Sri Lanka Receives $891m Loan From China For Coal-Fired Power Plant Expansion

Published: 30-Jun-2009

By: Staff Writer Staff Writer Staff Writer

Sri Lanka has received Chinese financing to increase the generation capacity of a coal-fired power plant by 600MW, reported Lanka Business Online.

John Seneviratne, power and energy minister stated that China's CMEC construction company has already constructed the first phase of 300MW plant project for the Ceylon Electricity Board (CEB) state power utility, which is expected to be completed by the end of 2010.

John Seneviratne informed that for the second phase of the Norochcholai coal power project in the north-western Puttalam district, commercial agreement has been signed by both the Sri Lanka and China governments.

The second phase of the project comprises two 300MW power plants, increasing the plant’s total power generation capacity to 900MW.

Seneviratne said that the agreement, which was signed on June 29, 2009, provides Sri Lanka with a 20 years repayable soft loan of $891m from China's Exim Bank. The loan carries 2% interest rate, which was granted for the completion of the Norochcholai coal power plant.

Seneviratne revealed that the present peak load in the island is approximately 2,000MW and the 900MW power project is half of the current requirement.

John Seneviratne, said: 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. 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.

Seneviratne informed that the electricity costing 14.50 rupees to generate and is sold at 13 rupees, which is creating a loss of 1.50 rupees per unit of power. The coal plant would create a difference in the CEB's generation costs, while reducing the usage of high-cost diesel power plants.