The Office of the Ministry of Economic Development of Sri Lanka on March 2013 had given approval to XXXX (PRIVATE) LIMITED, a Company incorporated in Sri Lanka to build, operate and run the Batticaloa Waste-to-Energy Power Plant of 5 MW using Municipal Waste in the Eastern Province of Batticaloa in Sri Lanka.
Initially a subsidiary company of a Malaysian Company, listed in the Malaysian Bursa funded all the basic researches and feasibility studies and had obtained all the approvals, necessary to operate the Power Plant, on the understanding that the Company will come up with the total investment of the Project in exchange for 80% equity in XXXX. All approvals had since been obtained from an estimated expenses around US$ 200,000 for a period of 6 months. Unfortunately by late 2013, the Company could not proceed and was delayed. Ultimately the option to participate in the project expired.
Waste Studies for Batticaloa had been done by an independent waste management consulting group, HMRE Consulting Group , based in Germany, to confirmed the suitability and availability of Feed-stocks. Six municipals had signed the feed-stock agreements, plus a letter of assurance from the Deputy Minister that there will be sufficient feed-stocks to operate the Plant. A few meetings were held with the off-takers of Electricity, Ceylon Electricity Board, together with the officers from the Ministry of Economic Development and Ministry of Energy. Assurance had been given that the Ceylon Energy Board will sign the Power Purchase Agreement for the off-takes of electricity from the proposed plant, when the plant is in operation. Once XXXX is officially registered with the Board of Investment of Sri Lanka with new Investor/funders, official letter of approval will be issued, prior to official PPA been signed.
XXXX will be designing, fabricate and installed the latest advance gasification technology, using proven fluidized bed technology and maximizing the electricity output, based on turnkey installation. XXXX will jointly operate the plant for one year, after installation and commissioning. After the one year period, XXXX will be willing to enter into an Operation and Maintenance contract at a reasonable fee.
Another alternative will be for XXXX is to take minority Equity Stake out of the Foreign Portion of 80%, and be responsible for the management of the Power Plant’s operation.
The land for the site of the Power Plant has already been allocated with a size of 22 acres in Batticaloa Province with easy road access and also main power grid nearby, which will be part of the contribution by the XXXX to the Joint Venture project.
Based on the 10 years profitability projection, it is reasonable due to the favorable factors surrounding the project, to expect a Return of Investment (ROI) of 17%. ( If based on 80% Equity, it will be around 14%). In conclusion, the Waste to Energy Power Plant in Batticaloa in Sri Lanka, is a very viable project due to the fixed financial income with assurance of supply of sufficient feed-stocks, high rates for electricity off-takes, as well as world class technology, yet economical, more durable and little maintenance requirement.