India has finally agreed to locate the 500 MW coal-based thermal plant of the National Thermal Power Corporation (NTPC) in Sampur in Trincomalee.

The town was wrested by the Sri Lanka military from the LTTE in September 2006,

According to reliable sources, the decision was conveyed by New Delhi to the Mahinda Rajapaksa government. Though India and Sri Lanka signed an agreement in December 2006, there was no unanimity between the two sides on the exact location of the plant.

Sri Lanka identified Sampur as a possible location, though an NTPC team preferred a site near the Indian Oil Corporation (IOC) oil complex, close to Trincomalee harbour.

The move locate the power plant at Sampur triggered a controversy with the pro-LTTE Tamil National Alliance raising political and environmental objections.

The project, involving an investment of $500 million, is to be implemented by a joint venture company in which the NTPC and CEB would each hold 50 per cent stake and funded with a debt equity ratio of 70:30.

Official sources said the power plant would substantially boost economic relations between the two countries. For Sri Lanka, this was one of the largest ever infrastructure investment and the project would augment its power capacity by 20 per cent.

The TNA had alleged that the coal-fired power plant project in Sampur had a hidden political agenda to permanently evict Tamils from the Muttur east region. They claim that around 30,000 Tamils were forced to leave the southern Trincomalee region into Vaharai when Sri Lanka military launched a major offensive and captured Sampur from the LTTE.

TNA parliamentarian from Trincomalee, K. Thurairetnasingham, in a media release, slammed the government of Sri Lanka for rushing with the project without consulting the Tamil representatives. The power plant would have an adverse impact on the livelihood of Tamils in the region, he claimed.

A ‘pre-feasibility’ report by the Power Grid Corporation of India on the proposed India Sri Lanka Electricity Grid Interconnection project to lay an undersea power line between Rameshwaran in South India and Talaimannar in Sri Lanka, said that it could be commissioned within 42 months.

The cost of the project is estimated at Rs. 2293 crores based on quotations from leading HVDC (high voltage direct current) equipment manufactures from Sweden, France and Germany. The report was expedited following the recent visit of Union Minister of State for Commerce Jairam Ramesh to Sri Lanka.