Sri Lankan government strikes with PPA to purchase power with a private provider

 

Vidullanka PLC has signed a Power Purchase Agreement (PPA) with the Ceylon Electricity Board to sell the electricity generated from the 3.2MW Bambarabatu Oya Mini Hydro Power project. The agreement is valid until 31 May 2021, with the option of extending it to 31 December 2038, subject to the securing of the approvals necessary.

Bambarabatu Oya is the first project commissioned in June 2001 by Vidullanka PLC which marked the start of the Vidal Group. The company said the new standard power purchase agreement (SPPA) for the 20 years from 1 January 2019 was pending and awaiting signing in the interim results statement for the year ended 31 March. However, the CEB continues to accept electricity supply from the power plant.

The revenue (amounting Rs. 96.29 million) agreed based on the price at Rs. 8.12 per unit, which is the tariff appropriate according to the new tariff scheme communicated by the CEB by letter dated 30 September 2019, the revenue of Rs. 102.15 million recognised as a trade receivable for the 12 months ended 31 March.

On 1 June 2016, the Bambarabatu Oya Mini Hydro Power Plant closed with the CEB the original stipulated SPPA contractual period. An interim SPPA was signed until 31 December 2018 and received payment in July 2019.

Vidullanka said it has obtained all the necessary consents and approvals from the Sri Lankan Public Utilities Commission (PUCSL) and other authorising authorities and is waiting to sign the SPPA with CEB. During the FY20, revenue from the Vidullanka PLC Group was Rs. 1.4 bn, up 12 per cent from a year earlier while in the 4Q, it shot up to Rs. 677.2 million by 197 per cent.

It currently has roughly ten mini-hydro projects in operations in Sri Lanka. By FY19 the capacity of Vidullanka was 26 MW with a total annual energy supply exceeding 100GWh to the national grids. In FY20, pre-tax profit fell by 4 per cent to Rs. 601 million, despite a 400 per cent increase from 4Q to Rs. 360 million, supported, among other reasons, by high financial income.

OSL Take: The impending power crisis in Sri Lanka has resulted in the opening up of a host of business/financing opportunities in Sri Lanka’s power sector. The government of Sri Lanka is exploring renewable energy solutions to increase the country’s power supply. Therefore, foreign businesses/investors could explore business/investment opportunities in Sri Lanka’s power sector.

VBS/AT/08/10/2020/Z_TB5