No official from the Indian Government or the National Thermal Power Corporation Ltd (NTPC) has ever visited Sampur on site inspection and India had not agreed to build a thermal power plant in Sampur, an Indian High Commission spokesperson said last week.

"It would be inaccurate to say a site in Sampur has been shown to NTPC or selected by NTPC in Sampur," said Nagma Mallick, information counsellor. "The site for the 500 megawatt coal-based thermal power plant has not yet been identified and Sampur was never mentioned in the Memorandum of Agreement that was signed between NTPC Ltd, the Ceylon Electricity Board and the Government of Sri Lanka."

"In October 2005, the NTPC visited Trincomalee and were shown three sites by the CEB but Sampur was nowhere in the picture," she added. "At that time, the location the NTPC had found most suitable was Clappenberg Bay in Trincomalee. But I stress again that no final site has been identified."

She also explained that site selection will be based strictly on techno-economic criteria as well as environmental feasibility. The availability of infrastructure, such as a suitable road network or proximity to the Trincomalee harbour, will be explored. She pointed out that the Indians were spending a large amount of money on the project and costs mattered significantly.

Reports emerged in the media from as early as October 2006 that India would assist Sri Lankan in constructing a thermal power plant at Sampur, which had only recently been captured from the LTTE. The websites of the ministry of defence, the ministry of information and government all carried uncontested statements saying that the country’s second coal-powered thermal plant would be constructed in Sampur.

These reports quickly prompted protests from the LTTE which made its views clear over TamilNet. The Tamil National Alliance also opposed the move.

Mallick stressed that the Indian Government had in no way "bowed to pressure from the LTTE" by ruling out Sampur. "This is not correct at all," she said. "The TNA has not spoken to us about it and the Government of India made its position clear well before the TNA or TamilNet started talking about this."

CEB Chairman W A S Perera maintained, however, that India had no problem with Sampur being the location of the power plant. He said it was "not necessary" to mention a specific site when entering into an initial agreement. The area to be offered to the Indians in Sampur was more than 500 acres in extent and in close proximity to the sea. "It’s not that easy to find such a big acreage from any other location," he stressed.

When informed that the Indian High Commission had expressed contradicting views, he said: "They have not objected to us." He also said that "some people are always opposing whatever the government does and want to upset rather than support".

Another Indian diplomatic source, who spoke on condition of anonymity, however reiterated that Sampur was not an option for the project. "Of course, Sampur is out," he said. "It’s a controversial area that is not well located."

Signed on 29 December 2006, the agreement envisages a US$500 million project to be implemented by a joint venture company. NTPC Ltd and CEB would each hold a stake of 50 per cent in this entity. The project would be funded with a debt equity ratio of 70:30, said a press release from the Indian High Commission. It added that a joint venture agreement between CEB and NTPC, a power purchase agreement between the joint venture company and the CEB, an agreement between the Board of Investment and the joint venture company, implementation agreement and coal supply agreement will be signed in January.