NTPC and Power Grid viability reports soon

Sri Lanka may set the stage for a new power play between the two Asian powers, China and India.

Two Indian state-run companies, NTPC and Power Grid Corporation of India (PGCIL), have planned to come out with feasibility reports on two projects in the power sector in Sri Lanka by January. The final agreement on both projects are expected to be signed soon after the detailed reports are out.

NTPC was looking to set up a 2x250 Mw coal-based project at Sampur in the Trincomalee region. PGCIL intends to come up with India’s first undersea power transmission project, connecting Sri Lanka.

Both projects are considered diplomatically important, as the China National Machinery and Equipment Import and Export Corporation (CMEC) is also setting up a coal-based power project in the Norochcholai area, with an investment of close to $900 million.

In September 2011, NTPC and the Ceylon Electricity Board (CEB) of Sri Lanka had incorporated a joint venture company, called Trincomalee Power Company, to set up the plant which would see investment of Rs 3,000 crore.

“The joint venture company will sign an agreement with the board of investment (BOI) in Sri Lanka on January 15 and the detailed feasibility report will be out by month-end,” said CEB chairman Wimaladharma Abeywickrama.

A top NTPC official confirmed the development and said related issues such as transport of coal would be decided later. PGCIL and CEB had signed a memorandum of understanding for the feasibility study for the undersea transmission line in 2010.

“The report is ready with the Sri Lankan government and a final decision will be taken by January,” Abeywickrama said.

The project is expected to start by 2014. It includes a 250-300 km power link, with a submarine stretch of about 50 km. It will require an expected investment of about Rs 3,000-4,000 crore and an exchange of close to 1,000 Mw of power. Abeywickrama says both governments have already shown green signals.

“These two projects are vital for Sri Lanka and will help us to connect with the planned Asian grid. More, we can share power both ways during peak hours,” he added. CEB is the largest electricity company in Sri Lanka, with an installed capacity of 2,684 Mw.

The finalisation of these projects are at a time when the President of the island, Mahinda Rajapaksa, had publicly said Lanka had sought the assistance of China only after India refused to get involved in some projects.