Kerawalapitiya power plant: 40 percent of shares for US company

The Finance Ministry has signed a framework agreement with a United States-based company to sell 40 percent of shares of the Treasury-owned 300MW Kerawalapitiya Yugadhanavi Power Plant instead of 51 percent as originally proposed.

According to this framework agreement, the Sri Lankan Government has assigned to the US- based New Fortress Energy ( NFE) the construction of off shore Floating Storage Regasification Unit ( FSRU) and the pipeline system for supplying Liquid Natural Gas ( LNG) to diesel power plants including Yugadhanavi and Kelanitissa and LNG Power Plants proposed to be built in the future.

As part of the agreement, New Fortress will supply natural gas to the existing 300 MW Yugadhanavi Power Plant and is negotiating the purchase of the Government’s 40% stake in the company that owns the power plant

Continued from Page 1 Last week’s Sunday Times reported that a Cabinet paper had been submitted by the Finance Ministry requesting approval for the sale of 51 percent of shares of the Yugadhanavi Power Plant to the US company.

Through this agreement, the Government has also granted NFE the rights to supply gas to all LNG power plants for five years.

According to the agreement that was signed this week, it has been decided by the Treasury to sell only 40% of the power plant's shares to NFE.

NFE has confirmed the signing of the agreement.

“As part of the agreement, New Fortress will supply natural gas to the existing 300 MW Yugadhanavi Power Plant and is negotiating the purchase of the Government’s 40% stake in the company that owns the power plant,” NFE said in a statement.

A Finance Ministry official said it had been mentioned in the framework agreement that “on the request of the government, NFE is willing to allow other parties to supply gas as well.”

The Ceylon Electricity Board Engineers Union (CEBEU) has objected strongly to the move, stating that this deal will have an extremely harmful impact on Sri Lanka.

The Ceylon Electricity Board ( CEB) has already called for competitive international tenders for the construction of the offshore FSRU terminal and the pipeline system to supply gas to the existing diesel power plants and LNG Power Plants proposed to be built in the future.

The call for tenders ended on June 18 and NFE without presenting a bid had submitted to the Finance Ministry an unsolicited proposal with conditions. In this unsolicited proposal by NFE, it had been stated that it was prepared to purchase a certain quantity of shares of the Yugadhanavi Power Plant, if all three tenders -- the FSRU, the pipeline system and supply of gas -- were awarded to it.

In response to the CEB's tenders, Ceylex Engineering (Pvt.)

Ltd., connected to Lakdhanavi Limited and China Harbour Engineering Company Limited had submitted bids.

However, without considering these bids, Presidential Secretary P. B Jayasaundara had informed the Ministry of Power and the CEB on July 6 that Cabinet approval had been granted to sell shares of the Yugadhanavi Power Plant to NFE. He made the announcement at a sudden meeting held at the Presidential Secretariat.

Finance Ministry Secretary S. R. Attygalle and Power Ministry Secretary Wasantha Perera, officials of the CEB and representatives of NFE and M.C.C. Ferdinando, a member of the Presidential Commission on Simplification of Existing Laws and Regulations participated in this meeting.

At this meeting, CEB officials spoke about the tenders they had called for. Responding to this, the President’s Secretary had told them to go ahead with that process also.

However, CEB engineers have emphasised that one FSRU was sufficient for the country to supply gas to present LNG Power Plants and those that are scheduled to be constructed in the future.

In Parliament on Wednesday, Samagi Jana Balavegaya Parliamentarian Nalin Bandara questioned the sale of Yugadhanavi Power Plant shares to the American company. Foreign Investment State Minister Ajith Nivard Cabraal replied that the US company came to the government as an investor and as it was not a procurement, there was no need for a tender process.