By Anusha Ondaatjie
March 22 (Bloomberg) -- Sri Lanka’s first coal-fired power plant, scheduled to be opened today by President Mahinda Rajapaksa, is expected to generate cheaper electricity as the economy expands after a three-decade civil war.
The plant at Norocholai, north of the capital Colombo, was built with a $450 million loan from the Export-Import Bank of China and will add 300 megawatts to the national grid, the government said on its website. The second phase is scheduled to be completed by 2014 at a cost of $891 million and will have a capacity of 600 megawatts, it said.
“This project will result in saving a considerable amount of foreign exchange and reduction in the cost of power generation,” according to the statement. It will “contribute toward the expansion of the industrial sector as well as other development sectors.”
Sri Lanka’s $42 billion economy may grow 8.5 percent in 2011 and 9 percent in 2012 from an estimated 8 percent expansion in 2010, according to the central bank. The island’s electricity demand is growing at about 8 percent a year.
The island nation, which imports all the fuel it needs, gets about 47 percent of its electricity from oil-fired plants and the rest from large hydro-power projects. The cost of generating power using coal is about half that of an oil-fired unit, the government has said.
Sri Lanka last year awarded its first contract for low- sulfur coal from Indonesia for about $70 a metric ton for the Norocholai project.
The country’s current power generation capacity is 2,818 megawatts, of which 1,059 comes from private producers, according to the state-run Ceylon Electricity Board. Maximum demand is 1,960 megawatts.
To contact the reporter on this story: Anusha Ondaatjie in Colombo at anushao@bloomberg.net.
To contact the editor responsible for this story: Hari Govind at hgovind@bloomberg.net
source - www.noir.bloomberg.com
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