According to reliable sources, the Sri Lankan government has decided to cancel a tender awarded to a China-Pakistan consortium to supply LNG and lay a pipeline network after being selected through an international bidding process, and has instead decided to offer to an Indian company.
As part of the cost-cutting strategy, the China-Pakistan Engro consortium was chosen.
Nevertheless on last Monday the Power and energy minister Kanchana Wijesekara through his cabinet paper with the heading ‘revisiting the National energy policy related to the development of Natural gas infrastructure in the country’ seek approval to suspend the ongoing LNG procurement process.
Consequently, the suspension covers the Development of a Floating Storage and Re-gasification Unit (FSRU) off Kerawalapitiya on a Build, Own, and Operate basis and a compatible mooring system on Build, Own, Operate and Transfer basis. It also covers the associated projects – the development of Offshore and Onshore Re-gasification Liquefied Natural Gas (RLNG) Transmission Pipeline Network with an Onshore Receiving Facility (ORF) and an associated System from the Floating Storage and Re-gasification Unit (FSRU) to existing and future Kerawalapitiya and Kelanitissa Power Plants on Build, Own, Operate and Transfer (BOOT) basis.
The Cabinet-Appointed Negotiating Committee (CANC) awarded a tender to the Engro Consortium in August, but the Energy Ministry delayed the process due to opposition from the Indian government. The subject minister requested that the tender be suspended.
Due to their lack of experience in FSRU, the Ministry rejected an unsolicited tender for Petronet LNG Ltd., an Indian company. The Ceylon Electricity Board (CEB) slammed the decision, claiming that it would be an expensive solution with no competition and higher electricity tariffs. Least Cost Long Term Generation and Expansion Plan (LCLTGEP) of the CEB aims to reduce power generation costs by converting furnace oil and diesel power plants to LNG.
From February 18 to June 25, 2021, the CEB invited international competitive open tenders from two bidders. The government received an unsolicited proposal from New Fortress Energy Company, which sparked controversy. The government agreed to sell New Fortress Energy 40% of the Kerawalapitiya Yugadhanavi Diesel Power Plant shares.
