- United Solar unable to provide exact timeline for initial $ 500 m investment
- Legal firm in London evaluates PPA
- PUCSL approval pending
- Company yet to obtain energy permit
The much-debated mega-scale solar development project scheduled to be constructed in Poonakari, Jaffna is likely to face delays as the two parties involved are yet to sign the Power Purchase Agreement (PPA).
As learnt by The Sunday Morning, the Australian investor, United Solar, is awaiting approval from its legal firm in London, tasked with evaluating the PPA.
Simultaneously, the Ceylon Electricity Board (CEB) is awaiting approval from the Public Utilities Commission of Sri Lanka (PUCSL).
The project, valued at a total of $ 1,727 million, aims to create a mega-scale 700 MW solar power plant on the Poonakari Tank.
Last December, the Cabinet of Ministers had granted approval to enter into a PPA with United Solar Group of Australia.
In September, the Cabinet of Ministers had approved the proposal presented by the Minister of Power and Energy to accept the project proposal from United Solar Energy SL Ltd.
The proposal involves the development of a 700 MW solar power plant with a battery energy storage system on the Kilinochchi Poonakari Lake.
The objective is to provide a power supply of 134 MW in principle and a Cabinet-appointed negotiation committee was appointed to evaluate the proposal and make recommendations.
The project, set to be implemented with a total investment of $ 1,727 million as 100% Foreign Direct Investment (FDI), allocates $ 500 million for domestic project components.
The project proponent company has suggested constructing three anicuts around the Poonakari Lake, costing $ 13.5 million, as part of the proposed project to prevent the entry of seawater.
As per the Cabinet proposal, the Agrarian Development Department has already agreed to grant 1,080 acres of the shallow area of the lake to the company on a 35-year lease agreement for establishing the 700 MW power plant.
Initially, the investor, United Solar, was expected to inject the first tranche of $ 500 million before March of this year. However, a United Solar spokesman revealed that the company could not provide exact timelines yet as they were awaiting the signing of the PPA with the CEB.
Responding to further queries, the spokesman stated that the company was waiting for its legal firm to evaluate the PPA. “The lawyers usually take some time to evaluate. We are hopeful that we will be able to complete the process by April,” the spokesman said.
Responding to a query about financial investment, the company spokesman noted that it would initiate groundwork to commence the project. “We should rehabilitate the Poonakari Tank and therefore, there is a lot of groundwork to be done,” the spokesman noted.
The Sustainable Energy Authority (SEA) issued provisional approval for the project’s implementation to United Solar Energy SL (United Solar) on 17 August 2022.
The Letter of Intent (LOI) was issued by the CEB on 16 August 2023 and Cabinet approval was granted on 11 September 2023.
The company was to bring down the entire investment of $ 1,727 million as 100% FDI within 12 months from the signing of the PPA with the CEB.
When contacted, Power and Energy Ministry Secretary Sulakshana Jayawardena said that the negotiation process was now complete. “There is a certain procedure we need to follow as per the Sri Lanka Electricity Act,” he said, adding that the CEB, as the licensee, had submitted the documents to the PUCSL to get its approval.
“Once the CEB gets approval, it can sign the PPA. The company needs to obtain the energy permit from the SEA and has submitted the documents. Once it gets the permit, it can sign the PPA,” he said.
The Secretary added that the Attorney General had already submitted clarifications to the PUCSL.