Norochcholai extension: CEB calls for expressions of interest

The Ceylon Electricity Board (CEB) has called expressions of interest to hire a financial consultant for the proposed 300 megawatt (mw) extension to the Lak Vijaya power plant (LVPP) at Norochcholai.

The advertisement published this week indicates that a financial model for the planned build, own, operate and transfer (BOOT) or build, own and operate (BOO) project is still not available, despite multiple Cabinet papers having been approved and a timeline for completion set for 2023.

The feasibility study for the initiative is also not finalised and there is no funding for the required transmission line – all essential perquisites. The project is valued at an estimated US$ 450mn ( Rs 82bn). There are currently three units at LVPP, as evident from the three stacks, each generating 300mw of power.

Eligible local and international consultants have been invited to express interest on developing the financial model for the project evaluation, negotiation purposes and development as well as to review relevant sections of the power purchase, implementation, coal supply, operation and maintenance contract, financing and other project agreements.

In November last year, the CEB issued a letter of intent ( LoI) to China Machinery Engineering Corporation (CMEC) to carry out a detailed feasibility study for a fourth unit at the 900mw plant in Norochcholai using the existing infrastructure and the same or advanced systems and facilities.

Last month, senior CEB engineers slammed moves to also offer the fourth unit “on a silver platter” to CMEC. The proposal is disadvantageous to both the utility and the country, the engineers said.

Successive Governments have attempted to privatise LVPP. For instance, a special purpose vehicle ( SPV) was once proposed to convert LVPP to a public- private partnership. There was also a proposal to offer 50% of LVPP equity to CMEC. The most recent development is to set up LVPP Unit 4 as an “independent power producer” ( IPP), thereby a joint venture between CEB and LVPP builder CMEC, rather than as a debt-funded project.

The engineers warned that the CEB and CMEC will compete for shared services. The coal yard, conveyor belts, reverse osmosis and hydrogen/chlorination plants, wastewater/sewage treatment, coal ash water treatment plants, ash yard, GIS operation and control room facilities will have to accommodate the IPP’s requirements.

The CEB will have to bear availability issues arising out of insufficient coal unloading facilities. Transmission line capacity will also have to be met by the utility.