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.

The Sri Lankan Government is getting set to privatize the national carrier, Sri Lankan Airlines in a bid to restructure the debt-ridden airline, faced with unprecedented economic turmoil on a national scale, can no longer afford to fund the carrier.

Sri Lankan Airlines CEO Richard Nuttall said that Sri Lanka benefited from pent-up travel demand despite global headwinds and is open to privatization

“The airline is also carrying quite a lot of debt .So if privatization provides some funding that allows us to reduce some of that debt, that also helps our ongoing operations and reduces the debt burden and makes future growth a much more realistic option,” he said.

Despite privatization efforts, Sri Lankan Airlines Chairman Ashok Pathirage revealed plans to lease up to 11 aircraft of which the lease contracts are expiring over the next year.

The Cabinet of Ministers has approved to replace of around 9-11 aircraft that are going out as per the lease agreement, he claimed.

“Based on the age of the aircraft, cost and availability, we have to analyse carefully what is good for the airline and for the country,” he explained.

As per Pathirage, lease contracts of around four aircraft are due to expire early next year from a fleet of 24 total aircraft. SriLankan Airlines had 27 aircraft before the COVID-pandemic, but it has now reduced to 24.

A decision on whether to restructure subsidiaries of SriLankan Airlines or privatize the entire entity as a single entity would be made soon by a committee, Aviation Minister Nimal Siripala de Silva said.

SriLankan Airlines official had been summoned to the committee earlier this week. The Ministry of Aviation first proposed that 49 percent of the catering unit, and 49 percent of ground-handling – which had given over to SriLankan – be sold to settle its debt. Then 49 percent of SriLankan be sold.

“There are two schools of thought,” Minister de Silva said. “At the cabinet the matter was discussed and his Excellency the President has referred the matter to the Treasury.”

Catering and ground-handling are captive profitable businesses which may represent easy money for those who buy the firms, according to some observers.

Ground-handling, which is a separate business from airline operations, however also represents easy money for the airline and can potentially bring tax revenues to the state if spun off and taxed appropriately.

Meanwhile Minister de Silva said the Chairman and Board was summoned before a Treasury Committee which is looking in to the matter.

“And they are discussing what is the best way out,” he said. “We will be guided not by a political decision but by a professional decision that will be given. So I think in one or two weeks they will consider this and given us a professional opinion.”

Sri Lankan Airlines has about a billion US dollars of debt including a sovereign guaranteed debt, and arrears to state-run Ceylon Petroleum Corporation on fuel bought before 2019.