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Friday June 21st, 2024

Sri Lanka’s Adani wind power price lowered to 8.85 cents: Minister

ECONOMYNEXT – The purchase price of a wind power plant in Mannar, Sri Lanka built by India’s Adani has now been lowered to 8.85 US cents in the latest negotiations, Energy Minister Kanchana Wijesekera said.

“They are now proposing 8.85 US cents or about 26.90 rupees,” Minister Wijesekera told parliament.

The private plant has drawn controversy because it was not coming through competitive bidding and the initial price demanded was said to have been as high at 15.20 US cents a unit.

Power purchase agreements (PPA) which run up to 20 years are among the largest government procurement in the island and dwarfs some capital projects.

Minister Wijesekera said the plant came as a government-to-government deal.  A cabinet appointed negotiation committee was appointed to sort out the price.

Some political analysts refer to such power plants as a ‘geopolitical’ cost.

There are now several plants for which prices are being negotiated without competitive tender.

Minister Wijesekera was responding to a question from opposition leader Sajith Premadasa whether the proper environmental cost has been assessed, given that the plant is in the middle of a migratory bird flyway and what was the price.

A bird corridor was expected to be set aside according to an Environmental Impact Assessment, he said.

However concerns have been raise about high tension wires. It is not clear whether buried cables would be used as called for by some activists.

Minister Wijesekera said the price now compared favourably with other renewable plants.

Sri Lanka was a risky country after a sovereign default, he said.

Due to the regulator earlier not increasing tariffs after the central bank depreciated the currency from time to time in the past after inflationary rate cuts, the CEB also runs losses and is unable to pay IPPs, adding another risk to private developers.

Mannar was one of the areas with the highest wind power potential, Minister Wijesekera said and there were already several other plants in the area.

Hiru Ras Power, which had a 15MW plant in the mainland, after a procurement process had asked for 20.54 rupees a unit. The price was set before macro-economists depreciated the currency.

Ceylex (Pvt) Ltd had sought 33.35 rupees for a 20MW plant. These were for 20 – year contracts.

A 50MW wind plant near the existing CEB plant has now been opened for competitive bidding to close in May 2024.

The Adani plant discussions are still underway, he said.

A solar plant in Siyambalanduwa (tendered in crisis period) was as high as 12 cents on tendering.

But after negotiations it was brought down to 8 US cents after negotiations, he said.

Solar panel prices have also plunged after the global commodity bubble ended and the US started to tighten policy, analysts say.

Minister Wijesekera said compared to wind, solar costs were lower.

The Siyambalanduwa plant comes with ramping, which reduces renewable energy stress on the grid.

Related Windforce to build Sri Lanka’s first ramp-rate controlled solar power plant

It is not clear whether Adani is now offering ramping at 8.85 cents or not.

Adani has meanwhile said it has been unfairly targeted.

Related Indian Adani Group says “vicious campaign” against its Sri Lanka wind project

Investors demanded a price based on the cost, location, plant factor, return on equity and the interest rate, Minister Wijesekera said.

According to data in an Environmental Impact Assessment the Adani 250MW plant would cost 420 million US dollars with 147 million dollars of equity (35 percent) and 273 million (65 percent) in debt

Under so-called ‘feed-in-tariffs’ which are also non-competitive, developers are paid 33.70 rupees per unit for the first 8 years, from 9-15 years 18.90 rupees and from 16 to 20 years 13.80 rupees, he explained.

Energy costs of coal plants are now around 25 rupees.


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  1. Kush Maddumarachchi says:

    Is a unit reffered to in this article a MWh? Sri Lanka should transition to a open market where generators bid for pricing every half hour and work in a more dynamic model. That way cheapest available generation is used first.

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  1. Kush Maddumarachchi says:

    Is a unit reffered to in this article a MWh? Sri Lanka should transition to a open market where generators bid for pricing every half hour and work in a more dynamic model. That way cheapest available generation is used first.

Indian FM meets Sri Lanka political leaders; focuses on committed deals

ECONOMYNEXT – Indian External Affairs Minister (EAM) S. Jaishankar met President Ranil Wickremesinghe and a range of political leaders during his visit to Sri Lanka, focusing on commitments made by Sri Lanka to India, including land and energy pipeline connectivity.

Sri Lanka has committed to renewable energy deals for the Indian Adani group, Trincomalee port development, an investment zone around the port, a bridge between the island nation’s Northern Mannar and South India’s Rameshwaram, a power grid, and an oil and gas pipeline between the two nations.

Though most of the committed projects have been discussed and some already signed, they face delays amid public protests, court cases on environmental concerns, anti-Indian sentiments triggered by high prices of renewable projects, local politicians as well as perceived Chinese influence, analysts say.

India has been pushing Sri Lanka to fast-track these deals under Prime Minister Narendra Modi.Jaishankar’s visit also comes ahead of Sri Lanka’s presidential polls later this year.

Jaishankar met President Wickremesinghe in a one-on-one meeting, Prime Minister Dinesh Gunawardena, and Foreign Minister Ali Sabry before delegation-level talks with Ports, Shipping and Aviation Minister Nimal Siripala de Silva, Agriculture and Plantation Industries Minister Mahinda Amaraweera, and Power and Energy Minister Kanchana Wijesekera.

“Appreciated the progress made on various bilateral projects and initiatives. Under President Ranil Wickremesinghe’s guidance, we discussed the way forward for India-Sri Lanka cooperation, especially in power, energy, connectivity, port infrastructure, aviation, digital, health, food security, education, and tourism sectors,” Jaishankar said on his official Twitter platform.

He also met former President Mahinda Rajapaksa, opposition leader Sajith Premadasa, and leaders of various political parties from the North, East, and the upcountry region.

“Interaction of EAM with the leadership of the Government of Sri Lanka provided an opportunity to review and accelerate progress in the multifaceted India-Sri Lanka partnership,” the Indian External Affairs Ministry said in a statement.

One of the key focus areas of discussion was the Vision Document adopted by President Wickremesinghe and Prime Minister Modi during the Sri Lankan leader’s visit to India in July 2023.

“Discussions added momentum to the ongoing projects as well as initiatives for promoting connectivity in all its dimensions, particularly in domains of energy, physical infrastructure as well as economic and people-to-people ties.”

Jaishankar also met leaders of Sri Lanka’s upcountry Tamils, who originally came from India as plantation workers. He discussed development and devolution of power with an eight-member delegation of Tamil leaders from the Northern and Eastern provinces, including Shanakiyan Rasamanikkam and M. A. Sumanthiran.

India helped Sri Lanka with financial and humanitarian aid when the island nation faced an unprecedented economic crisis amid delays by the International Monetary Fund loan to rescue Sri Lanka.

“Following Sri Lanka’s economic recovery and stabilization, forging deeper long-term economic cooperation was underlined as a priority for sustainable and equitable growth of Sri Lanka, and mutual prosperity in the Indian Ocean Region,” the Indian External Affairs Ministry said.

Though the Sri Lankan government has claimed that Jaishankar’s visit was a precursor to Indian Prime Minister’s visit, the Indian External Affairs Ministry did not mention anything about a possible Modi visit.

This visit is Jaishankar’s first bilateral visit after the formation of the new government.

The Adani wind power project in the Northern district of Mannar has seen some public protests over environmental concerns after some experts said the project has failed to conduct a proper Environmental Impact Assessment (EIA). Critics also protest against its transparency.

President Wickremesinghe, opposition leader Premadasa, and Marxist Janatha Vimukthi Peramuna (JVP) leader Anura Kumara Dissanayaka are expected to contest in the election to choose the island nation’s 8th leader.

Sri Lankan leaders have been under pressure from India in the past two decades amid increasing Chinese influence in the island nation, seen as a security threat to India, analysts say.

The docking of a Chinese nuclear submarine in 2014 led to a dramatic government change in the 2015 presidential poll with the ousting of former leader Mahinda Rajapaksa, who later accused India of orchestrating his defeat.

Rajapaksa’s brother Gotabaya in 2021 unilaterally canceled a key port terminal project given to India’s Adani group after promising Jaishankar to sign the deal.

Gotabaya Rajapaksa was later forced to flee the country in 2022 after mass protests due to his economic policies. (Colombo/June 21/2024)

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Sri Lanka car permit tax losses Rs14bn in two years of partial disclosure

ECONOMYNEXT – Sri Lanka has lost 14.3 billion rupees in taxes from car permits given to public servants, including doctors, military officers, central bankers, finance ministry and tax officials, in 2019 and 2020 information disclosed by the finance ministry shows.

Inclusive of some 2021 tax losses when imports were banned for the rest of the year, 14.4 billion rupees of foregone revenue from a waived luxury tax is shown.

The list only shows waivers of a so-called ‘luxury tax’ imposed on larger vehicles above a certain value and size.

The list does not show other vehicles imported under car permits such as double cabs or cars below a certain size.

The list also does not seem to include tax free cars imported by politicians.

In 2019, Sri Lanka has lost 8.3 billion rupees from the luxury tax on car permits and in 2019 the loss 5.92 billion rupees.

In 2021 when car imports were stopped as the central bank started printing money to cut rates and target ‘potential output’ only 85.6 million rupees were lost.

Among the biggest tax waivers of over 10 million rupees went to some doctors and military officers. Doctors were among the biggest users of tax slashed car permits in the list.

Sri Lanka at one time did not allow cars imported by state workers to be transferred for many years.

But reportedly after Customs raided a finance company involving a fleet of vehicles, the rule was relaxed by the then President.

Among the largest tax waivers listed were given to Rolls Royce and Maclaren assigned to Melwire Rolling (Pvt) Ltd.

The 45.6 million rupee Rolls Royce was given a 42.1 million rupee tax waiver.

The 41.46 million McLaren was given a 37.9 million tax waiver.

There were also a large number of Audi A5 and Q2 vehicles listed at prices over 80 million rupee. It is not clear whether the disclosure is an error. The market value of the A5 and Q2 are much lower.

Up to end 2023, 138 cars imported under a migrant worker remittance scheme was listed to lose 436 million rupees in luxury taxes.
The total for the three years was listed at 14.86 billion rupees, involving 2,034 cars in 2019 and 1,470 cars in 2020.

It is not known how much the total tax losses or total vehicle imported through ‘car permits’ is. (Colombo/June20/2024)

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Construction of Sampur solar power plant to begin mid-July

ECONOMYNEXT – Joint energy projects between India and Sri Lanka, including the Sampur solar power plant due to begin next month, took centre stage during bilateral discussions between president Ranil Wickremesinghe and visiting Indian External Affairs Minister S Jaishankar on Thursday.

Wickremesinghe and Jaishankar discussed initiatives aimed at enhancing energy connectivity and developing the renewable energy sector, a statement by his media division said.

“Significant attention was given to plans for an LNG supply, a proposed petroleum pipeline linking the two countries, and advancing oil and gas exploration projects. Additionally, it was announced that construction of the Sampur Solar Power Plant is set to commence in July 2024.”

The visit comes amid delays in key Indian projects including land, oil and gas pipe, and grid connectivity deals, Adani’s wind power plant deals which are facing a legal battle, and port and investment zone projects in the Eastern port district of Trincomalee.

Indian supported projects for developing Trincomalee and expanding the Kankasanthurai port, the ongoing development of Jaffna Airport and Colombo Airport, and the expediting the unique digital identity card project were discussed.

The efficiency of projects supported by the Indian government aimed at bolstering Sri Lanka’s liquid milk industry and fertilizer production, were also examined.

Sri Lankan leaders have been under pressure from India in the past two decades amid increasing Chinese influence in the island nation as the move is seen as a security threat to India, analysts say. (Colombo/Jun20/2024)

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