COLOMBO: Sri Lanka President Mahinda Rajapaksa on Sunday announced that the proposed 500 MW power project, to be set up in collaboration with the NTPC, would be located in Sampur, a town in the east, captured by the Sri Lanka military from the LTTE in September.

Mr. Rajapaksa referred to the new venture in his Independence Day speech in the context of the developmental and infrastructural projects envisaged by his Government in the coming years. "The Norochcholai and Upper Kotmale power plants, the Sampur power plant, the Moragahakanda Maha Samudra, the new airport at Weerawila, expanding the port of Colombo to twice its capacity, new railways and expressways are among these decisions. All this will invariably change the future development profile of Sri Lanka," he said.

The reference to Sampur seems to have caught the Indian side by surprise as no decision has yet been taken on the exact location of the project. As a follow-up to the December agreement between the NTPC, the Ceylon Electricity Board (CEB) and the Sri Lanka Government on the plant, a team of experts from India was here a few days ago. However, they could not complete the job, as they were unable to visit all the potential sites.

As per the agreement, the coal-based thermal plant is to be located in Trincomalee district. The exact site is to be decided by a team of experts including from the NTPC.

The Sri Lanka Government has identified Sampur in Trincomalee district as a possible location though an NTPC team had earlier identified a site near the Indian Oil Corporation oil complex, close to Trincomalee harbour.

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 raising political and environmental objections.

Agreement

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

As a follow-up, a joint venture agreement between the CEB and the NTPC, a power purchase agreement between the joint venture company and the CEB and an agreement between the Board of Investment and the joint venture company and an implementation agreement and coal supply agreement are expected to be signed.

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