NTPC goes to Lanka for first overseas venture

NTPC's first overseas venture will be a $700-million coal-based power project in Sri Lanka.

On Tuesday, it entered into a joint-venture with Ceylon Electricity Board (CEB) to establish the 500 MW plant (2x250 MW) near Trincomalee in East Sri Lanka.

The joint venture company will be incorporated in Sri Lanka, with equal equity (50:50) contributions by NTPC and CEB, for implementation of the power project.

The joint venture company, upon incorporation, will shortly sign other agreements including power purchase agreement with CEB, board of investment agreement with the Board of Investment and implementation agreement with the Government of Sri Lanka.

These agreements have already been finalised. The project is expected to achieve financial closure in about a year.

The agreement was signed by Mr Arup Roy Choudhary, Chairman and Managing Director, NTPC, and Prof Wimaladharama Abeywickreme, Chairman, CEB.

India will offer a concessionary line of credit of $200 million to Sri Lanka to fulfil its commitments under the Implementation of agreement, including that of the construction of jetty at Sampur and of transmission lines from Sampur to Habarana.

The capacity of the project may be enhanced by another 500 MW in the future.

The memorandum of agreement for the project was signed in December 2006. When the Sri Lankan President, Mr Mahinda Rajapakse, visited India in June 2010 the progress on discussions on various agreements pertaining to the power project was reviewed and it was agreed that the parties concerned would expeditiously complete discussion on the agreements so that work on the power project could commence without delay.

Speaking on the occasion, Mr H.E. Ashok K. Kantha, High Commissioner, said that it was the largest joint venture project being undertaken by the two countries. He noted that CEB and NTPC are premier institutions in their countries and have come together as equal partners to form the joint venture company.

He said that the cooperation between the two companies would take the bilateral economic cooperation to a new level.

Mr P. Uma Shankar, Secretary (Power), Government of India, said that signing of the agreement was a ‘historic occasion' and the project will have full support of the Indian Government.

The project would be completed by mid-2016. He also noted that a joint steering committee (JSC) at the level of Secretary from both sides has been constituted to oversee the implementation of the project. The first meeting of the JSC took place in the day.

The NTPC chief Mr Roy Choudhury said that NTPC as an equal joint venture partner will bring the best practices of his company during the implementation as well as long-term implementation of the project.

He noted that NTPC as a responsible corporate citizen accords environment a high priority and all power stations of NTPC is a testimony to that. NTPC would like to replicate its environmental-friendly way of doing business in this project. NTPC's involvement in this JV project will automatically ensure technology transfer in implementation and running of the power plant.

The Ceylon Electricity Board was established in 1969. It operates 24 power plants with an aggregate installed generation capacity of 2,058 MW. The transmission network of CEB dispatches a total of 3,100 MW, including generation from IPPs. The annual revenue of CEB in 2010 was about SLR 121 billion ($1.1 billion approx.). The annual sales of CEB distribution network was 9,268 GWh in 2010, and the maximum peak demand met in 2010 was 1,955 MW.