Despite environmentalist opposition, Sri Lanka's goverment has commissioned a Chinese-built coal fir

Despite environmentalist opposition, Sri Lanka's goverment has commissioned a Chinese-built coal fired power station.

Sri Lanka Says China to Build Major Coal Power Plant

Planet Ark, Reuters News Service

August 31, 2005

COLOMBO - China's National Machinery Equipment Import and Export Corporation has signed a deal with Sri Lanka to build a 900-megawatt coal power station on the Indian Ocean island, the government said on Tuesday.

Work on the Norochcholai coal plant, which has been shelved for nearly two decades due to opposition from environmental groups, will begin in October, the government said in a statement after the deal was agreed in Beijing.

"This coal power project will have a positive impact on Sri Lanka's economy, as it would bring down the cost of electricity and reduce Sri Lanka's dependency on diesel oil to generate electricity," the statement said.

President Chandrika Kumaratunga, in China on an official visit, witnessed the signing of a memorandum of understanding along with Chinese President Hu Jintao.

Sri Lanka, which produces no crude oil of its own and must import all of its needs, has been pummelled by high international oil prices, which hit a record-high above $70 this week.

Cyclical droughts that hit hydropower generation have forced companies to rely on expensive-to-run diesel generators, and Sri Lanka is desperate to find ways to bring down energy costs that have put pressure on the island's balance of payments.

The Sri Lankan government hopes electricity charges will fall by up to 13 percent in 2010 and by up to 32 percent in 2012 thanks to the new coal plant, which would in turn ease pressure on the heavily indebted, loss-making Ceylon Electricity Board.