Dullas opposes move to hand over Sri Lanka’s LNG supply monopoly to US-based New Fortress Energy

• Says Cabinet of Ministers not yet aware of a definitive agreement with Fortress Energy
• Govt. expected to provide a full update on matter to Parliament at next sitting 

Expressing his opinion on the move by the government to give away exclusive LNG supply rights to US-based New Fortress Energy (NFE), Co-Cabinet Spokesperson and Mass Media Minister Dullas Alahapperuma, who earlier served as the Power Minister, this week publicly opposed any moves leading to a monopoly in LNG supply to the country.

Moving ahead with an unsolicited proposal made by New Fortress, the government signed a Framework Agreement (FA) with the firm on July 7, 2021. The key features of the unsolicited proposal include the purchase of 40 percent shares of West Coast Power Private Limited (WCPL) for US $ 250 million, execution of the LNG terminal project, which includes a floating storage regasification unit (FSRU), a mooring system and a pipelines, as well as the supply of LNG to WCPL, Sobadhanavi Limited (SBL) and other plants.

The Ceylon Electricity Board Engineers’ Union (CEBEU) last week charged that the proposal also includes giving away exclusive rights of supplying LNG to the country’s electricity generation to New Fortress, with commitment to purchase LNG from the firm under very strict conditions, which would be favourable to them, thereby, leading to a monopoly in LNG supply to the country.

Responding to a media query at the Cabinet press briefing on Tuesday, Alahapperuma  stressed that he’s strictly against any moves to grant an LNG supply monopoly to New Fortress. “That’s why I decided to float a competitive tender when I was the Power Minister,” he said.

Following an 18-month feasibility study sponsored by the Asian Development Bank, the Ceylon Electricity Board (CEB) floated tenders in February this year to build the country’s required LNG infrastructure, which included an FSRU to be built on a 10-year build-operate-own basis and pipelines on build-operate-transfer basis.

Meanwhile, New Fortress recently announced that it has entered a definitive agreement with Sri Lanka’s government. However, Alahapperuma said that the Cabinet of Ministers was not updated on the reported new agreement. 

He assured that the government would provide a full update on the new developments on the matter in Parliament at its next sitting.

Further, the coalition parties in the government are also scheduled to hold internal discussions on the matter, with several junior parties opposing the move.

The CEBEU warned that the country could  lose up to US $ 400 million over the next five-year period, if the government decides to move ahead with the unsolicited proposal.