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Exclusive rights of supplying LNG to SL to be handed over to American company; Energy security in danger

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US firm, New Fortress Energy, was trying to take advantage of the country’s declining economic situation on the pretext of purchasing 40 percent shares of the West Coast Power Plant, Yugadanavi by paying Sri Lanka USD 250 million, but in actual fact the US firm was targeting huge returns, says Ceylon Electricity Board Engineers’ Union President Saumya Kumarawadu.

Responding to queries, Kumarawadu said that the unsolicited offer from New Fortress included clauses that required Sri Lanka to make all LNG purchases through that firm. “In other , it will give the US firm an opportunity to make more than USD 6,000 million in a 10-year period. However, if LNG purchases went through competitive bidding the amount would be much lower,” he said, adding that they were waiting to take up the matter with President Gotabaya Rajapaksa.

The transaction cost under the NFE’s LNG supply contract could be in the range of USD 3000 million for five years and could go up to USD 6000 million for 10 years, given the fact that the country would be forced to buy LNG from NFE for the plants in Kelanitissa premises as well since there was no other alternative option, he said.

Exclusive rights of supplying LNG to Sri Lanka would be given to the American company for five years initially, but the country would be compelled to extend the period and that was a great threat to national energy security, he stressed.

The CEBEU President said they feared that the Colombo-based existing and future power plants could be controlled by the US company through the LNG supply deal, which would greatly hamper the country’s electricity supply availability and reliability. Supply of LNG under the contract might not be limited to the electricity sector but could also be extended to other sectors such as transport and domestic use in the years to come.

Dhammike Wimalaratne, Secretary of CEBEU said: “New Fortress USA only agrees to buy 40% government shares of West Coast Plant by paying Sri Lanka USD 250 million provided Sri Lanka agrees to give them the exclusive rights to supply and operate both LNG FSRU infrastructure and LNG Supply to all the power stations in the country.

He too warned that the national energy security in the country which was enforced through the Country’s National Energy Policy issued in Aug 2019 was in jeopardy.

 It states, “Considering the impact to the country’s energy security, operation of the first terminal and LNG procurement shall be kept under state control”

• CEB has already developed a comprehensive road map for the deployment of LNG for Sri Lanka electricity generation through a detailed feasibility study funded by ADB.

• The intention was to deploy LNG for the Colombo based power plants initially with the actual LNG requirement determined carefully in accordance with CEB’s generation plan as well as forecasted dispatch scenario.

• The tenders were separated for the procurement of LNG terminal, pipeline and LNG supply through a competitive bidding process to secure the optimum economic benefits to the country while ensuring transparency and accountability.

• International Competitive Tenders were called by CEB to procure LNG terminal (FSRU, mooring facility and other infrastructure) and by CPC to construct the pipeline network and the bids received are currently under evaluation.

• Bid documents to procure LNG through a competitive bidding process are being prepared.

Island

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