The Public Utilities Commission of Sri Lanka (PUCSL) has approved the signing of a power purchase agreement for the 300-MW gas-fired Kerawalapitiya power plant, near Colombo, Lanka Business Online reported. 

The agreement will be signed by the Ceylon Electricity Board (CEB) and private firm Lakdhanavi. Initially, the plant will run on diesel until supplies of LNG can be obtained. Sri Lanka does not produce any gas of its own, but two discoveries were made in the Mannar basin in 2011 and were subsequently relinquished.  

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With the environment in mind, Sri Lanka is looking to promote greater use of natural gas, while moving away from coal and oil-based power generation. A letter of intent was signed in September 2017 on the development of the country’s first LNG regasification terminal. The terminal will be 47.5% owned by India’s Petronet, 37.5% by Japan’s Sojitz Corp. and Mitsubishi, with the remaining 15% held by the Sri Lankan government through Sri Lanka Gas Terminal. 

The board of investment of Sri Lanka also signed an agreement last year with Pearl Energy to develop an LNG hub at the Port of Hambantota on the south coast. Pearl plans to deploy a floating storage facility with the primary aim of trading LNG in the region. The project's cost is expected to be $97.2mn.