July 15, 2019
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    ADB to fund LNG feasibility study

    June 16, 2019

    The Asian Development Bank (ADB) has approved a proposal to conduct a feasibility study and survey to adopt Liquefied Natural Gas (LNG) power generation in Sri Lanka to diversify energy mix. The government through the External Resources Department (ERD) has requested ADB last March to support Ceylon Electricity Board (CEB) urgently in exploring LNG as a fuel for power generation. The Ministry of Power and Renewable Energy (MPRE) also sees a greater role for LNG in its goal of reducing the use of oil and coal in the country, particularly for power generation.

    This is also in line with the government’s key development priority to diversify the existing generation mix to include cleaner energy resources and climate change mitigation actions. A small-scale TA (technical assistance) was preferred to initiate activities for LNG study quickly as requested by the government, according to the ADB. The proposed feasibility study is aimed at identifying the optimal LNG facility for Sri Lanka (land-based LNG terminal or floating storage and regasification unit) and the most suitable location for the development of new LNG-fired power plants and its associated facilities.
    This will include a detailed study by considering the demand for natural gas in Sri Lanka, global LNG market, LNG pricing and contracts, possibility of supplying LNG to regional markets, and social and environmental aspects. The Maldives is considering importing LNG for power generation and other uses. An LNG terminal in Sri Lanka with sufficient storage and adequate supply will benefit from lowering the energy cost of both countries. The site selection requires offshore survey and hydrodynamic studies to ascertain technical parameters needed for LNG power generation infrastructure and its associated facilities. Therefore, it is recommended to engage a firm with expertise, equipment, and experience working in Sri Lankan ocean waters to carry out this marine survey.
    The TA will help provide support for the feasibility study including marine survey for developing LNG based power generation and its value chain. The CEB, a State-owned electricity utility, has already carried out a preliminary feasibility study with support from the ADB exploring the possibility of LNG for Colombo-based power plants. The findings of the pre-feasibility study recommend the setting-up an LNG terminal and other infrastructure on an expeditious basis to supply LNG for power generation, the ADB report said.
    The CEB does not have in-house capacity to undertake these tasks since LNG is entirely new to Sri Lanka. The TA will provide external consultants to assist in preparing the feasibility and survey report for LNG import, LNG terminal and sea side facilities, infrastructure and other allied facilities for LNG transmission to prospective power plants.

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