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China factor behind move to hasten NTPC’s Lanka project

China factor behind move to hasten NTPC’s Lanka project
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First Published: Wed, Feb 25 2009. 09 29 PM IST

Helping hand: NTPC chairman and managing director R.S. Sharma.
Helping hand: NTPC chairman and managing director R.S. Sharma.
Updated: Wed, Feb 25 2009. 09 29 PM IST
New Delhi: To counter China’s growing presence in Sri Lanka, the Indian government had asked NTPC Ltd to hasten the process of building a power plant in the island nation, said a person close to the matter.
NTPC plans to build a $500 million (Rs2,490 crore), 500MW power project north of Trincomalee by partnering with the Ceylon Electricity Board (CEB). The power plant is expected to be commissioned by 2011.
Helping hand: NTPC chairman and managing director R.S. Sharma.
The government had asked the state-owned electricity producer to step up the process after the 300MW coal-fired power plant in Norochcholai in Puttalam in Sri Lanka was awarded in 2006 to the China National Machinery and Equipment Import and Export Corp. (CMEC), the person said on condition of anonymity.
While the 50:50 joint venture is seen by NTPC as an effort to demonstrate its ability to set up power plants in other countries, an NTPC executive who declined to be identified confirmed that the Lanka project has a strategic intent.
“The project was decided at the government-to-government level. The joint venture agreement is under finalization and by March this year, it will be completed,” the executive said. “So far, we do not have the credential of setting up a power project overseas. By commissioning this project, we will satisfy the requirements when we bid for other overseas projects.”
NTPC’s chairman and managing director R.S. Sharma said: “NTPC will do its best for government’s planning. I will not be able to comment on China’s influence.”
Sri Lanka has a power generation capacity of 2,500MW, compared with India’s 145,000MW.
The project will be set up on a build, operate, own and transfer basis, and will have a debt-to-equity ratio of 70:30. It will use around 2.5 million tonnes coal annually, which may be sourced from Australia and Indonesia, the NTPC executive quoted earlier said.
Another public sector unit, Power Grid Corp. of India Ltd (PGCIL), plans to set up an electricity transmission link between India and Sri Lanka, of which 30km will be under sea. The India-Sri Lanka link would run from Madurai in Tamil Nadu to Anuradhapura in Sri Lanka’s north-central province.
“While the pre-feasibility report has been prepared, the detailed project report for the link will require around Rs13 crore. We have sent the memorandum of understanding to CEB for vetting,” said S.K. Chaturvedi, chairman and managing director of PGCIL.
“Economic, political and commercial interest will be best served by having Indian promoters for the undersea link as well as for the power plant,” said Anish De, chief executive at Mercados Asia, an energy consulting firm. “The load profile of Sri Lanka is such that large thermal power projects require a larger market beyond the island.”
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First Published: Wed, Feb 25 2009. 09 29 PM IST