For over a decade, my country—Sri Lanka—followed a state-directed, debt-fueled model of infrastructure development. The results were mixed: just how mixed is illustrated by is the 900Mw coal-fired power plant in Norochcholai. It is regarded as a success: but read on.
The largest power plant in the country, Norochcholai was expected to transform the energy supply, producing reliable cheap power and freeing the country from the vagaries of the weather. Up to that point, the bulk of the country’s power was being provided by hydropower.
The plant was designed and built by the China National Machinery and Equipment Import and Export Corporation (CMEC) and partly financed by a loan from the EXIM bank. Controversy dogged the project from inception: the idea was first floated in the 1980s but environmental and other concerns stopped it from being built. In 2005 a positive environmental impact assessment from 1998 was dusted off and the agreement with CMEC signed.
However, Sri Lanka does not produce coal. So the plant was sited by the seashore to facilitate the unloading of coal. Naturally, a pier should have been built for ships to dock and unload. But this was never done. Under pressure from environmentalists, the site was shifted from the eastern deep water port of Trincomalee, to Hambantota in the south, before finally settling on the West coast—where the water is too shallow to accommodate a pier.
This means that the ships that bring coal for the plant must now discharge their cargo mid-sea onto small barges that transport it to shore. Inefficient enough: but unfortunately, Sri Lanka is also a tropical country, subject to the monsoon. So for six months of the year, the waters are too choppy for the barges to operate. So the plant has to stockpile half a year’s supply of coal in the open, where of course it gets wet.
Since a change of Government in 2015 the two sides have traded allegations of corruption, poor design and the use of substandard materials in the project. CMEC have retorted by blaming breakdowns on the transmission lines and a lack of technical skills in Sri Lanka. The fact that all the instruction manuals for the power plant were written in Chinese may have contributed to some of the confusion evident among local engineers.
Remarkably, despite all these mistakes, plus teething troubles that led to many unexpected shutdowns, and more recent problems of pollution from coal dust and fly ash, the coal power plant remains one of the best Chinese projects. It does at least generate power at relatively low cost: when it was completed in September 2014, the President announced a 25% cut in the electricity tariff (with cuts in kerosene, petrol and diesel prices thrown in for good measure). As an example of a state-led infrastructure project, however—it is a classic.
Ravi Ratnasabapathy is a Fellow of the Advocata Institute, a free-market think tank in Colombo.