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| Sri Lanka gets 891 m US$ Chinese loan for coal power expansion |
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(Lanka-e-News 30June.2009 1.00PM) Sri Lanka has got Chinese financing to add 600 Mega Watts of coal powered capacity to a generation complex where the first stage is scheduled to be completed next year, a government minister said.
Power and Energy Minister John Seneviratne said the two governments had signed a commercial agreement for the second phase of the Norochcholai coal power project in the north-western Puttalam district.
"By using coal power, which costs much less than oil-based power generation, we will be able to lower our production costs and reduce electricity tariffs to consumers," he told a news conference Monday.
The first phase of the project, a 300 Mega Watt plant for the Ceylon Electricity Board (CEB) state power utility, is already being built by China's CMEC construction company.
It is to be completed by the end of next year, ahead of schedule, Seneviratne said.
The second phase will consist of two power plants of 300MW each, bringing the total power generation capacity of the facility to 900MW.
Seneviratne said the island's current peak load is around 2,000MW and the 900MW coal power project is about 50 percent of the current need.
Seneviratne said the agreement signed Monday provides for a soft loan of 891 million US dollars from China's Exim Bank for completion of the Norochcholai coal power plant.
The loan will carry an interest rate of only two percent and is repayable over 20 years.
"We hope to generate power at the coal power plant at a unit cost of 7-8 rupees which will allow the CEB to turn its present losses into a profit and allow it to reduce consumer tariffs," he said.
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"The main reason for power to cost so much now is because of our dependence on petroleum - 60 percent of our power is generated by diesel, so when diesel prices are high, the cost of power is also high."
The CEB is now losing 1.50 rupees a per unit of electricity which it sell at 13 rupees but which costs 14.50 rupees to generate, Seneviratne said.
The coal power project will make a "tangible difference" in the CEB's generation costs and enable it to reduce dependence on and use of high-cost diesel power plants. |
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| Courtesy: LBO |
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