Differences in Sri Lanka's ruling coalition over LNG deal with US-based firm

Leaders of 10 parties expressed their opposition to the 15-year lease agreement with New Fortress Energy, the New York-based energy giant, claiming it goes against the interests of Sri Lanka.

Published: 24th September 2021 03:21 PM  |   Last Updated: 24th September 2021 03:21 PM   |  A+A-

Image for representation. (File Photo | Reuters)


COLOMBO: Smaller political parties in Sri Lanka's ruling coalition have mounted a campaign to halt a deal with a US-based gas company to acquire 40 per cent stake in a state-run power plant.

Leaders of 10 parties in the Sri Lanka People's Party-led coalition held talks with Prime Minister Mahinda Rajapaksa on Thursday and expressed their opposition to the 15-year lease agreement with New Fortress Energy, the New York-based energy giant, claiming it goes against the interests of Sri Lanka.

"The talks ended without a conclusion while we expressed our concerns," said Weerasamuna Weerasinghe, a parliamentarian from the Communist Party.

Minister of Industries Wimal Weerawansa, another coalition party leader, said they were awaiting the return of President Gotabaya Rajapaksa from the ongoing United Nations General Assembly sessions to present him with a memorandum recording their opposition to the deal.

The NASDAQ-listed company announced last week that it had struck a deal to supply state-run Ceylon Electricity Board (CEB) with 1.2 million gallons of liquefied natural gas (LNG) per day through a 310-megawatt combined cycle power plant and a 700-megawatt plant in Kerawalapitiya, 10 km north of capital Colombo.

With this, New Fortress Energy will acquire 40 per cent stake in state owned Yugadanavi Power Plant in Kerawalapitiya for 15 years.

"New Fortress will initially provide the equivalent of an estimated 1.2 million gallons of LNG per day to the GOSL (Government of Sri Lanka), with the expectation of significant growth as new power plants become operational”, a company release said.

The petroleum trade unions had alleged the country stood to lose hundreds of millions of dollars through a "back-door" LNG deal with the US firm which could be worth up to USD 6 billion.

Saumya Manawadu, a Ceylon Electricity Board Engineers Union member, criticised the deal as "unsolicited" and said it was "suddenly struck without open tender".

Privatisation and the processes involved to select foreign partners have always been a debatable issue in Sri Lanka.

In a similar case, the state-owned Sri Lanka Ports Authority (SLPA) had signed a memorandum of cooperation in May 2019 with India and Japan to develop the Eastern Container Terminal (ECT) during the previous Sirisena government.

The Colombo port trade unions opposed the proposal of investors from India and Japan buying 49 per cent stake in the ETC.

They demanded the ECT to remain 100 per cent owned by the SLPA as opposed to the 51 per cent.

Under pressure from trade unions, Prime Minister Mahinda Rajapaksa last month agreed to scrap the deal, prompting India and Japan to demand Sri Lanka to abide by its commitment to the trilateral deal.


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