Monday, February 25, 2013

Norochcholai – Even the Chinese don’t want it! (back)

In Sri Lanka’s desperation for a solution to its power crisis, The Mahinda Rajapakse Government fast forwarded Norochchalai and granted the contract to a Chinese outfit, even though the CEB Engineers opposed the technology as being both obsolete and inefficient in terms of conversion ratios from use to power.

It has now emerged by an opposition legislator, that the contractor was chosen due to the US$400M commissions paid and not for the best interests of Sri Lanka. The first phase coming into operation (300MW) a few years ago, was plagued by breakdowns and fires, and there were claims and counter claims that it was because the CEB engineers were responsible for the sabotage, to prove their initial assertions. The Counter claim being that a second-hand used plant that has exceeded its useful life had been built, further accentuating the initial suspicions. As an added spanner the low quality coal imported to power the plant has also resulted in heavy losses. This whole saga would be funny if not for the cost to the people of Sri Lanka, every man woman and child. In their desperation to show capacity utilization, the CEB is running at 65% thermal today, and only 35% hydro despite being able to run 35:65 merely to falsely show a potential buyer that it is a viable project. How foolish our state salesman wishing for a sales commission are, to think that a suspicious purchaser will not see through this charade!!

The recent proposal to sell it back to the Chinese as it was too expensive to run, and the Govt. unable to pay the interest on the debt to build it, brings out into the open the previous allegations. At US$1300M, the Chinese are baulking as it is overpriced, partly due to the huge commissions that have been earned by local unscrupulous Govt. backers. China will only pay US$700M if they are allowed to do the next phase at an overpriced rate. This will further tie up SL into a future of worse financial commitments. With Sampur now history, with the Indian party pulling out, the Govt. is in a bigger bind not knowing what action to take to fill the power vacuum!!

I believe it is now time to sell it to the highest bidder whoever it may be and pay off some of the loans. The revenue may not be enough for it!! I would not go in for the future phases, as the threat of mercury poisoning, due to the coal power plant, and resulting effluent into the sea, is not worth the price of future life and health cost to the people of Sri Lanka, in their fish consumption from mercury in the fish!

We may have to go back to the drawing board on an alternative solution to the impending power crisis, and Nuclear may be the only option available, unless of course the new technology in harnessing wave power becomes economically feasible in the interim along with more wind-power plants offshore.


Anonymous said...

nuclear is not the answer for Sri Lanka. Lanka should position itself in the world as a green and clean place to do business and enjoy leisure time. this image will set it apart from competitors and neighboring countries, and also make it a nice place to live and work for everyone already resident in the isle. Nuclear, coal, or other dangerous/dirty sources of power should be overlooked in favor of clean alternatives such as biomass, wind, solar, wave, etc.

Anonymous said...

Is the US$1.3bn for 300mw accurate?

That is over 4 dollars per watt.

If this is the real cost, it is now much cheaper to install wind or solar and the running cost after installed is MUCH cheaper than buying coal.

If this 1.3bn is accurate, someone should bring an FR case and invalidate the deal and default on the loans.

This is a MUCH bigger ripoff that the hedging deal.

How on earth is it possible for SL to get so screwed???

Anonymous said...

I am guessing that if the government spent the US$1.3bn and just handed our home solar installations for free that it would beat the economics of this deal.

What an unbelievable ripoff!!!