Kerawalapitiya LNG Plant to Run on Diesel

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The two Cabinet approved Liquefied Natural Gas (LNG) Power Plants at Kerawalapitiya, one of which is already nearing construction, would most likely be powered by diesel, which is expensive and the main cause of the present fuel crisis.

According to Ceylon Electricity Board (CEB) officials, due to paucity in the supply of LNG, the LNG power plants would operate on diesel till supplies arrive.

The country is currently witnessing its worst fuel crisis, with thermal power facilities that use diesel accounting for the vast majority of the problems.

However, the Government began to build LNG power plants, stating that while diesel generators have a long history as a power generation workhorses, they are unreliable.

They further claimed that LNG power plants are more efficient, quieter, and cleaner than conventional power plants. Furthermore, natural gas is becoming more popular as a liquefied product that can be delivered safely and conveniently for use in commercial and industrial operations.

The advantages of using LNG for fuel over diesel are that it is cleaner and less polluting to the environment.

Director (Power Generation, Transmission & Distribution Division) K.L.R.C. Wijayasinghe stated that acquiring LNG supplies in the near future is improbable due to the difficulties of the undertaking. As a result, the LNG power plants will initially be powered by diesel.

Even though the LNG power plants are expected to be completed in 2023, he is not optimistic about acquiring LNG supplies by then.

Why are LNG projects always delayed?

Despite the fact that CEB’s Long Term Generation Expansion Plan 2022-2041 stated that the two 300 MW Liquefied Natural Gas (LNG) Power Plants in Kerawalapitiya require immediate action, it was stated that each project takes about five years to begin construction due to delays in the approval process.

These LNG projects, however, will be connected to the national grid using diesel rather than LNG.

Director Wijayasinghe said that, despite the delay, the majority of the work has been completed and that the first 300 MW Liquefied Natural Gas (LNG) Power Plant at Kerawalapitiya will be connected to the National Grid by 2023.

When asked why the Government initiated LNG projects if the CEB does not have LNG supplies, he said that Sri Lanka will need more years to get LNG supplements and in order to start the LNG power plants the diesel will be used.

However, for the supply of LNG to the proposed power plants, several other projects have to be completed.

They are the deployment of floating Storage Regasification (FSRU) and mooring system at Kerawalapitiya, on a Build Own Operate (BOO) basis by CEB. RFP documents are prepared by the CEB with the assistance of the consultants appointed by Asian Development Bank (ADB) and these documents are being reviewed by the Project Committee.

The Ceylon Petroleum Corporation (CPC) is responsible for the construction of a gas pipeline from the FSRU to the power plants. 

However, LNG supply – the CEB will be given a special licence by the Minister of Energy for five years for the supply of LNG for the power plants

First 300MW LNG Power Plant at Kerawalapitiya

Work on the first LNG fired Combined Cycle Power Plant, of 300MW commenced after the Public Utilities Commission of Sri Lanka (PUCSL) approved the Power Purchase Agreement (PPA) between the Ceylon Electricity Board and Lakdhanavi to build the 300MW Kerawalapitiya LNG power plant last month.

The project, initially proposed in 2016, ran into multiple approval delays and controversy over the PPA, which were eventually resolved in February.

The 300 MW combined-cycle dual-fuel LNG power plant will be the first plant to be constructed after the first phase of the Lakvijaya Coal-fired Plant in Norochcholai which was completed almost a decade ago. The plant is to be constructed under the Build, Own, Operate and Transfer (BOOT) system.

The CEB has not been able to commission any new power plants included in their Long-Term Generation plan since 2013, when the Lak Vijaya plant was completed. Two LNG power plants, as well as an extension to the Norochcholai plant, have been in discussions since at least 2016 with multiple rounds of tenders, Court proceedings, Cabinet decisions and Government evaluation reports compiled on them.  

It is expected to commence commercial operations in 2023.

Second 300MW LNG Plant

This power plant is also expected to be constructed in Kerawalapitiya. It is expected to go for the open competitive bidding process for the selection of a suitable contractor to implement the project on an IPP and BOOT model.

The Cabinet has approved the transfer of a 10-acre land in Muthurajawela to the CEB in order to construct a 300 MW LNG Power Plant. The Board of Directors of the Land Development Corporation has approved the transfer of ten acres of land adjacent to the Yugadanavi Power Station at Muthurajawela to the CEB. The CEB Board of Directors has also approved the purchase of the land.

It is expected to commission the project in 2024.

When asked about the LNG Power Plant in Kerawalapitiya with the Government of Japan and the LNG Power Plant in Kerawalapitiya with Indian Investment, Wijayasinghe stated that the project had been temporarily halted despite the fact that Cabinet approval had been obtained and the Cooperation and Memorandum of Understanding for the LNG Power Plant in Kerewalapitiya with the Government of Japan had been signed.

This project has been allocated 100 hectares of land in the Kerawalapitiya area. Activities are underway to secure the land for the CEB on a long-term lease basis. Speaking further about the LNG Power Plant in Kerewalapitiya with Indian Investment, he said that even though EB has commenced discussions with National Thermal Power Corporation Limited, India (NTPC), the commencement of the project is unsure.

International media reported that in order to do this, NTPC will incorporate a joint venture company along with CEB and the two have signed an agreement. In a regulatory filing to the stock exchanges, NTPC said that they have entered into a Joint Venture & Shareholders Agreement with the CEB for incorporation of 50:50 Joint Venture Company for development of 300 MW ±15% LNG power project at Kerawalapitiya.

Composition of the board of NTPC Sri Lanka JV

The board of the joint venture company shall comprise not less than six and not more than 10 Directors. Till such time, as a party holds at least 40 per cent of the share capital, the parties hereto shall continue to remain entitled to appoint an equal number of Nominee I Directors on the Board, subject to a minimum of at least three Directors each, NTPC said. “Equity shares to be issued at face value as per the Joint Venture & Shareholders Agreement and shall be of one class,” the filing said.

Environmental Hazards

However Civil Engineer (Environment Unit), Transmission Design and Environment Branch at CEB, Kelum Athukorala said that these projects are being carried out in Kerawalapitiya’s industrial zone, which was formerly filled in Muthurajawela wetlands. He claimed that no new fillings were performed in order to construct these LNG power units.

He said that the Central Environmental Authority granted all environmental approvals for the LNG Power projects.

When questioned if they were aware that the LNG power plants  are renowned to be environmentally benign, they responded that they will operate with diesel for a period of time until LNG supplies arrive.

By Thameenah Razeek