Sri Lanka to Build Mini-Hydro and Wind Power Plants

07th November 2010, www.lankabusinessonline.com

Sri Lanka is building more mini-hydro and wind power plants but needs more technology transfer to ensure better use of renewable energy, officials said.

Harsha Wickremasinghe, deputy director general of the Sustainable Energy Authority, said the country was well in its way to achieve planned non-conventional renewable energy targets but more ambitious goals needed greater caution.

"Our target is to deliver 10 percent of energy from non-conventional sources by 2015," Wickremasinghe told a news conference to announce a forthcoming conference on use of renewable energy for sustainable living.

The conference is organised by the German Alumni Association of Sri Lanka with the German Cultural Institute, German Academic Exchange Service and the SEA.

"It's a target we're comfortable with as we have already reached six percent," Wickremasinghe said.

"But there is tremendous pressure for us to increase the target to 20 percent."

He said the SEA was "working cautiously" towards achieving the higher target keeping in mind the difficulties encountered in exploiting non-conventional renewable sources of energy such as their fluctuating nature.

Energy produced from wind and solar plants varies depending on the availability of wind and sunlight and hence cannot be used as base load power.

"There are now 200 megawatts of small hydro power running and another 200MW are under construction," Wickremasinghe said.

The country's first commercial wind power plant began generating energy this year, he said.

Three wind power plants with a capacity of 10MW have been built in north-western Puttalam, a site considered ideal for wind power, and there are plans to build a total of 30MW of wind power plants.

"The wind power plants operated satisfactorily during the last monsoon," Wickremasinghe said.

"We hope to have more wind power plants not only in coastal areas but in other areas as well. We hope to develop more wind energy in Balangoda, (southeast of Colombo) and other windy areas," Wickremasinghe said.

The international renewable energy conference planned for November 26-28 is expected to draw about 120 participants from Sri Lanka, India, Pakistan and Germany, said Janaka Wijesundera, president of the German Alumni Association.

Wickremasinghe said Sri Lanka lacks knowledge in solar and wind power technologies and looked forward to technology transfer and sharing of knowledge through conferences like the one planned by the alumni association.

Germany has mature renewable energy technology and could help Sri Lanka to reduce harmful emissions from fossil fuel burning power plants, Wickremasinghe said "Partnerships like this and awareness raising during conferences like these are very valuable," he said.

"We're a growing economy. Our emissions will continue to rise and it is through partnerships like this that we can share knowledge."

Sri Lanka China Signs $82mn Hydro Power Project on Broadlands Kelani River

20th October 2010, www.lankabusinessonline.com

Sri Lanka's state-run Ceylon Electricity Board has awarded a 35MegaWatt 82 million US dollar hydro power plant deal to China, power minister Champika Ranawaka said.

The run-of-the-river plant known as the Broadlands project on Sri Lanka's Kelani River will be built by China National Electric Equipment Corporation (CNEEC) and connected to the grid by 2014.

"The engineering estimate for the project was 102 million US dollar but the contractor is building it for 82 million US dollars," minister Ranawaka told reporters after signing the construction contract with CNEEC.

The CEB also required the bidder to arrange finance.

The project will be 90 percent financed by the Industrial and Construction Bank of China on a 15-year floating rate loan at 220 basis points above the London interbank offered rate and will also include three years grace.

The balance 10 percent funds will come from state-run People's Bank.

Minister Ranawaka said the plant will generate 126GigaWatt-hours of energy a year.

The project involves the building of a 114 meter long, 24 meter high gravity dam across the Maskeli Oya tributary of the Kelani River complex at Polpitiya.
Another smaller diversion weir 48 meters long and 19 meters high will be built across the Kehelgamu Oya and water brought through an 850 meter tunnel to the main reservoir. The main tunnel to the generators will be 3.2 kilometres long.

The Broadlands project is the last plant in the so-called Laxapana cascade power station complex on the Kelani River system which was started 50 years ago.

The CEB is separately rehabilitating plants in part of the Laxapana complex at a cost of 6.97 billion rupees which will add 14 MW of additional capacity and in another part at a cost of 4.2 billion rupees with Austrian suppliers credit, officials said.

Sri Lanka's Hemas Power Earnings up on Hydro Power

29th July 2010, www.lankabusinessonline.com

Sri Lanka's Hemas Power said net profit for the June 2010 quarter shot up 967 percent to 80 million rupees from a year ago on a sharp increase in earnings from hydropower.

Sales of the company, a unit of the Hemas Holdings group, fell five percent to 729 million rupees owing to lower thermal power revenue, a stock exchange filing said.

"The reduction arose manly from an 11 percent reduction in revenue at Heladhanavi," Hemas Power managing director Kishan Nanayakkara said.

"However, the excellent performance of the hydropower sector reflecting a 405 percent increase in revenue between comparative quarters helped to nullify this impact to some degree."

Revenue from thermal power fell to 669 million rupees in June 2010 from 755 million the year before while revenue from hydro power rose to 53 million from 11 million rupees.

Profit from thermal power rose to 42 million from seven million rupees while profit from hydro power shot up to 40 million from six million rupees a year ago.

Nanayakkara said the revenue reduction at Heladhanavi stemmed from a tariff cut and lower power generation owing to a

maintenance overhaul.

"Almost half of our net profits for the quarter derived from the hydropower sector," he said.

"Though hydropower is seasonal, the fact that it now influences our net profits considerably signifies the positive impact of

our effort to spread the portfolio balance between the hydropower and thermal sectors."

Lower finance costs at the Heladhanavi plant and the interest income earned from investments also helped to increase the

company’s profits.

Nanayakkara said the firm's Giddawa Hydro Power plant made a net profit of 16.0 million rupees for the quarter and its Upper

Agra Oya Hydro Power plant a net profit of 25.0 million rupees.

"The power generation at both hydropower plants was considerably higher than the anticipated generation levels during the

quarter."

The firm is building another hydro power plant called the Magalganga project.

"We anticipate that the forthcoming quarter also to be a reasonably good one although our two hydropower plants will move in

to the dry-season until the forthcoming North-East monsoon season which begins in October or in November," Nanayakkara said.

Sri Lanka's Last Mega Hydro Power Project at Upper Kotmale to Compelete by 2011

30th May 2010, www.news360.lk

The construction work of the Upper Kotmale Hydro power project, the last such mega hydro power plant to take place in Sri Lanka will see its completion by the 3rd quarter of 2011.

Project Director Shavindranath Fernando told www.news360.lk “by the 3rd quarter of 2011, the project will be completed”

Once completed the plant will add 150 MW into the national grid, which according to energy specialist Dr. Tilak Siyambalapitiya will contribute 3.5% of the country’s total electricity requirement for the year 2012.

He said “By 2012 the total electricity requirement of the country will be 12,800 million units and if Upper Kotmale operates by that time, it will contribute 430 million units to the total figure”.

The UKHP is located in the Nuwara Eliya district and will be using the water flowing from the Kotmale Oya, a branch of the Mahaweli Ganga.

The US$ 450 JICA funded Upper Kotmale Hydro power project was in the drawing board since 1985 and was expected to be fully operational in the early parts of 2000.

However pressure from area politicians citing socio-economic and environmental issues delayed the project.

Project Director Fernando said ”all these issues are resolved”.

497 families who lost their homes owing to the project has being settled down in new homes.

Sri Lanka’s electricity demand is growing at 8% per annum.

Sri Lanka's Power Sector Attracts Private investors

19th April 2010, www.lankabusinessonline.com

More private investment is likely to get attracted to Sri Lanka's power sector given stable and growing demand and improve profitability especially among hydro-power producers, a ratings agency report said.

However, investments will be restricted to small power plants of less than 25 megawatts capacity as a new electricity law requires bigger plants to be controlled by government, RAM Ratings (Lanka) said.

It said in a report on the island's power sector that it was important to restore the long-term financial viability of the loss-making, heavily indebted sole buyer of power, the state-owned Ceylon Electricity Board.

"While Sri Lanka may have closed its door to large-scale IPPs, it has embraced the role of IPPs in the 'less than 25 MW' capacity segment," the RAM report said.

" . . . we note that more IPPs are likely to be attracted to the power sector given its salient features such as stable demand, moderate operating risks and long life of assets."

However, the ratings agency identified several inherent risks from a credit-rating perspective.

These include customer-concentration risk as the CEB is the sole purchaser of power, as well as construction risk involving a company’s possible failure to complete construction on time, and fuel risk based on possible interruptions in fuel supply.

RAM Ratings noted that private hydro-power players have improved their profitability of late.

"Their impressive profit performance is underpinned by lower debt levels, better tariff rates and heightened power generation," the report said.

"We observe that these profitability indicators may entice further investor interest in the local power sector."

Private power producers have also sought to dilute their site risks through acquisitions, which so far have not "overly strained" the companies’ balance sheets.

"From a private-investment perspective, the power sector is unique as it is a non-cyclical industry," the report said.

Demand for electricity in Sri Lanka has been increasing with economic growth and more electrification and remains resilient even amid economic downturns.

"This fundamental characteristic results in a stable or predictable cash flow provided there is no off-taker default," the rating agency said referring to the loss-making CEB's capacity to pay.

"In Sri Lanka, the CEB is the sole off-taker; hence the IPPs’ debt-servicing aptitude depends on the off-taker’s willingness and ability to pay its bills on time."

RAM Ratings Lanka said its assessment of the CEB is based more on its systemic importance rather than its financial profile.

In 2008, the state utility company owed 57 billion rupees to the IPPs.

According to the Central Bank the CEB's finances remained weak in 2009 although it had managed to reduce its operating loss to 7.4 billion rupees from 33.3 billion in 2008.

CEB’s short-term borrowings from banks and other outstanding liabilities to the state-owned fuel refiner and to Independent Power Producers increased to 71.6 billion rupees in 2009, the Central Bank said.

Sri Lanka Distilleries Invests in 4MW Hydro Power Plant

30th March 2010, www.lankabusinessonline.com

Sri Lanka's Distilleries Company, said it was spending 750 million rupees to by into a 4 MegaWatt hydro power plant in a tea plantation which is an associate firm in its group. Bogo Power Pvt Ltd, will be built on Kirkoswals estate in the Bogowantalawa area in Sri Lanka's central hill region.

Distilleries said the firm had already signed a standardized power purchase agreement with state-run Ceylon Electricity Board to sell its output.

Distilleries is part of the Stassen's group controlled by businessmen Harry Jayewardene.

Sri Lanka Hemas Buys Hydro Power Plant of 2.6MW in Nuwara Eliya District

04th January 2010, www.lankabusinessonline.com

Sri Lanka's Hemas Power said it has bought a 2.6 megawatt (MW) hydro-power plant in the Nuwara Eliya district in the central hills from Senok Mark Hydro for 198.5 million rupees.

Under the deal, Hemas Power has bought 9.92 million shares, Senok Mark Hydro’s total issued share capital, at 20.00 rupees a share, Hemas said in a stock exchange filing.

Hemas Power is a unit of Hemas Holdings which has business interest in healthcare, consumer goods, shipping and power.

Its generation unit consists of Heladhanavi, a 100 mega watt thermal power plant, and a two-mega watt mini-hydro power plant in Kandy, also in the central hills.

Sri Lanka is heavily dependent on fossil-fuels for its power needs and is trying to increase renewable energy sources like hydro-power.

In August 2009, Hemas Holdings floated its power generation business to build a 1.6 MW mini hydro plant in Kandy to move away from costly fossil-fuel thermal power.

Sri Lankan Hydro Power Producer Rated 'BBB+' by Agency RAM Ratings Lanka

22nd December 2009, www.lankabusinessonline.com

Private power producer Vidullanka PLC has been given a short term financial rating of P2 and a long term rating of BBB+, by agency RAM Ratings Lanka. The long term rating has a stable outlook.

The rating is supported by the company's sound project economics and financial strategy, the rating agency said.

It was also helped by the improving credit profile of the company over the past three years due to a strategy of retiring debts through internally generated funds.

As a result of this, gearing levels have been eased to 25 percent of company capital as at end September 2009. Debt service coverage ratio stands at 7.09 times.

"Going forward, the management intends to broaden its revenue base within the renewable-energy sector via joint-venture investments," RAM Ratings said.

"While these are positives over the longer term, Vidullanka’s credit metrics are expected to moderate in the interim, until these new ventures come on-stream."

Vidullanka is an independent power producer, listed on the Colombo Stock Exchange. It is in renewable energy generation, while its subsidiary Vidul Construction specialises in building mini-hydro power projects.

Vidullanka owns two power plants of 2 and 3.2 MegaWatts, supplying power to state-run Ceylon Electricity Board grid under 15-year power purchase agreements.

The company is a working partner in another power plant and manages two other projects. A new power plant is to be commissioned in March 2010.
Dec 22, 2009 (LBO) – Private power producer Vidullanka PLC has been given a short term financial rating of P2 and a long term rating of BBB+, by agency RAM Ratings Lanka.

The long term rating has a stable outlook.

The rating is supported by the company's sound project economics and financial strategy, the rating agency said.

It was also helped by the improving credit profile of the company over the past three years due to a strategy of retiring debts through internally generated funds.

As a result of this, gearing levels have been eased to 25 percent of company capital as at end September 2009. Debt service coverage ratio stands at 7.09 times.

"Going forward, the management intends to broaden its revenue base within the renewable-energy sector via joint-venture investments," RAM Ratings said.

"While these are positives over the longer term, Vidullanka’s credit metrics are expected to moderate in the interim, until these new ventures come on-stream."

Vidullanka is an independent power producer, listed on the Colombo Stock Exchange. It is in renewable energy generation, while its subsidiary Vidul Construction specialises in building mini-hydro power projects.

Vidullanka owns two power plants of 2 and 3.2 MegaWatts, supplying power to state-run Ceylon Electricity Board grid under 15-year power purchase agreements.

The company is a working partner in another power plant and manages two other projects. A new power plant is to be commissioned in March 2010.