FSRU Plant Govt, Japan and India in joint venture Officials decry move

By Niranjala Ariyawansha

Ceylon Today

The Government has decided to go for a joint venture with India and Japan towards the setting up of a Floating Storage Regasification Unit (FSRU), which would convert diesel plants to LNG, for a sum of US $300 million, despite opposition from top officials.

The Cabinet Committee on Economic Management (CCEM), which has forwarded this proposal, has not included any environment or final feasibility report with it.

With the country being devoid of any energy plan or policy, it would be dangerous to release the country’s power sector in an ad hoc manner to overseas buyers, these officials charged.

Sources said the Government has decided to implement this joint venture, although Australia had earlier submitted a proposal to set up an FSRU for half of that sum.

Also, South Korea, under an agreement that Sri Lanka has to purchase LNG from Seoul for over a 25-year period, had even consented to set up a FRSU free-of-charge.

However, having put aside the proposals from South Korea and Australia, the Government is now preparing to opt for the joint venture by the end of this month with the four firms that are to be submitted by the three countries, a top official from a Ministry told Ceylon Today.

The firms are Sri Lanka Gas Company, which comes under the Treasury, Petromat Oil & Gas Equipment (Pvt) Ltd of India and Sojitz & Mitsubishi for Japan are those companies.

As per the joint venture, these firms are set to import gas to Colombo over a 20-year period.

The Ceylon Petroleum Corporation (CPC) will function as a Single Credible Entity towards the gas imports.

According to this plan, the lowest percentage of shares (15) will be left to Sri Lanka, 47.5 per cent will go to India, while 37.5 shares will be given to Japan.

A top official stated that they had to fight tooth and nail to hold on to the 15 per cent.

The Ceylon Electricity Board (CPC) has already expressed opposition to this joint venture. Ministers Ranjith Siyambalapituya and Dr. Sarath Amunugama having submitted a Cabinet Paper a fortnight ago, noted that they have decided to import gas in a bid to convert the diesel plants owned by the CEB to LNG.

Furthermore it has also been mentioned in the agreement that Colombo will be going for a joint venture with New Delhi regarding the China Bay Oil Tank Farm in Trincomalee.

The proposal which was submitted to the Cabinet, prior to Prime Minister Ranil Wickremesinghe’s visit to India in April last year, had also been ratified.

“The CCEM is taking decisions regarding the country. They think that Government officials, by forwarding various circulars, are placing burdens on the country’s development drive. But we do that not with the aim of scuttling development programmes but towards the betterment of the country. These circulars have been made to prevent both politicians and their henchmen from damaging the country by taking arbitrary decisions. However, these decisions can only help to stall the forward march of the country,” a top official said.

He further charged that behind such unsolicited proposals, invariably there are commissions.

The CPC, the Engineers Union of the CEB (CEBEU) and many other trade unions have already protested to this proposal.

CEBEU Committee Member Athula Wanniarachchi said: “There is no energy plan to the country. Instead there is only a business plan. The country’s energy plan is being designed according to the business plan of their friends and kith and kin,” he charged.

The FSRU is set to be established at the Colombo Port. The Convener of the CPC Trade Union Collective Janaka Rajakaruna alleged that due to the threat posed by the setting up of FSRU in a commercial port, the rest of the shipping firms would automatically seek to increase insurance charges.


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