PUCSL approves PPA for 300MW LNG plant

• New Chairman says green light given for first major power project in a decade
• PPA approved following acceptance of PUCSL recommendations 
• Chairman insists no delays caused by PUCSL during approval process 
• Project in Kerawalapitiya to be set up under BOOT system 
• CEB empowered to give Lakdhanavi go-ahead to commence project  

By Uditha Jayasinghe 

The newly revamped Public Utilities Commission of Sri Lanka (PUCSL) has approved the Power Purchase Agreement (PPA) of the 300MW LNG plant, its Chairman said yesterday, paving the way for construction of Sri Lanka’s first major power plant in a decade.  

PUCSL Chairman Janaka Ratnayake told Daily FT the newly appointed commissioners of the PUCSL had approved the PPA between the CEB and Lakdhanavi to build the 300 MW Kerawalapitiya LNG power plant on Friday. 

The approved PPA is more aligned with the original document and was more favourable to the Government, consumers and licensee Ceylon Electricity Board (CEB) compared to the previous agreement, he said.  

Ratnayake insisted there was no delay on the part of the regulator and the reason for the project dragging on was largely due to the long period that was taken for the tendering process. The CEB submitted a request to tender the power plant on 15 November 2016, and PUCSL approval was granted within two days. However, the process of tendering, which is the responsibility of the CEB took about four years, the new Chairman explained.  

“We had received the PPA for approval on 9 October 2020 and the PUCSL had observed there were amendments made to the initial draft PPA, which was sent to the PUCSL earlier with the Request for Proposals (RFPs). The PUCSL observed the new PPA was unfavourable to the CEB, consumers and the Government. Therefore PUCSL granted conditional approval on 25 November to the new PPA requesting CEB and Lakdhanavi to include 18 conditions that were excluded from the original document,” Ratnayake added. 

CEB made the amendments accordingly as requested by the regulator and submitted the new document for approval on 1 December 2020. Both CEB and Lakdhanavi agreed to a more favourable PPA in line with PUCSL recommendations, the Chairman said. 

However, the project was then caught up in the resignation of the former PUCSL commissioners at the request of the Treasury Secretary in December. Approval had to wait until a new set of commissioners were appointed, which took place earlier this month.  

“We expect the CEB will take action to build this least-cost power plant in a timely manner to cater to the country’s electricity demand. I have already signed the documents to allow CEB to instruct Lakdhanavi to commence construction as soon as possible.”    

The 300mw combined-cycle dual-fuel LNG power plant at Kerawalapitiya will be the first plant to be constructed after the first phase of the Lakvijaya Coal Plant in Norochcholai was completed almost a decade ago. The plant is to be constructed under the Build, Own, Operate and Transfer (BOOT) system. The Ceylon Electricity Board (CEB) has not been able to commission any new power plants included in their Long-Term Generation plan since 2013, when the Lak Vijaya plant was completed.  

Two LNG power plants, as well as an extension to the Norochcholai plant, have been in discussions since at least 2016 with multiple rounds of tenders, court proceedings, Cabinet decisions and Government evaluation reports compiled on them.