- Move reverses 2023 Cabinet suspension
- CEB seeks LNG to address 650 MW power shortfall
- Original tender to replace Petronet’s LNG proposal
The Government is set to re-open the Liquefied Natural Gas (LNG) procurement process for the establishment of a Floating Storage Regasification Unit (FSRU) and an LNG pipeline, which was cancelled by the previous administration led by former President Ranil Wickremesinghe.
In August 2023, the then Cabinet suspended the long-delayed LNG procurement process for the establishment of the FSRU and LNG pipeline.
Speaking to The Sunday Morning, Ceylon Electricity Board (CEB) Spokesman Eng. Dhanushka Parakramasinghe stated that LNG supply was crucial for the country, especially given that the country owned two LNG power plants that could be used as a base load to meet the ongoing power shortfall.
According to him, the Yugadanavi and Sobadhanavi power plants, with a total capacity of nearly 650 MW, are currently running on heavy fuel, while the newly-completed Sobadhanavi can only be operated with diesel.
“We are not operating Sobadhanavi because we cannot afford the diesel costs,” he emphasised.
Therefore, he stressed that commencing LNG supply was crucial.
Following the cancellation of the tender, India’s Petronet submitted a proposal to supply LNG. However, Parakramasinghe stated that the current administration would not consider the Petronet proposal and would proceed with the previous tender instead.
As per Cabinet Memorandum No.28/2023/PE, dated 14 July 2023 and signed by then Power and Energy Minister Kanchana Wijesekera, the Cabinet had suspended the procurement process for the FSRU offshore Kerawalapitiya on a Build, Own, Operate, and Transfer (BOOT) basis, along with a compatible mooring system on a BOOT basis, and the associated project for the development of an offshore and onshore Regasified LNG (RLNG) transmission pipeline network with Onshore Receiving Facilities (ORF) and associated systems from the FSRU to the existing and future Kerawalapitiya and Kelanitissa power plants on a BOOT basis.
The Cabinet had approved obtaining the views of the Gas Utilisation Master Plan Committee on the scope and necessity of the present project proposals and the assumptions used for the development of these proposals, considering the electricity sector plans.
In its Cabinet memorandum, the then Ministry of Power and Energy had proposed to re-analyse the LNG procurement process, which is specifically designed to meet the requirements of the electricity sector in a systematic manner, taking into account challenges and the current global environment.
Sri Lanka has opted for FSRU and mooring units to unload from gas transport vessels for the tender developed around the concept based on the Long-Term Generation Expansion Plan (2018-2037), which was approved by the Public Utilities Commission of Sri Lanka (PUCSL) on 12 June 2018. This plan recognised the need to convert furnace oil and diesel-based power plants to LNG as a measure to reduce infrastructure within the country.
The tender was floated on 18 February 2021 and closed on 25 June 2021, and is currently under evaluation.
“This was designed and sized solely for the conversion of existing combined-cycle thermal power plants. The country’s strategy for acquiring LNG has undergone multiple changes over time with various development partners. The country has attempted these initiatives with a Japanese-Indian consortium as well as with the Korea Energy Agency. The recent proposal by New Fortress also marked another milestone in this effort,” the memorandum states.
As highlighted, the Cabinet paper had noted that the lack of a consistent, multi-sectoral energy strategy and a holistic demand analysis had been a major deficit, leading to the failure of previous efforts by various governments.