the authorities to solve the power crisis over a
period of time. (GW) |
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