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Our Bureau

New Delhi , Dec. 29

NTPC Ltd today signed an agreement to build a 500-MW coal-fired power plant. NTPC will pick up 50 per cent stake in the project, which is to come up in the Sri Lankan port town of Trincomalee. The project would entail an investment of around $500 million.

Sri Lanka's Ceylon Electricity Board (CEB) will join NTPC in the project, which would be executed on a 70:30 debt-equity ratio and would be run on imported coal, an NTPC statement said. The plant is expected to commence operations in 2011.

"The signing of the agreement will commence the process of site selection in Trincomalee, which will be done on the basis of techno-economic and environmental feasibility studies and other relevant matters including availability of infrastructure," the statement said.

The project would be executed through a joint venture between the CEB and NTPC and a power purchase agreement between the joint venture and CEB is expected to be signed in the coming months, the statement said. About 2.5 million tonne of coal required annually to fire the Trincomalee plant could be imported from either Indonesia or Australia, an NTPC official said.

Sri Lanka is opting for cheaper power generation as the island nation currently generates about 65 per cent of its electricity from oil-fired plants and imports all the fuel it needs to run them.

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