New Fortress Energy, the American company which bought 40 percent of shares in the Yugadanavi power station in Kerawalapitiya, is almost bankrupt. Among the company’s liabilities are mounting debts, dwindling reserves and falling share prices. The government of Puerto Rico in the Caribbean Islands, where it had signed up to start a similar project to that in Sri Lanka without following international tender procedures, is taking it to court for malpractice and corruption.
Nalinda Jayatissa, who represented the JVP from the Kalutara district in the last parliament revealed how the company’s accumulated debt stands at more than $2000 million. ‘By Marchthis year, its debts had risen from $949. 5 million to $1240 million and its reserves were down at $360. 1 million’. The company’s share prices have been reducing rapidly. The price of one share which was $59 in January went down to $26. 95 in September and dropped further to $24. 6 in October.
New Fortress is reportedly not even among the top 250 companies that supply Liquefied Natural Gas and therefore does not have a reputation as a provider.
Despite its poor performance the sale paves the way for the company to have a monopoly in Sri Lanka’s energy sector. Although the Ceylon Electricity Board and Ceylon Petroleum Corporation had called for competitive international tenders to construct an off- shore floating storage regassification unit and a pipeline system to supply gas to the power station and others that will come up in the future like the Kelanatissa and Muturajawela plants, this company had been selected outside the tender process to provide these.
According to Jayatissa, one aim of Sri Lanka’s energy policy was to avoid one individual or entity having a monopoly. ‘New Fortress will now have control of all the key functions which are needed to provide the country’s energysupply. In addition to having a monopoly, the terms of the agreement are such that it will lead to a waste of energy and open doors for the USA to meddle in Sri Lanka’s internal affairs.’
Among the provisions of the agreement which was signed between New Fortress and the government is the supply of LNG for 10 years at a cost of $ 6000 million. Although the power station has the capacity to generate 12 lakhs of gallons of LNG, the country’s consumption need is only for seven lakhs of gallons of LNGduring the peak hours of between 6 and 12 midnight, leaving an excess of five lakhs of gallons of LNG. But because the deal is a ‘take or pay’ one, the government will have to pay for the entire 12 lakhs of gallons of LNG that is produced even though it will not be used and will be going to waste.
Jayatissa explained that the agreement will lead to American expansion in the Indian Ocean at a time of geopolitical sensitivity between China and India. ‘In addition, America gets a licenceto interfere in Sri Lanka’s affairs. It can decide unilaterally whether or not to supply energy for households to turn on their domestic lights and industries to operate machinery. America will also get a chance to station its own ships in the region and the floating storage facility will be one.’
Another reason the sale hurts is because the power station is a good performer. It is expected to increase its output from the current 300MW to 600MW and eventually to 1000MW by 2026. It will fulfil one third of the country’s energy needs.
Jayatissa said the CEB’s engineers have calculated the losses the power station will incur. ‘It will rise from $800 million to about $1500 million in the coming months.’
On the 17th of September at six minutes past 12 midnight the government signed the agreement with the US based company to sell the component of shares which belonged to the Treasury. The power station’s balance shares are owned by the Lanka Electricity Company (Pvt) Ltd, the Employees Provident Fund and LTL Holdings Private Limited. There has been an uproar from opposition political parties and patriots after it came to light that the government had signed the agreement and had done it surreptitiously. The cabinet of ministers, parliament and even the Minister of Power and Energy at the time Udaya Gammanpila were reportedly in the dark about the deal which the JVP allege was struck earlier in the year by the three Rajapakse brothers, President Gotabaya Rajapakse, Prime Minister Mahinda Rajapakse and Finance Minister Basil Rajapakse. The president of the Ceylon Electricity Board who is a member of the Viyathmaga, a civil society network which backs the President, and the subject minister had been changed from their posts to facilitate the sale of the shares.
The JVP is asking the government to divulge details of the agreement which was signed. It is yet to see the light of day.
