• LNG plant to be completed by end of this year
• Plant to run on diesel without storage or pipeline 

The delay in awarding the contract for setting up a Floating Storage Regasification Unit (FSRU) and Liquefied Natural Gas (LNG) pipeline will cause a billion-rupee loss to the country annually as the State-run Ceylon Electricity Board (CEB) will have to depend on diesel to ensure an uninterrupted power supply to the country, The Sunday Morning learns.

It is reliably learnt that Sri Lanka is currently spending over Rs. 1 billion per day to run thermal oil (diesel) power plants.

As per CEB statistics as of Friday (26), the thermal oil contribution to the national grid was 18.5% of the total energy requirement and the coal contribution was 35.3%. The total hydropower contribution was 17.5%.

As claimed by a senior official attached to the CEB, the LNG power plant which is currently under construction in Kerawalapitiya will be completed by the end of this year. However, since there is no LNG supply, the power plant will have to run on costly diesel power.

As per the official, by around February when the board made calculations, the country was supposed to save nearly Rs. 50 billion per year with the commencement of the Kerawalapitiya LNG power plant. 

Furthermore, since LNG prices have dropped drastically in the international market, the official predicted that the amount that would be saved by the country would increase parallel to LNG prices.

He went on to say that there was an already-finalised tender waiting to go before the Cabinet for approval and to award the setting-up of the FSRU and the LNG pipeline system, but that there had been an unexplained delay, mainly due to political interference.

Another senior official attached to the Ministry of Power and Energy told The Sunday Morning that the ministry was awaiting communication from interested parties.

Meanwhile, a senior engineer attached to the CEB, who wished to remain anonymous, told The Sunday Morning that the tender could be awarded as soon as concurrence had been received from the Attorney General’s Department for the already-finalised tender for the setting-up of an FSRU and the pipeline.

The CEB had earlier floated a tender for a Build-Operate-Own (BOO) FSRU which will be financed by throughput charges and LNG supplied separately by competitive tenders, similar to how coal and fuel are presently supplied.

However the tender had not proceeded after a controversial unsolicited deal with US-based New Fortress Energy was made public.

The New Fortress proposal and at least two other proposals had involved controversial take-or-pay energy deals, compelling the CEB to buy LNG from the terminal owner or pay penalties, which was opposed by unions.