Completed Mixed AidData Chinese Aid

China Eximbank provides $891 million preferential buyer’s credit for Phase II of the Puttalam/Norochcholai Coal Power Project (Linked to Record ID#33244 and #33463)

$891K USD

Funder	Export-Import Bank of China (China Eximbank)
Recipient Organization	Sri Lanka Ministry of Finance
Country	Sri Lanka
Start Date	Dec 25, 2009
End Date	Feb 21, 2028
Duration	6,632 days
Number of Grantees	1
Roles	Recipient
Data Source	AidData Chinese Aid
Grant ID	`33452`

Grant Description

China Eximbank provides $891 million preferential buyer’s credit for Phase II of the Puttalam/Norochcholai Coal Power Project On December 25, 2009, China Eximbank signed a $891,000,000 preferential buyer’s credit (PBC) agreement [CHINA EXIMBANK PBC 2009 NO. (42) Total No.(104)] with the Ministry of Finance of the Government of Sri Lanka for the Phase II of Puttalam/Norochcholai Coal Power Project.

📋 Loan / Grant Terms

📅 Maturity20 years

⏳ Grace Period5 years

The Ministry of Finance of the Government of Sri Lanka then used the proceeds from the PBC (loan) to on-lend to Ceylon Electricity Board (CEB), which is a state-owned electricity company that controls all major functions of electricity generation, transmission, distribution and retailing in Sri Lanka.

CEB was expected to use the proceeds of the loan to partially finance a commercial contract [ID# PCPP/CANC/2009/01] with China National Machinery Import & Export Corporation, which was signed on July 29, 2009.

China Eximbank disbursed an unknown amount in 2009, and unknown amount in 2010, an unknown amount in 2011, $127,781,680 in 2012, $110,377,930 in 2013, $50,765,212 in 2014, and $66,952,892 In 2015. The loan's amount outstanding was $772,200,000 as of December 31, 2016, $445,500,000 as of June 30, 2022.

The project involved the establishment of two power plants with a capacity of 300MW, a transmission line from Norochcholai to Anuradhapura, new substations at Chilaw and Anuradhapura and the construction of the expansion of coal handling port facilities and employees' housing.

China Machinery Engineering Corporation was the contractor responsible for project implementation and its work was overseen by the CEB.

Phase I of the project, which was also financed by China Eximbank, ran from 2007 to 2011 (as captured via Record ID#33244 and #33463). The groundbreaking ceremony for Phase II of the project took place on March 18, 2010. Phase II was completed on September 16, 2014. However, the project has encountered debt repayment problems.

On April 12, 2022, the Government of Sri Lanka announced a ‘pre-emptive’ sovereign debt default, noting that it would suspend debt repayments to all external creditors other than multilateral institutions.

Its decision to suspend external debt service reportedly affected all China Eximbank loans with amounts outstanding at the time of the announcement. The project has been controversial since the inauguration. The three units have broken down several times after they were put into operation. A recent breakdown happened on August 8, 2023.

According to certain Sri Lankan experts, a reason behind the plant’s persistent breakdowns is China’s failure to train Sri Lankan staff in maintenance.

Insufficient staffing and funding since its establishment have resulted in inadequate maintenance, exacerbating the plant’s issues. At the same time, the project also has environmental concerns.

In 2019, a study conducted by the University of Peradeniya highlighted that sulphur dioxide levels in the air surrounding the Sri Maha Bodhi tree exceeded the recommended limits set by the World Health Organization. The study also found a correlation between sulphur dioxide levels and the number of dead leaves on the tree.

📋 Staff Comments

The Chinese project title is 普特拉姆燃煤电站.
This Puttalam/Norochcholai power plant is sometimes referred to as the Lakvijaya power plant.
The Government of Sri Lanka loan key number is 2009027.
The commercial contract [ID# PCPP/CANC/2009/01] between Ceylon Electricity Board (CEB) and China National Machinery Import & Export Corporation, which was signed on July 29, 2009, can be accessed in its entirety via https://www.dropbox.com/s/qul59h2khujrj5l/PuttalamCoalPower-Contract-2009.pdf?dl=0

📚 Sources & References

Ministry of Power and Energy
Lakvijaya coal power plant
President to open 300 MW Norochcholai plant coal power plant
Sri Lankan govt wants fast completion of China funded coal power plant
Public Investment supported by Export Credit
斯里兰卡第一座燃煤电站即将投入使用
UPDATE 1-Sri Lanka
India's NTPC in coal plant JV; worth up to $700 mln
China's Global Energy Finance
Performance Report 2015
习近平同斯里兰卡总统拉贾帕克萨举行会谈拉贾帕克萨为习近平举行盛大欢迎仪式两国元首决定携手推动中斯战略合作伙伴关系走实走深
China/Sri Lanka: Chinese investors interested in Sri Lanka: ambassador
Performance Report 2009
对外投资合作国别（地区）指南 —— 斯里兰卡2018年版
Presidents of China and Sri Lanka Attend the Opening Ceremony of Puttalam Coal-fired Power Plant
Puttalam Coal Power I & II
Monthly Bulletin
程学源大使考察卡普特拉姆燃煤电站并进行安全检查
Test Run of Puttalam Phase II Coal-fired Power Plant #2 Unit Successfully Completed
普特拉姆燃煤电站
Sri Lankan officials say Putlam coal-fired power station is a model of cooperation between Sri Lanka and China
Putram Coal-fired Power Plant Signs Contract for Phase II Project, ‘Going global’ Chinese enterprises seek win-win cooperation with host countries
Rajapaksa Holds Grand Welcome Ceremony for Xi Jinping, 300 MW capacity inaugural Coal Power Plant to be Commissioned by President
Puttalam Coal-fired Power Plant Project
Sri Lanka
Annual Report 2014
Public Investment supported by Export Credit
斯里兰卡总统出席普特拉姆燃煤电站项目二期工程奠基仪式
斯里兰卡普特拉姆燃煤电站项目二期工程举行奠基仪式
驻斯里兰卡大使程学源考察卡普特拉姆燃煤电站
Government of Sri Lanka 2017 Bond Prospectus
Resource Mobilization
Annual Report 2007
Performance Report 2017
CS-DRMS Report 814
The Export-Import Bank of China
Disbursements in 2014 January to December.pdf, 814 Disbursements Jan to Dec 2015
Disbursement from January to December 2016.pdf, 814-1 Annual 2017 for WEB New.pdf
Transactions For the period from to 2019/01/01 2019/12/31, 814 up to Oct 2018.PDF
Transactions For the period from to 2020/01/01 2020/12/31
Transactions For the period from to 2021/01/01 2021/11/30
Actual Disbursement by Transaction Date
FINANCIAL STATEMENTS OF THE GOVERNMENT FOR THE YEAR ENDED 31ST DECEMBER 2018
FINANCIAL STATEMENTS OF THE GOVERNMENT FOR THE YEAR ENDED 31ST DECEMBER 2019
FINANCIAL STATEMENTS OF THE GOVERNMENT FOR THE YEAR ENDED 31ST DECEMBER 2021
Instrument-wise Details of Central Government External Debt obtained under Foreign Law as at 2022/06/30
Annual Report 2019
Notes to the Financial Statements (Contd.)
Financial Statements 2014
Democratic Socialist Republic of Sri Lanka - 2016, 2015 Annual Report Ministry of Finance Sri Lanka
Ceylon Electricity Board Annual Report 2020
FINANCIAL STATEMENTS OF THE GOVERNMENT FOR THE YEAR ENDED 31 ST DECEMBER 2020 Loan applications and disbursements are still being received and processed as the projects continue to evolve. Ongoing monitoring and evaluation are in place to ensure project continuity.

All Grantees

Sri Lanka Ministry of Finance

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