A statement released by New Fortress Energy Inc. revealed that they had executed a ‘definitive’ deal with the Sri Lankan government.
The new deal will see New Fortress invest in West Coast Power Ltd., which owns the 310 MW Yugadanavi Power Plant in Colombo, and gain the rights to develop a new Liquefied Natural Gas (LNG) terminal off the coast of Colombo. They will also gain the gas supply rights to the Kerawalapitiya power complex. This deal was also bundled with a 40% acquisition of West Coast Power for $250 million.
In exchange, New Fortress will provide 1.2 million gallons of LNG to the government through the 310 MW combined cycle power plant and the 700 MW power plant, which is to be built in Kerawalapitiya. The firm has agreed only to charge $1.45 per million British terminal units (MMBTU) of LNG, but a minimum commitment or capacity charge can push it up to $5.50 per million.
According to trade unions, the actual value of the agreement could be as high as $6 billion and would cost the government billions of dollars. As it is required to operate 70% of the power plant, the CEB will be committed to a high ‘take-or pay commitment. Many states that the deal would undermine Sri Lanka’s energy security as it provides a backdoor to the country’s LNG supply and blocks the CEB from using it.
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