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COLOMBO: The National Thermal Power Corporation (NTPC), Ceylon Electricity Board (CEB) and Sri Lanka Government on Friday signed an agreement for setting up of a 500 MW coal-based thermal plant in Trincomalee district.

The exact site for the location of the plant is to be decided by a team of experts including from the NTPC. The Sri Lanka Government has identified Sampoor, the town it captured in September from the Tamil Tigers, as a possible location though an NTPC team had earlier identified a site near the Indian Oil Corporation (IOC) oil complex, close to Trincomalee harbour, as the ideal location for the plant.

The move by the Sri Lanka Government to shift the proposed power plant to Sampur has triggered a controversy with the pro-LTTE Tamil National Alliance (TNA) raising political and environmental objections. The Indian delegation that signed the agreement was at pains to emphasise that New Delhi would not walk into unnecessary problems and would be strictly guided by techno-economic and environmental feasibility studies.

The memorandum of agreement was signed between NTPC (a Government of India undertaking), CEB and the Government of Sri Lanka at the Presidential Secretariat. Subject to finalisation of the plant location in the next two to three months, the power plant is expected to commence operations from 2011.

The agreement was signed by T. Sankarlingam, Chairman and Managing Director, NTPC, MMC Ferdinando, Secretary, Power, and Perera, Chairman, CEB. Alok Prasad, High Commissioner, R. V. Sahi, Secretary (Power), Government of India, and other officials of NTPC and the Indian High Commission were also present.

The project, involving an investment of $500 million, would be implemented by a joint venture company to be formed with a stake of 50 per cent each by NTPC and CEB, and would be funded with a debt equity ratio of 70:30.

As a follow up to Friday's MoA, in January next year, joint venture agreement between CEB and NTPC, a power purchase agreement between the joint venture company and the CEB, and an agreement between BOI and the JV company and an implementation agreement and coal supply agreement are expected to be signed. The visiting Indian delegation and High Commissioner of India also called on President Mahinda Rajapaksa.

The Indian Power Secretary told The Hindu that the proposed power plant would substantially boost economic relations between India and Sri Lanka. He said for Sri Lanka the project was one of the largest ever infrastructure investment and would augment its power capacity by 20 per cent.

Commenting on the development TamilNet said it was taking place amid protests from Tamil parliamentarians that the coal-fired power plant project in Sampoor has a hidden political agenda to permanently evict Tamils from the Muttur east region.

It said around 30,000 Tamils were forced to leave the southern Trincomalee region into Vaharai when Sri Lanka military launched a major offensive and captured Sampoor from the Liberation Tigers of Tamil Eelam in September.

Tamil National Alliance (TNA) parliamentarian from Trincomalee, K. Thurairetnasingham, in a media release, slammed the Government of Sri Lanka for rushing with the project without consulting the Tamil representatives, while thousands of Tamils are forced to flee the region. The power plant would have a permanent adverse impact on the future livelihood of Tamils in the region, he said.

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