Lakvijaya Power Plant
|This article is part of the CoalSwarm coverage of Sri Lanka and coal|
The Lakvijaya Power Plant (Lakjawiya = "Victorious Lanka" in Sinhalese) which is also known as the Norocholai Power Station or the Puttalam Coal Plant after its location, is a 900-megawatt (MW) coal-fired power station in the Puttalam District of the Northwestern Province in Sri Lanka. It is Sri Lanka's first coal power plant. The plant comprises two 300 MW units with a third 300 MW unit commissioned in 2014.
- 1 Location
- 2 Background
- 3 Accidents and shutdowns
- 4 Call for inquiry on plant tender
- 5 Controversy over cost and origins of the deal
- 6 Maintenance agreement with CMEC
- 7 Coal supplies and barges
- 8 Project financing
- 9 Project Details
- 10 Articles and resources
The map below shows the location of the the plant.
The plant was reportedly first proposed to be commissioned, according to the Ministry of Power and Energy, "in late 1980’s, but due to pressure from various organizations was kept on hold." However, in 2005 - while the civil war was still raging - the President Mahinda Rajapaksha decided to press ahead with the project and entered into a contract for the project in 2006.
In March 3, 2007 the Sri Lankan government took over 300 acres at Narakkaliya and Paniadiya, displacing 68 families. While the displaced families were given houses in the Daluwa Manpuriya Nirmalapura housing scheme, they complained the new houses were poorly built. During its pre-development stages, a number of protests were launched by residents living at the project site, claiming that they were deceived by the government.
The construction work for the 300 MW coal fired thermal power plant with infrastructure for a 900 MW power plant had started in 2006 amid heavy resistance from the Catholic community of the area. The Chinese government thorough the Exim Bank of China has provided US$455 million for the Lakvijaya plant. The delivery of the first shipment of 65,500 tonnes of coal at a cost of US$7 million from Indonesia was expected in the first week of November 2010.
With the end of the civil war in May 2009, the development of the power station was accelerated to cater for increased electricity demand and to reduce the outflow of foreign exchange on oil imports for power generation. Construction of the Unit 2 (300 MW) was officially inaugurated by the President in March 2010.
Accidents and shutdowns
The plant has been beset with problems and shutdowns including:
- In October 2010, a fire broke out at the plant. According to Ceylon Electricity Board officials, the fire erupted due to the clogging of a chimney that emits waste from the combustion of coal. The fire will not interrupt construction. The Ministry of Power and Energy commented that damages to the facility would be borne by the constructors, and not the government or the developers.
- On July 22, 2012 the power station ceased operations due to a leak in one of the thousands of tubes carrying water between the boiler. The country was put into controlled regional power outages to cope with the missing generation. Reuters reported that with the failure of the first unit - the fifth since it had been commissioned, that the CEB had determined that power cuts would be required for three hours a day until July 28. "The only alternative to resolve the current situation is to go for power cuts," CEB said in a statement.
- The first 300 MW unit was commissioned on March 22, 2011.
- On August 8, 2012 a tripping of the powerline from Lakvijaya caused the power station to cease operations.
- On January 29, 2013 the power station exceeded its designed levels of 300MW, causing a complete shutdown. The plant was reactivated a day later.
- On December 13, 2013 a steam leak was detected. “Although the plant could still function with the defect we concluded that it would be dangerous to the plant and therefore decided to halt operations. However we later detected that there was also another problem in the condenser. The issue is that the steam leakage cannot be detected without the specialised equipment which is not available in Sri Lanka and the Chinese said that they would take over a month to get the required equipment from China," said CEB DGM Business and Operational Strategy and spokesman Senajith Dasanayake. Facing a potentially long shutdown, the CEB call for bids from both the Chinese company and Indian firms. "Since the Indians quoted the lowest we decided to seek the help of the Indians. The DGM of Norochcholai informed me that the Chinese were attending to the problem and the Indian intervention has been temporarily put on hold,” he said.
- The adviser to the National Electricity Consumer Movement, Bandula Chandrasekera, said that a consequence of the problems with the coal-fired plant was that the CEB's operating losses were higher than planned.
- On January 12 2014 the Sunday Star Times reported that since the start of the year the plant had been shut down for six days. Just a day after being restarted after its latest shutdown, the newspaper reported that a leak from the repaired condenser had been detected and the plant shut down for the 26th time. It also reported that in the previous 24 days it had been shut down on four occasions. With the Ceylon Electricity Board having to spend US$3.3 million a day to buy alternative diesel power during shutdowns, the financial losses from the Lakwijaya Coal Power Plant continue to mount. The newspaper reported that in the first six months of 2013 the plant had been closed for 32 days and in the second halef of the year for between 90 and 100 days.
- The Sunday Star Times editorialised that the problems with Unit 1 at the plant were wide ranging including "mishaps from valve repairs and pipe damages to coal mill fires, abnormal fluctuation in turbine lube oil pressure, a hydrogen seal oil leak, debris filter damages, high temperature in cooling water pumps and a failure of both transmission lines."
- Compounding these problems, the editorial stated, was "the fact that all instruction manuals for the plant –including its many, many auxiliaries — are in Chinese is “a big problem”. Even machine components are labelled in Chinese. Translations are ongoing ‘on the run’, so to say. What government in the world agrees to a design-build-and-transfer power plant without an assurance that basic instruction manuals are in a language that could be understood by the party expected to run it? It is difficult enough to operate a Chinese mobile phone with directions only in that language. The scale of Lakvijaya is a thousand times bigger," the paper editorialised. demonstrate the need for right to information laws.
- On January 23, 2014 the Minister of Power and Energy Pavithra Wanniarachchi told parliament that that the power station had been offline for 271 days of of 1,086 days since commissioning in 2011.
- In late August 2014, problems emerged once again. On August 27 an CEB spokesman said that an "error in instrumentation" had sent a wrong signal to the protection system on Unit 1, shutting the unit down automatically. Unit 3, which was being test run at the time ahead of the target commissioning date of September 16, was also shut down. At the same time the generator in Unit 2 had also broken down due to a problem with its turbine blades but - as of the end of August - were scheduled to take another ten to fifteen day to repair. Spokesman Senajith Dassanayake said that the filters on the water intake had been clogged by jellyfish. "Around 30-40 divers have to be used to remove these creatures from the filters. We were hoping to remove these creatures from the filters of Unit 1, but unfortunately, seas these days are extremely rough in the area and the divers haven’t been able to go in thus far," he said.
- In December 2015 it was reported that all three coal plants in the facility were offline due to multiple plant failures.
Call for inquiry on plant tender
In December 2013 the National Electricity Consumers Movement, unions and opposition political parties called for a Parliamentary Select Committee (PSC) to investigate into the recurrent breakdowns with the first phase of the Norochcholai coal power plant. It was reported that since the plant was commissioned in December 2011 the plant, which was built by China Machinery and Engineering Corporation (CMEC) has experienced more than 20 breakdowns. As a result the Ceylon Electricity Board (CEB) has incurred significant financial loss.
The General Secretary of the Lanka Electricity Board Employees’ Union, Ranjan Jayalal, said that some CEB "officials went to China with their families thanks to technical evaluations and other similar operations. It is clear that they have not done their job. We urge the government to start an inquiry. As much as the Chinese company is responsible for the breakdowns in the Norochcholai coal power plant, those officials too should take the blame for the problem.”
Parliamentarian Ajith P Perera said that it was important that a Parliamentary Select Committee into the construction of the first unit be held before work proceeded further on stage two of the plant. "The power plant has been built on an ‘unsolicited tender’, without taking any other competitive tender into consideration. The same contractor has handled every aspect of the construction without getting any other party involved in the process. Also, there is a serious question about the cost involving the construction. This is just the tip of the iceberg. Therefore, the only option is to appoint a Parliamentary Select Committee to look into the problem,” he told the Sunday Leader.
Bandula Chandrasekara, an Advisor to the National Electricity Consumers Movement, told The Sunday Leader that the project had become a financial nightmare for the CEB. "The cost of one electricity unit at the Norochcholai plant is making a debilitating effect on the CEB as it is in stark contrast with the ‘Cost Generation Plan’ of the CEB. The plan was made at the beginning of the year. The reason for the difference is that the CEB has not taken the foreign exchange variation and coal price fluctuations in the world market into consideration, when making the initial plan. Therefore, in the Cost Generation Plan, the production cost of a unit stands at a lower rate than the actual cost. This has now become a serious concern for the CEB,” he added.
Controversy over cost and origins of the deal
In November 2013 with controversy over the reliability raging in the Sri Lankan community and media, the Vice President of China Machinery Engineering Corporation (CMEC), Li Chaoyang, wrote an extraordinary letter to the Power and Energy Ministry Secretary, M.M.C. Ferdinando, defending the company and rejecting accusations that a significant commission had been factored into the cost of what turned out to be a defective plant.
"Recently, it is reported by local media that the Phase I Puttalam Coal Power Project was a corrupted (sic) project with high commission contained in the contract price and CMEC was chosen as the contactor due to the requirement of commission payment could be met (sic), which led to poor quality of project and the Sri Lankan government has compelled to sell the power plant, etc,” Mr. Li wrote.
“These reports are completely baseless, severely distorted and totally irresponsible and nonsense,” he asserts. “It has ruthlessly insulted all of the staff from all involved parties who have devoted their hearts and exerted their utmost efforts to this project for so many years, and it is just a deliberate sabotage and attempt to destructing of long-history friendship (sic) between the two countries,” he wrote.
The Sunday Times reported that it had been provided with a copy of a June 10, 2005 email which alleged that commission payments were "discussed between CMEC’s Norochcholai Project Manager Ning Li and businessman Eshana de Silva, who was the commission agent for the project. In it, Mr. Ning instructs Mr. de Silva to arrange for him and some colleagues to apply for multiple entry visas to Sri Lanka. He then writes, “According to my calculation, your comm. is $25.4Mn, including: A. $13.2Mn and B. $12.2Mn. Please check and contact me if any questions.” The contract for the power station was signed in August 2005 and witnessed by the then Sri Lankan President Chandrika Kumaratunga and former Chinese President Hu Jintao.
Maintenance agreement with CMEC
In February 2014 Ceylon Electricity Board Chairman (CEB) Chairman W.B. Ganegala stated that "we are going to sign a Memorandum of Understanding for technical Corporation with the CMEC on technologies, to ensure technical efficiency of the Power Plant, which is by all means not "handing over" of its functions to anyone."
In September 2014 it was announced that the Ministry of Power and Energy had negotiated two Memorandum of Understandings (MOUs) between with China to "provide technical co-operation for the stable, efficient functioning of the Norochcholai Coal Power Project". The government stated that the first MOU was between the governments of Sri Lanka and China to be signed on September 16 at the commissioning of the final unit at the power station and a second MOU "to be signed between CEB and China Machinery Engineering Corporation."
The Sunday Times reported that it had obtained a copy of the government to government MOU. The MOU included provisions for:
- "Providing operation and maintenance advisory service for the Project";
- "Assisting CEB to plan to purchase its spare parts requirements on a long term basis, facilitating CEB to procure genuine spare parts from original manufacturers at competitive prices while guaranteeing cost effectiveness, quality and technical standards to ensure effective operation and maintenance of the Project in a timely manner";
- "Providing effective advisory services for annual inspection and overhaul of the project, and the related machinery including advisory services on effective remedial measures to be taken to rectify the shortcomings and lapses, particularly with regard to machinery of the Unit One of the project"; and
- "Providing training to CEB personnel with the intention of improving their technical capabilities and to provide exposure to a different technical culture to such CEB personnel."
The MOU also proposed the establishment of a four member committee to oversee the agreement.
Coal supplies and barges
In October 2012 the Sri Lanka power minister Champika Ranawaka told Parliament that the first 300 MW unit of the Norochcholai Power plant would use between 650,000 to 700,000 tonnes of coal a year.
Coal for the plant is supplied through Lanka Coal (Pvt) Ltd, a government-owned company. However, Lanka Coal put the supply of coal for the power plant out to tender and received two bids: one from Holcim, which operates cement plants which it already imports coal for, and another from Nobel Resources, a company owned by casino businessman Ravi Wijeratne. (Wijeratne is a major partner in James Packer’s Colombo Crown casino.) (The controversy over the awarding of the coal contract reportedly provided the impetus for the government to consider direct investment in a coal mine.)
Ranawaka told parliament that at first Holcim Trading (Pvt) Ltd had been awarded the contract but that this was overturned in favour of Nobel Resources following an appeal to cabinet. It was reported that Holcim had bid US$58.763 million and Nobel Resources US$58.736 million to supply 325,839 tonnes.
Member of Parliament Dayasiri Jayasekera told parliament that Holcim's bid included the cost of coal landed at the jetty - including the costs of barge transport from the coal carriers while Nobel's excluded the costs of barging. Power Minister Ranawaka stated that Lanka Coal had already bought a barge which would be operated by the government-owned Ceylon Shipping Corporation a state-run firm. However, he said that in future tenders the cost of barging operations would be included.
In November 2013 it was reported that the Power and Energy Ministry had undertaken a tender process. It was later reported that the CEB initially signed a contract in November 2013 for the provision of one million tonnes of coal at US$64.80 per tonne. But then in March the supplier reportedly informed the CEB that they could only supply 200,000 tonnes instead of the initially contracted volume. This led to fuel shortages as the power station could not be resupplied until after the monsoon.
The Island reported that "then, the CEB once again in July 2014 to signed a contract with the same supplier for purchasing another 200,000 MT of coal at a higher price––an additional USD 9.62 per tonne." The higher price reportedly led Power and Energy Ministry officials to question why a company which hadn't fulfilled their initial contract had then been chosen as the supplier for another contract while a senior CEB official estimated that calling for separate bids for 200,000 tonnes shipments should have led to lower prices.
The Island also revealed in September 2014 that the Ceylon Electricity Board (CEB) Chairman W. B. Ganegala, Lanka Coal Company Chairman Menaka Liyanage and other government officials had gone to China to buy a coal barge.
The Sri Lanka Ministry of Power and Energy state that the for the first 300 MW Unit the Export-Import Bank of China provided a US$450 million loan of which US$300 million was at 2% interest and US$150 million was 6% interest. The Sri Lankan government contributed 5300 Million Sri Lanka Rupees as its contribution to the project.
The Sri Lanka Ministry of Power and Energy state on its website that the second stage -- comprising two further 300MW units - is estimated to cost US$891 Million. The Ministry states that the second stage of the project has "been funded by a soft loan" of US$891 by EXIM Bank of China. The Ministry states that "ss local investment the Sri Lankan Government has invested Rs. 5300 Million for the first stage and Rs. 11,000 Million for the second stage of construction."
- Sponsor: Ceylon Electricity Board
- Location: Norocholai, Puttalam district, North Western province
- Coordinates: 8.0172, 79.7225 (exact)
- Gross Capacity:
- Type: Subcritical
- Projected in service: Unit 3: 2014 (scheduled to be commissioned on September 16)
- Coal Type:
- Coal Source: Indonesia and supplied by Nobel Resources, a company owned by a major investor in Colombo Crown casino, Ravi Wijeratne.
- Source of financing: Export-Import Bank of China
Articles and resources
- Ranga Sirilal, "With Chinese push, Sri Lanka boosts power generation by 11 pct", Reuters, March 22, 2011.
- "Norocholai (Laskvijaya) Coal Power Plant Sri Lanka," Global Energy Observatory, accessed March 2014
- "Norochcholai Coal Power Plant", Ministry of Power and Energy website, accessed September 2014.
- "Displaced families complain of shocking deception" (13 April 2008). Retrieved on 13 October 2012.
- Shirajiv Sirimane, "Two major development projects from November" Sunday Observer, Oct. 24, 2010.
- Coal-fired power plants around the world. IndustCards.com (11 March 2012). Retrieved on 13 October 2012.
- "Minister orders a full report on fire at Sri Lanka power plant" Colombo Page, Oct. 24, 2010.
- "Government won't bear costs of Norocholai fire", Adaderana.lk, December 2, 2010.
- "Cause of Lakvijaya breakdown identified", AdaDerana.lk, July 24, 2012.
- "Sri Lanka imposes daily power cut after Chinese plant fails again", Reuters, July 24, 2012.
- "First phase of Sri Lanka's first coal power plant to be opened tomorrow" ColomboPage, March 21, 2011.
- "Power cuts again", DailyMirror.lk, August 8, 2012.
- "Norochcholai Coal Power Plant at a standstill", DailyMirror.lk, January 29, 2013
- "Norochcholai back to life", January 30, 2013.
- Camelia Nathaniel, "Norochcholai: Indian Help Put On Hold!", Sunday Leader, December 29, 2013.
- "A Costly Breakdown", The Sunday Leader, January 12, 2014.
- "Throw some light", Sunday Star Times, January 12, 2014.
- "Sri Lanka's china-built coal power plant failed 271 day since start", Colombo Page, January 23, 2014.
- Sandun Jayawardana, "Lakvijaya Coal Power Plant woes - Jellyfish clog pump filters", The Nation, August 31, 2014.
- "Lakvijaya stalled but no blackouts envisaged," Daily News, Dec 14, 2015
- Rasika Jayakody, "PSC Sought On Norochcholai", Sunday Leader, December 8, 2013.
- Namini Wijedasa, "Coal power chaos: Chinese firm fumes: Top official defends Norochcholai plant, dismisses bribery charge", Sunday Times, February 2, 2014.
- Chamikara Weerasinghe, "Lakvijaya fully operational No power cuts", Daily News, April 10, 2014.
- "Sri Lanka-China to sign two MOUs for Norochcholai Coal Power Project", News.lk, September 7, 2014.
- "More power for China in Norochcholai: MoU to prevent ‘technical failures’ to be signed with China’s Ministry of Commerce during President Xi’s vist to Sri Lanka", The Sunday Times, August 31, 2014.
- "Sri Lanka power plant to use up to 700,000 tonnes of coal a year", Lanka Business Online, October 17, 2012.
- "SL considers investments in foreign coal mines", Sunday Times, November 03, 2013.
- "Now, top CEB officials fly off to buy vessel to bring coal", The Island, September 3, 2014.
- "Lakvijaya Coal Power Plant adds 900MW to the Grid on Sept.16", News.lk, September 5, 2014.
- Ceylon Electricity Board, "Major Projects: Puttalam Coal Power Project", Ceylon Electricity Board website, accessed September 2014.
Related SourceWatch articles
- "Norochcholai Coal Power Plant", Ministry of Power and Energy website, accessed September 2014.