Identifier
Created
Classification
Origin
07COLOMBO610
2007-04-24 12:35:00
UNCLASSIFIED//FOR OFFICIAL USE ONLY
Embassy Colombo
Cable title:
SRI LANKA: GE TURBINES PART OF $90M U.S. CONTENT IN
how-toVZCZCXRO4982 PP RUEHLMC DE RUEHLM #0610 1141235 ZNR UUUUU ZZH P 241235Z APR 07 ZDK FM AMEMBASSY COLOMBO TO RUEHC/SECSTATE WASHDC PRIORITY 5911 INFO RUCPDOC/USDOC WASHDC RUEHCG/AMCONSUL CHENNAI 7609 RUEHNE/AMEMBASSY NEW DELHI 0885 RUEHLMC/MILLENNIUM CHALLENGE CORPORATION
UNCLAS COLOMBO 000610
SIPDIS
SENSITIVE, SIPDIS
STATE FOR SCA/INS, EB/IFD/ODF, AND EB/CBA TIM GILMAN
COMMERCE FOR BRYAN LOPP AND EROL YESIN
MCC FOR D NASSIRY
STATE PLEASE PASS TO EXIM BANK
E.O 12958: N/A
TAGS: EINV ENRG ETRD PREL CE
SUBJECT: SRI LANKA: GE TURBINES PART OF $90M U.S. CONTENT IN
KERAWALAPITIYA POWER PLANT
REF: A) 2006 COLOMBO 1589, B) 2006 COLOMBO 1425
UNCLAS COLOMBO 000610
SIPDIS
SENSITIVE, SIPDIS
STATE FOR SCA/INS, EB/IFD/ODF, AND EB/CBA TIM GILMAN
COMMERCE FOR BRYAN LOPP AND EROL YESIN
MCC FOR D NASSIRY
STATE PLEASE PASS TO EXIM BANK
E.O 12958: N/A
TAGS: EINV ENRG ETRD PREL CE
SUBJECT: SRI LANKA: GE TURBINES PART OF $90M U.S. CONTENT IN
KERAWALAPITIYA POWER PLANT
REF: A) 2006 COLOMBO 1589, B) 2006 COLOMBO 1425
1. SUMMARY: Negotiations continue between the Government of Sri
Lanka (GSL) and Lakdhanavi Private Limited (Lakdhanavi) for a 300
megawatt power plant in Kerawalapitiya described in reftels. The
project plan anticipates that the Export Import Bank will provide
guarantees and insurance for suppliers for this project, which will
include around USD 90 million in US content. Plans initially called
for a September 2008 completion date. However, the GSL now urges
that the plant begin operations in late July 2008 due to anticipated
power shortages, which can be partially alleviated with the earlier
plant activation. This urgency increases the importance of timely
ExIm Bank project approval. END SUMMARY.
2. (SBU) Sri Lankan company West Coast Power will build a 300
megawatt combined cycle power plant using U.S. content valued at
about $90 million. West Coast will procure turbines from General
Electric, a desalinization unit from NELCO, and plant superstructure
from Bluescope for the $323 million plant, which will be located at
Kerawalapitiya, north of Colombo. West Coast has signed a power
purchase agreement and an implementation agreement with the
Government of Sri Lanka for the development of the 25-year
build-own-operate-transfer (BOOT) plant. Ravindra Pitigalage,
Director, Lakdhanavi Limited (a semi-private spin off of the
state-owned Ceylon Electricity Board, and 55 percent shareholder in
West Coast) told Econoffs April 17 that the Kerawalapitiya plant is
due to begin operations in September 2008.
3. (SBU) As reported in ref A, the arrangement anticipates that the
U.S. Export-Import Bank (Ex-Im) will guarantee and insure the U.S.
suppliers of the project. Other national export credit agencies are
also participating with similar arrangements for their countries'
exports. The entire deal is financed by HSBC in Hong Kong.
TIMELINE PRESSURE DUE TO PENDING ENERGY CRUNCH
4. (SBU) Although West Coast's agreements with the GSL call for
plant operations to begin in September 2008, the Ceylon Electricity
Board (CEB) has asked West Coast to try to speed the project toward
a July 2008 opening. The CEB seeks to avert a power crunch
beginning in early 2008. Sri Lanka's energy needs have outpaced its
power sector development over the past several years, as the GSL has
been slow to approve needed power projects despite predictions of
power shortages. If the Lakdhanavi plant could be operational by
late July 2008, Pitigalage explained that the CEB could allocate
more hydro power in early 2008, rather than maintaining reserves for
late summer 2008. Pitigalage said that West Coast was trying to
meet the earlier target date, but that doing so would require that
every step of the construction and financing process occur without
delay.
5. (SBU) COMMENT: The West Coast project will result in
significant U.S. exports to Sri Lanka to meet its growing energy
needs. Embassy advocacy has already helped keep this project on
track. In light of Sri Lanka's need for power generation, the
Embassy offers to cooperate with the ExIm Bank in any way to
facilitate the Bank's smooth and expeditious entry into this
project.
BLAKE
SIPDIS
SENSITIVE, SIPDIS
STATE FOR SCA/INS, EB/IFD/ODF, AND EB/CBA TIM GILMAN
COMMERCE FOR BRYAN LOPP AND EROL YESIN
MCC FOR D NASSIRY
STATE PLEASE PASS TO EXIM BANK
E.O 12958: N/A
TAGS: EINV ENRG ETRD PREL CE
SUBJECT: SRI LANKA: GE TURBINES PART OF $90M U.S. CONTENT IN
KERAWALAPITIYA POWER PLANT
REF: A) 2006 COLOMBO 1589, B) 2006 COLOMBO 1425
1. SUMMARY: Negotiations continue between the Government of Sri
Lanka (GSL) and Lakdhanavi Private Limited (Lakdhanavi) for a 300
megawatt power plant in Kerawalapitiya described in reftels. The
project plan anticipates that the Export Import Bank will provide
guarantees and insurance for suppliers for this project, which will
include around USD 90 million in US content. Plans initially called
for a September 2008 completion date. However, the GSL now urges
that the plant begin operations in late July 2008 due to anticipated
power shortages, which can be partially alleviated with the earlier
plant activation. This urgency increases the importance of timely
ExIm Bank project approval. END SUMMARY.
2. (SBU) Sri Lankan company West Coast Power will build a 300
megawatt combined cycle power plant using U.S. content valued at
about $90 million. West Coast will procure turbines from General
Electric, a desalinization unit from NELCO, and plant superstructure
from Bluescope for the $323 million plant, which will be located at
Kerawalapitiya, north of Colombo. West Coast has signed a power
purchase agreement and an implementation agreement with the
Government of Sri Lanka for the development of the 25-year
build-own-operate-transfer (BOOT) plant. Ravindra Pitigalage,
Director, Lakdhanavi Limited (a semi-private spin off of the
state-owned Ceylon Electricity Board, and 55 percent shareholder in
West Coast) told Econoffs April 17 that the Kerawalapitiya plant is
due to begin operations in September 2008.
3. (SBU) As reported in ref A, the arrangement anticipates that the
U.S. Export-Import Bank (Ex-Im) will guarantee and insure the U.S.
suppliers of the project. Other national export credit agencies are
also participating with similar arrangements for their countries'
exports. The entire deal is financed by HSBC in Hong Kong.
TIMELINE PRESSURE DUE TO PENDING ENERGY CRUNCH
4. (SBU) Although West Coast's agreements with the GSL call for
plant operations to begin in September 2008, the Ceylon Electricity
Board (CEB) has asked West Coast to try to speed the project toward
a July 2008 opening. The CEB seeks to avert a power crunch
beginning in early 2008. Sri Lanka's energy needs have outpaced its
power sector development over the past several years, as the GSL has
been slow to approve needed power projects despite predictions of
power shortages. If the Lakdhanavi plant could be operational by
late July 2008, Pitigalage explained that the CEB could allocate
more hydro power in early 2008, rather than maintaining reserves for
late summer 2008. Pitigalage said that West Coast was trying to
meet the earlier target date, but that doing so would require that
every step of the construction and financing process occur without
delay.
5. (SBU) COMMENT: The West Coast project will result in
significant U.S. exports to Sri Lanka to meet its growing energy
needs. Embassy advocacy has already helped keep this project on
track. In light of Sri Lanka's need for power generation, the
Embassy offers to cooperate with the ExIm Bank in any way to
facilitate the Bank's smooth and expeditious entry into this
project.
BLAKE