By:Staff Writer
August 14, Colombo (LNW): Major power purchase agreement with the Ceylon Electricity Board (CEB) and Sahasdhanavi Limited for a 350MW dual-fuel power plant has been facing serious allegations of using outdated economic data to mislead the Cabinet of Ministers into approving the agreement.
Sahasdhanavi Limited, a fully owned subsidiary of LTL Holdings Ltd., signed a 25-year Power Purchase Agreement (PPA) with the CEB to construct and operate a combined cycle power plant at Kerawalapitiya. The project, to be based on Regasified Liquefied Natural Gas (R-LNG), was promoted as an economic means of strengthening the national grid.
However, energy sector analysts and the Electricity Consumers’ Association (ECA) claim that the revised Cabinet Memorandum submitted in January 2025 used outdated pricing data—including diesel, LNG, and the dollar exchange rate—to justify the project.
The company has informed the Cabinet that while the Sahas Danavi power plant is intended to operate as an LNG-powered facility, it would take at least three years to build the necessary LNG terminal.
Until then, the plant will have to run on diesel. Cabinet documents note that the cost per unit using LNG is Rs. 20, but current diesel-based generation costs Rs. 72.11 per unit, as per the Public Utilities Commission. With a capacity of 350 MW, operating the plant on diesel for a year would cost Rs. 111.3 billion, incurring a Rs. 73 billion annual loss to the government
“This is a deliberate attempt to hoodwink the Cabinet and the public,” said former energy minister Udaya Gammanpila. It’s clear the country is being pushed into a high-cost energy trap under the guise of cleaner fuel,”he added
The Public Utilities Commission of Sri Lanka (PUCSL) has also reportedly raised concerns over the outdated assumptions, warning of significant financial risk to the government and consumers.
.Under the BOOT (Build-Own-Operate-Transfer) model, Sahasdhanavi will operate the plant for 25 years, after which it will be transferred to the CEB. The project is scheduled to begin open-cycle operation within 30 months, and full combined-cycle mode by 42 months.
Civil society groups are calling for the Cabinet to review the agreement, reassess cost assumptions, and investigate potential conflicts. As LNG infrastructure is years away, there are fears the project will use costly diesel, weighing down the Treasury and increasing consumer tariffs.
As Sri Lanka navigates its way towards economic recovery, this deal is fast becoming a litmus test for good governance, accountability, and transparency in the energy sector.
