General
Sri Lanka to call tenders for 50MW Mannar wind power plant
ECONOMYNEXT – Sri Lanka is still negotiating the power purchase price with India’s Adani group, Energy Minister Kanchana Wijesekera said, amid concerns about the government procurement without tender.
Adani Group had proposed to sell a unit of wind power at 9.7 US cents per kiloWatt hour.
That is about 30 to 31 Sri Lanka rupees at our exchange rates,” Minister Wijesekera said. “During the evaluation it has been reduced further to below 30 rupees. That price also we have not yet agreed, the evaluation is still ongoing.”
“We hope to conclude the evaluation very quickly.”
The price will apply to plants in Mannar and Pooneryn which are coming as a single project.
Minister Wijesekera told parliament a day earlier that a price of 27.65 rupees a unit (8.97 US cents) was being discussed.
Minister Wijesekera said claims made that Adani had proposed to sell power at 50 rupees was not correct.
There have been reports that Adani had proposed to sell power at 14 US cents or 50 rupees at an exchange rate of 360 rupees.
Adani is expected to build 500 MW of wind plants in Sri Lanka’s Mannar and Pooneryn area which have strong winds.
CEB already has a 100 Mw wind plant in Mannar which is giving a plant factor of around 45 percent delivering around 400 Giga Watt hours of energy a year.
Due to high plant factor the levelized cost for a 20-year concession for a 100MW plant was calculated at 4.6 percent in a project offered to investors based on CEB’s already available wind data for Mannar according to published Board of Investment data for investors.
Without a competitive tender, investors could demand higher per unit rates by reducing the plant factor in their proposal, analysts say.
A plant that can deliver 2000 Giga Watt hours (based on Mannar plant factor) has a difference in price of 20 million US dollars a year for each one US cents in the price of a unit, industry analysts say.
Meanwhile Minister Wijesekera said through a feed in tariff system – which is also non-competitive – the Ceylon Electricity Board has to pay 37 to 43 rupees a unit to private solar and wind developers who build plants below 10 Mega Watts at the moment.
When Sri Lanka sought bids from investors in February 2023, local renewable firms had bid over 48 rupees a unit, Minister Wijesekera said.
“They were bids of 60 rupees, sometimes 56 rupees,” he said. “At the time there was instability, the financial situation and questions over the ability of the CEB to pay.”
A renewable project in Siyambalanduwa had resulted in a bid of 8 US cents a unit, he said, which was about 25 to 26 rupees a unit.
“We plan to enter into agreements for projects between 26 to 30 rupees as quickly as possible,” Wijesekera said. “It takes at least two years for a project to connect to the grid.”
Competitive tenders for 10 renewable plans were also planned. (Colombo/Mar8/2024)
