Power and Energy Ministry clarification:

Norochcholai: No shady deal

The Power and Energy Ministry n response to certain media reports have clarified how the Government entered into an agreement with China National Machinery and Equipment Import and Export Corporation (CMEL) for the construction of the Norochcholai power plant.

China National Machinery and Equipment Import and Export Corporation (CMEC) is a 100 percent Government owned Chinese company nominated by the Chinese Government as technically and financially competent, Engineering, Procurement and construction contractor (EPC contractor) with the financial assistance the Chinese Government to undertake the construction of Norochcholai power plant.

Accordingly having evaluated the technical proposal and the commercial proposal of the said Chinese company by a committee of senior engineers of the Ceylon Electricity Board having negotiated the price proposal of the said Chinese company by a committee of senior officials of the government, awarded the Engineering Procurement and Construction contract (EPC) to the said company with the specific Cabinet approval on March 15, 2006.

A commercial contract for this was executed by the Ceylon Electricity Board and the said company on March 15, 2006, for a total contract sum of US $ 455 mn. The said sum includes the procurement of equipment and materials required for the construction of the coal power plant, construction of the jetty and the 220 kv transmission line of 118 km from the plant site of Norochcholai to Veyangoda including grid substations.

The said commercial contract was executed by the said EPC contractor Ms CMEC and the CEB on March 15, 2006 in the presence of the President of Democratic Socialist Republic of Sri Lanka and the head of the State Council of the People’s Republic of China.

M/s Electrowatt Econo Limited of Switzerland who did the feasibility study for the above project has been employed by the Government of Sri Lanka as an ‘Independent Engineer’ to supervise the construction work of the above project and to monitor the progress and to certify the quality of the works including the quality of the equipment and material brought to the country by the said EPC contractor.

Therefore all precautionary measures have been in place for the government of Sri Lanka and the CEB to satisfy that the quality of work including the equipment and materials are in complying with the technical specifications and the technical standard given in the project report and the commercial contract.

Loan agreement between the two governments Sri Lanka and China was finalised after the execution of the commercial contract and construction works of the project commenced on July 23, 2007 after the loan effectiveness was declared by the government of China.

The design life of this plant is 30 years, which means that with continued and correct maintenance, the plant can be operated properly over this time and even beyond. Moreover the said EPC contractor has an extended warranty of five years for the corrosion protection of all metal surfaces starting from the time of taking over.

In order to enforce this extended warranty, a retention will be withheld from payments until expiration of the extended warranty period. This gives the CEB sufficient certainty that after five years from taking over the plant is still in good condition with respect to corrosion.

It is in that context that the accusation ‘on low quality metal’ is totally an unfounded and baseless statement that has with the ulterior motive to defame this Ministry, CEB and Basil Rajapaksa.

As this project is implemented on a Government to Government basis having provided the required finances by the Chinese Government and having nominated a Chinese Government owned company as an EPC contractor by the Chinese Government. It is highly unreasonable for anybody to level allegations to Basil Rajapaksa who has no connection whatsoever with this project.

This accusation may have to be taken as politically motivated and most likely being a part of the ongoing election campaign with malicious intention and ulterior objective.

Finally this ministry wishes to reiterate to the public that the CEB on behalf of the Government of Sri Lanka has taken all measures to ensure that the said project is implemented in accordance with the technical specification and the technical standards agreed between the parties and that it will take every measure to prevent such unwarranted things happening to the project.