Chinese technical team due here soon: Norochcholai project to launch end of this year

by Anjana Samarasinghe

'A Chinese technical team is due here next month ahead of the commencement of the Norochcholai Coal Power Project at the end of the year,' said Power and Energy Minster Susil Premajayantha.

He said that China has pledged to increase the funding they will provide for the project. The Minister was speaking at the launching of Sustainable Guarantee Facility (SGF) to provide low cost funds to promote commercial energy efficiency projects in Sri Lanka recently.

He said Kotmale project and first phase of the Norochcholai Coal Power Project will be concluded within the next four to six years and the ministry will also encourage more private sector involvement in mini-hydro power projects in order to meet the increasing power demand.

"Each year the electricity demand increases by 8 to 10 percent. At present, Lanka depends on 65% of diesel electricity and balance is from hydro-power electricity.

The disparity between the average cost and the selling price of a unit has caused the Ceylon Electricity Board (CEB) to lose a colossal sum of money everyday," the Minister said.

The Minister also said that government will reform the CEB without privatising. The Ministry was able to appoint a committee comprising trade union members for this purpose.

The committee will submit its final report within few days, he said.

SGF will help industrialists to obtain concessional loans from the banks under a guarantee offered by the Energy Conservation Fund (ECF). This has been designed through technical assistance offered by the United States Agency for International Development (USAID). ECF plans an initial investment of Rs. 50 million to finance the fund, which has given approval.

SGF provides repayment guarantee to participating financial institutes to overcome barriers of energy efficiency project financing. Guarantee is limited to 75% of the total loan amount covering both technical and commercial risk of loan.

SGF's main objectives are to accelerate the private sector energy efficiency activities and create sustainable financial mechanism for energy efficiency investment. This will also help to overcome barriers for funding projects such as collateral and high interest rates.