Sunday, February 5, 2023

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LNG power project deal with the New Fortress Energy comes to the fore

The controversial US $ 250 million Sri Lanka LNG power project deal with the US energy company the New Fortress Energy Inc.(NFE) has come in to the focus once again following the government’s urgency to review the project.

The possibility of resume the LNG project under the much delayed deal with NFE was discussed at a special meeting held under the patronage of President Ranil Wickremesinghe and Treasury Secretary Mahinda Siriwardana recently official sources said.

NFE and The Government of Sri Lanka executed a definitive agreement in September 2021 whereby NFE will invest in energy infrastructure in Sri Lanka and develop a new LNG Terminal off the coast of Colombo.

NFE said will have gas supply rights to the Kerawalapitya Power Complex and will initially provide GOSL an estimated 1.2 million gallons per day of LNG (~ 35,000 MMBtu) to supply both the currently operational 310 MW Yugadanavi Power Plant and an additional 350 MW (the Sobadanavi Power Plant) which is expected to commence operations in 2023.

The definitive agreement is subject to customary conditions, the statement said. “We are pleased that the Court has dismissed these petitions, as NFE can now proceed with our plans to deliver cleaner fuels and more reliable, affordable power to Sri Lanka,” said Wes Edens, Chairman and CEO of New Fortress Energy.

New Fortress Energy Inc. is a global energy infrastructure company founded to help accelerate the world’s transition to clean energy.

The company funds, builds and operates natural gas infrastructure and logistics to rapidly deliver fully integrated, turnkey energy solutions that enable economic growth, enhance environmental stewardship and transform local industries and communities

In September 2021, the Cabinet approved the share transfer of 300 MW of the Yugadanavi Power Plant to NFE. Accordingly, the Finance Ministry has agreed to transfer a total of 40% shares of the power plant owned by the Treasury to NFE together with the rights to supply natural gas to Sri Lanka.

In May, it was revealed that the information on the minimum required LNG had been sought from the Ceylon Electricity Board (CEB) to support the now defunct NFE committee to conclude the negotiations of the proposed Gas Supply Agreement and amendments to the existing project agreements of West Coast Power Ltd. with the CEB.

The information had been sought in a backdrop where the Government had officially announced its Renewable Energy (RE) target of 70% by 2030.

It was further revealed that the Government was trying to reach a ‘take or pay’ agreement with the US company by deciding the minimum required LNG in the next 10 years.

According to a senior treasury official the two committees appointed to evaluate the proposals were working on it and that there were several agreements to be finalized with the CEB.

However, no response had been received from those committees, he said, adding that it was the Department of Public Enterprises that was handling the matter.

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