Sri Lanka to cancel $500-Indian coal plant deal, wants natural gas

Sri Lanka to cancel $500-Indian coal plant deal, wants natural gas

Sri Lanka will cancel plans for a 500 MW Indian-built coal-fired power plant at its strategic eastern port

city of Trincomalee and will instead opt for a liquefied natural gas (LNG) power plant, a cabinet minister

said late on Tuesday.

Chandima Weerakkody, petroleum minister, said Sri Lankan President Maithripala Sirisena told Prime

Minister Narendra Modi of the decision at a meeting on Saturday during Sirisena’s visit to the island

nation’s larger neighbour.

“We do not want to hurt India. So President Sirisena, in his visit, has offered an LNG plant instead of the

coal plant,” Weerakkody told Reuters. “This has been discussed at the highest level and there is

consensus.”

Sri Lanka is trying to increase its power generation capacity after a recent blackout that was the worst in

20 years, government officials say.

BMS Batagoda, the energy ministry secretary said the switch to LNG was proposed after ten years of

opposition to a coal-fired power plant by the residents of Sampur, a village near Trincomalee, where

India has already proposed to build South Asia’s largest petroleum hub.

Area residents and environmental groups have resisted the coal power plant ever since it was originally

proposed in 2006 due to worries about land clearance and pollution.

Plans for the $500 million coal power plant project were finalised in 2011, when state-run Ceylon

Electricity Board (CEB) and India’s state-run National Thermal Power Corporation Ltd (NTPC) agreed to

form a joint venture for its construction.

It is not clear which Indian companies would be considered as partners on the proposal to build a gas-

fired power plant. Natural gas is a cleaner burning fuel than coal, but there would be the added hurdle

that Sri Lanka has no LNG import infrastructure.

Sri Lanka’s only coal-fired power plant with 900 MW capacity was built with a $1.4 billion loan from

China in two phases. However, the Chinese plant has faced frequent repairs.

India and China have been increasingly loaning funds to Sri Lanka over the last few years, mainly for

infrastructure projects. Since the island’s civil war ended in 2009, the two rivals have been competing

for influence in Sri Lanka, which sits right off one of the world’s busiest shipping routes.

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