By: Staff Writer
September 15, Colombo (LNW): Sri Lanka is preparing to launch a 100 MW solar power plant in Oddamawadi, Batticaloa, by next year, despite allegations of manipulation in its power purchasing agreement with the Ceylon Electricity Board (CEB).
The project, which will follow a Build, Own, and Operate (BOO) model for 20 years, has been criticized by senior engineers for a potentially costly agreement that could result in substantial financial losses for the CEB.
According to a senior official from the Ministry of Power and Energy, the Cabinet-appointed committees considered realistic energy output projections to avoid artificially low tariffs.
The Cabinet approved the project for Solar Forge Batticaloa following an evaluation of expressions of interest (EOIs) solicited in 2021.
Solar Forge obtained land clearances, Environmental Impact Assessment (EIA) approval, and an energy permit between 2022 and 2023, with development set to start in 2024 and operations in 2025.
The Technical Evaluation Committee had recommended a unit price of $0.0666 (6.66 cents) for electricity, but the final power purchase agreement was set at $0.0875 (8.75 cents) per unit, despite an initial proposal of $0.0978 (9.78 cents) per unit. This discrepancy raises concerns as it could lead to an annual loss of Rs. 1.39 billion for the CEB, totaling Rs. 27.85 billion over 20 years.
This solar project is part of a larger government initiative to increase renewable energy capacity. The Cabinet’s decision on 31 August 2021 led to the invitation of EOIs for projects over 50 MW, receiving a total of 533 submissions.
In March 2023, a Standing Cabinet-Appointed Negotiating Committee (SCANC) and Project Committee were established to manage large-scale renewable projects.
Despite navigating this process and securing necessary permits, the project has faced criticism for potentially bypassing competitive bidding, which may have led to higher tariff rates.
CEB engineers argue that global market rates suggest wind power projects should be below $0.05 (5 cents) per unit and solar projects around $0.06 (6 cents) per unit
Nevertheless, the Oddamawadi solar power project advances, illustrating the challenge of expanding renewable energy while maintaining financial sustainability for state utilities like the CEB.
