Lanka questions feasibility of power link

Lanka questions feasibility of power link

New Delhi: Even as India is hopeful of pushing ahead with the under-sea power transmission link with Sri Lanka, the island nation’s government has questioned the long-term feasibility of the project.

The link is part of a bid to enhance economic and political ties between the neighbours.

The transmission project is to be implemented by state-run Power Grid Corp. of India Ltd (PGCIL), the country’s main power transmission company, and requires an investment of Rs2,300 crore to transmit around 1,000MW.

“Sri Lanka wants to have it. The question was, we had negotiated it with ADB (Asian Development Bank) and ADB had agreed to give us the funds. The Indian side at that time was reluctant as it did not want multinational banks to come and spend money. In the meanwhile, both sides are increasing their energy capacity. Oil prices have come down. The urgency of this has probably come down now. So what was viable at one stage may not be viable now," said Sarath Amunugama, Sri Lanka’s minister of public administration and home affairs, on the sidelines of the World Economic Forum’s India Economic Summit in New Delhi on Monday.

“The Indian peak load is in the morning because farmers need to use power. Sri Lanka’s peak load is from 7 to about 11 in the night. So the idea was that we could supply our extra power to India in the morning and India could reverse the flow at night," the Sri Lankan minister said.

The India-Sri Lanka transmission link is to run from Madurai in Tamil Nadu to Anuradhapura in Sri Lanka’s north-central province.

“We have sent the proposal for the preparation of detailed project report (DPR) from the Sri Lankan government. The preparation of DPR will involve an investment of Rs6 crore. The question is who will bear this cost. We are yet to hear from them," said a senior PGCIL official involved in the process, who did not want to be identified.

Sri Lanka has other concerns as well.

“The question is whether India has enough surplus power," said Palitha Ganegoda, Sri Lanka’s deputy high commissioner to India.

Mint had reported on 25 September 2007 about the lack of interest on the part of the Sri Lankan government in the project. The proposal earlier faced opposition from the Tamil Nadu government.

This is not the only Indian energy sector project facing problems in Sri Lanka. India’s largest power generation utility, NTPC Ltd, which has plans to set up a 500MW coal-based thermal power plant in Sri Lanka as a joint venture project with the Ceylon Electricity Board and had signed a memorandum of understanding (MoU) in December 2006, is yet to conclude a joint venture agreement for the project.

The project is to be developed as an equal joint venture and will involve an investment of $500 million. There were differences earlier between the partners over payment of security and sovereign guarantees.

“I heard that the NTPC people are already there. The engineers from their side and our side are already discussing these things," Amunugama said.

The project also has strategic overtones. To counter China’s growing presence in Sri Lanka, the Indian government has already asked NTPC to hasten the process of building a power plant in the island nation.

Responding to a question about the project delay, the minister said, “Earlier they wanted to set up the project in the Trincomalee harbour. That is a most scenic site and one of the best harbours in the world. If you look at the whole thing, it is absurd to set up a coal power plant in the heart of Asia’s best scenic tourist site. It will environmentally destroy the whole area," the minister said.

“After a long debate, the government said you cannot have it here but take it to a place called Sampur. That was the reason for the delay. Both sides have now agreed on the Sampur site. The Indian side can’t decide on the location. That is for the host government," he said.

However, a senior NTPC executive, who did not want to be identified, said, “The Sri Lankans need to confirm certain things. As per the MoU, they were to provide the infrastructure such as roads, ports for the project. Now, they say they will ‘make efforts’. We are hopeful of signing the JVA (joint venture agreement."