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NTPC to pull out from its maiden overseas power project in Sri Lanka

New Delhi, Feb 21 (): NTPC, the largest state-owned power generator is set to pull out from the proposed power project – its maiden overseas coal power project in Sri Lanka over differences with Ceylon Electricity Board (CEB).

This coal power project was planned to be built in the Eastern province of Sri Lanka by India’s NTPC. This is likely to be pulled out over differences prevailing between CEB and the NTPC, according to media reports.

A fresh set of proposals has been forwarded by NTPC’s joint venture partner,Ceylon Electricity Board which are not in agreement with the NTPC. The new proposal demands scaling down of returns on investment from 18- 12% post tax returns and downward revision of operations and maintenance cost of the proposed power plant to Rs 20.5 lakh per MW from the currently proposed Rs 38.92 lakh each year.

During 2011, CEB and the NTPC entered into an agreement to jointly set up the 500-MW plant in Trincomalee, but the project has not taken off yet due to various differences existing persistently between the two companies.

NTPC chairman Arup Roy Choudhury in a letter  sent on 15th January to CEB chief W. Abeywickreme, has said the fresh terms and conditions set by the CEB are unacceptable to NTPC as it amounted to considerable changes agreed on the initial Power Purchase Agreement (PPA).

The NTPC chief Mr Arup Roy is also believed to have conveyed to power secretary P Uma Shankar and India’s high commissioner to Sri Lanka Ashok K Kantha that the CEB is going back on the signed PPA due to which the project is unable to make any progress.

Mr Arup Roy also said in his letter to Abeywickreme that the draft PPA was finalised with CEB after extended discussions on all issues and then it was signed in February 2011 and they should not re-open any of the settled issues in mutual interest.

Ministry sources also say that NTPC has sought approval from the Indian government to pull out two of its top functionaries posted in Sri Lanka to oversee this project.

This power project was conceptualised and taken forward considering the growing bilateral relations between India and Sri Lanka.