Lanka not keen on power plant with NTPC

Sri Lanka is not too keen on setting up its 300 mw power plant in collaboration with state owned National Thermal Power Corporation (NTPC).

Sources involved with the development said, "Sri Lankan officials have developed a cold feet for the joint venture with NTPC and they did not seem to be keen on setting up the plant in collaboration with us."

"This assumes significance if we consider that a Chinese company is also in the race and that cost of the project now has been a major consideration for the Sri Lankan government," he said.

NTPC officials visited Sri Lanka to discuss project details some times back but discovered that they were not too keen on entering into a joint venture with India now that the Chinese have offered a very competitive price.

L D Gupta, general manager, international operations said, "We are still in negotiations with the Sri Lankan authorities and nothing concrete has evolved as of now." "We are revisiting the whole matter once again and things have not been finalised," he added.

NTPC had earlier announced a 300 mw joint venture power plant in Sri Lanka for which it had submitted a proposal to the Sri Lankan government.

The cost of the project was pegged at Rs 1,500 crore while the plant would be implemented in joint venture with Bharat Heavy Electricals Ltd (Bhel) and Ceylon Electricity Board (CEB).

"CEB or the Sri Lankan government however is yet to take the final call on deciding its partner and cost of the project is playing a major role in determination of the joint venture partner," the source said. Earlier, the Sri Lankan Cabinet had accepted a proposal by NTPC to execute the project.

Following the Cabinet decision, all available studies on the project were handed over to the NTPC to work on. Power purchase agreement however remained to be negotiated. Sri Lanks is now reconsidering its decision.

The plant was envisaged to be set up through the build, operate and own (BOO) basis by NTPC, while the Chinese company offered to set it up on a design, build and transfer (DBT) basis.

"If NTPC is handed over the project it would have to borrow from the international market or from Indian financial institutions on the other hand, the Chinese venture would be entirely funded by the Chinese government through a long term, soft loan. The Chinese company also offered to build, transfer and quit. There would be no power purchase agreement," experts in the field.