September 08, 2008

NTPC agrees to locate Sampur plant as Colombo wants

It is reported that India has finally agreed to locate a 500 MW coal based plant of the National Thermal Power Corporation at Sampur town in Sri Lanka’s Trincomalee district.

According to reliable sources, New Delhi’s decision was conveyed to Sri Lankan government. Though the two countries signed an agreement in December 2006, there was no unanimity on the plant location.

Sri Lanka identified Sampur, which its military wrested from the Liberation Tigers of Tamil Eelam in September 2006, though an NTPC team earlier preferred a site near the Indian Oil Corporation oil complex, close to the Trincomalee harbor. Sri Lanka’s move locate the plant at Sampur triggered a controversy with the pro-LTTE Tamil National Alliance raising political and environmental objections.

The project, involving an investment of USD 500 million, is to be implemented by a JV company, in which the NTPC and the Ceylon Electricity Board will each hold a 50% stake and which will be funded with a debt equity ratio of 70:30.

For Sri Lanka, this is one of the largest ever infrastructure investments and the project will augment its power capacity by 20%.