Ex-Post Monitoring of Completed ODA Loan Project
Sri Lanka''Kelanitissa Combined Cycle Power Plant Project''
External Evaluator：Mimi Sheikh, International Development Center of Japan, Inc.
１．Project Description

Map of Project Area

Kelanitissa Combined Cycle Power Plant

1.1 Project Objective
The objective of this project is to increase base load power sources and stabilize thepower supply by building a 150MW grade combined cycle power plant in Kelanitissa
district, located in the north of Colombo City, thereby contributing to economic growth in
Sri Lanka as a whole.
1.2 Outline of the Loan Agreement
Approved Amount/ Disbursed

13,481 million yen / 13,406 million yen

AmountLoan Agreement Signing

October 1996 / June 2003

Date/final Disbursement Date
Ex-post Evaluation

2005

Executing Agency

Ceylon Electricity Board (CEB)

Main Contractor

Marubeni (Japan), Alstom Power Centralle(France)

Main Consultant

Lahmeyer International (Germany), Chuo Kaihatsu
1Corporation (Japan)
1.3 Background of Ex-post Monitoring
When the project was initiated, the demand for electricity was rising in Sri
Lanka due to the country's sustained economic growth. It was forecasted thatby the year 2000, the nation's output capability would not meet the expectedpeak demand. To respond to this situation, a 150 MW grade combined cycle
power plant was built by this project.
At the time of ex-post evaluation, the efficiency of the project was evaluatedas low because the actual project cost and period for building Kelanitissa
Combined Cycle Power Plant had exceeded the initial plan. In addition, three
concerns were pointed out in the report. The first concern was the future
impact on the surrounding area of the power plant since the environmental
monitoring system was not fully established and functional at that time. The
second concern was the sustainability of the operation and maintenance skillsof the staff as the equipment at training center was old and run down. The
third concern was the improvement of CEB financial situation and their low
profitability. It was point out that urgent measures were need.
As a result, the ex-post evaluation recommended CEB to develop an
environmental monitoring system and measure the environmental impact on
the surrounding areas; and for the Sri Lankan government to take measures toimprove CEB's profitability.
Therefore, this project was selected for ex-post monitoring and reviewed
under each criterion with final conclusion being drawn from the findings of the
field survey and other research activities.

2．Outline of the Monitoring Study
2.1

Duration of Monitoring Study

Duration of Monitoring Study：April 2011～February 2012
Duration of the Field Study：7 August, 2011～18 August, 2011
2.2

Constraints during the Monitoring StudyNone.
3 Monitoring Results
3.1 Effectiveness3.1.1 Quantitative Effects
3.1.1.1 Results from Operation and Effect Indicators2

(1) Comparison to the ex-post evaluation
As can be seen in the following table 1, the operation and effect indicators,
namely, power output and plant load factor were lower than the target
values of the ex-post evaluation. The reasons for the result are 1) a failure ofa major part of the steam turbine in August 2010 and discontinuation ofoperations since then; 2) and reduction of thermal power generation usage
due to increase in annual rain fall from 1,711 mm in 2009 to 1,992 in 2010.
The broken steam turbine has already been repaired in India and is awaiting
customs clearance and the repairs of other parts have already been
completed. If customs clearance is carried smoothly, the steam turbine
should be in use by the end of 2011. The operation and effect indicators in 2008,
before the steam turbine broke down, were not much different from the ex-post
evaluation in 2005. Therefore it is considered that the current situation is only
temporary and there will not be a problem in the future.
Table 1: Operation and Effect Indicators (unit: 1000 tons)
Ex-post evaluation

Ex-post monitoring inMaximum output (MW)Power generation (GWh)in 2005168
1043.5

20111
165
493.3

Plant load factor (%)

72.2

31.9

Source: Data submitted by Kelanitissa Combined Cycle Power Plant(2) Outage hours
Regarding outage hours of Kelanitissa Combined Cycle Power Plant, until 2009, thetotal outage hours of gas turbine and steam turbine were lower than the number in 2003;
however, the outage hours have largely increased in 2010.
Gas Turbine
2003
2004
2005
2006
2007
2008
2009
2010

Table 2: Outrage Hours
Steam Turbine
444.40222.45299.50468.11448.42
187.36259.10340.21

1826.26936.20675.371219.30
1101.41
1064.06
558.564896.28

Total Outragehours
2,270.66
1,158.65
974.87
1,687.50
1,549.83
1,082.42
314.66
5,236.49

The data used was fiscal year 2010, Plant load factor = annual operation hours /annual hours (8,760 hours).
13

Source: Data submitted by Kelanitissa Combined Cycle Power Plant
It is because the main part of the steam turbine broke down and needed replacement.
Although outage of either the gas turbine or the steam turbine occurred frequently, it isconfirmed that Kelanitissa Combined Cycle Power Plant has been trying hard to maintainthe generation of a certain volume of power and to minimize the outage hours at thefacility.
3.1.1.2 Financial and Economic Internal Rate of Return (FIRR)The Financial Internal Rate of Return (FIRR) and Economic Internal Rate of Return(EIRR) at the time of ex-post monitoring, were both negative as it is shown in the table 3.
The increase in maintenance costs and the lowered electricity unit pricing could be themain reasons for the results. Even in this situation, it is important to keep operating theplant in order to maintain sustainable power supply in Sri Lanka.
As it will be discussed later in this document the sustainability and financial situation of
CEB are not favorable; however, some positive factors were observed. These were 1) the
financial structural reform including amendment of the electricity bill by revision ofElectric Utility Law had been active since 2009; and 2) the maintenance cost of specially
the Steam turbine could be reduced after 2012 by completing the current major repairs of
it. Thus, the internal rates of returns could be improved in the future. Regarding, theconditions assumed when calculating the Internal Rates of Return see the following Table
4.
Table 3：Internal Rate of Return
Ex-post evaluation

Ex-post monitoringin 2005

in 2011

FIRR

14.5%

Negative

EIRR

14.2%

Negative

Table 4：Conditions Assumed when Calculating the Internal Rates of Return
Project life

Twenty years from when the facilities begin operation

Fiscal year

Same as the calendar year

Fixed price calculation

Costs are converted to fixed prices by taking the year of

methodproject completion as the base year and discounting for the
consumer price indices for both the local and foreign
currencies. Fixed prices expressed in foreign currencies areconverted using the exchange rates of the base year.

Cost breakdown

Project cost, operation and maintenance cost4Breakdown of FIRRi) Income from sales of the electricity generated by the power
plantii) Fuel savings

Breakdown of EIRR

Same as above

3.1.2 Qualitative Effects
It is not identified.

In summary, although the internal rate of returns of the project are negative due to theincrease in the maintenance cost and the lowered sales price; from the viewpoint of
maximum output, power output and plant load factor, it is concluded that the project ismostly effective as was expected at the time of ex-post monitoring.
3.2 Impact
3.2.1

Intended Impact

3.2.1.1 Stabilization of the Power Supply
The amount of electricity generated by the Kelanitissa Combined Cycle Power Plant(493.3GWh) accounted for 4.6% of total electricity generation (10,714GWh) in
Sri Lanka in 2010. In the same year, Sri Lanka's potential output (2,818MW)
exceeded peak demand (1,955MW), thereby securing a supply reserve of
863MW. Considering the supply reserve was 766MW at the time of the ex-post
evaluation in 2005, the power supply in Sri Lanka has become more stabilized
than it was in the past. Table 5 shows the composition of power sources in Sri
Lanka. Although the percentage of hydroelectric power has slightly increased
in 2010 in comparison to 2004 because of the increase in rainfall, it is evident
that the over dependence on hydroelectric power as was the case in the 1990s
has been reduced.
Table 5：The Composition of Power Sources (%)
Hydroelectric Power
Thermal Power
1992
18%
82％
2004
50%
50%
2008
48%
52%
2009
48%
52%
2010
53%
47%
Source：CEB
3.2.1.2 Impact on the Surrounding Environment5

It was pointed out in the ex-post evaluation that it was difficult to know the effect of the
project on the surrounding environment. In response to this, the manager of Kelanitissa
Combined Cycle Power Plant assigned an Environmental Officer in 2006 and since then,the officer has been carrying out monthly monitoring of effluent discharge, noise andvibrations. In addition to this, the plant has then commissioned a quarterly environmental
inspection by a third party inspection body that has been in carrying out inspections since2006 in accordance with the Environmental law of Sri Lanka. All inspections have been
conducted using inspection equipments brought by the third party inspection body to thepower plant. The subjects of the inspections are noise, vibrations, and concentration ofcontaminant emission from smokestacks.
When the past environmental inspection reports were reviewed; the Kelanitissa
Combined Cycle Power Plant had never received warnings about an environmental
problem up to today. It is also confirmed that an environmental license has been issued tothe plant by the Central Environmental Agency (CEA).
As for the concern of the concentration of contaminant emission from the smokestacks
shown in the ex-post evaluation report, the results from environmental test reportconducted by an independent third party are shown in the table 6. From this results, all
the contaminants including Nitrogen Oxide (Nox), sulfur dioxide (SO 2), Suspended
Particulate Matter (SPM) are much less than the national standard of Sri Lanka, therefore,
it is concluded that the impact of this plant gives on the natural environment will belimited.
Table 6: Concentration of Contaminant Emission from Smokestacks
NOx
SO2
SPM
(mg/Nm3)(mg/Nm3)(mg/Nm3)
2009
85
27
8
2011 (July)71
41
85
Environmental Standard
3,000
250
300
of Sri Lanka
Source: Test report of Industrial Technology InstituteThe continuous monitoring system to measure the concentration of contaminants fromsmokestacks, which was installed when the plan was constructed, has never been
operational since the start of operation of the power plant, due to problems associatedwith the monitoring equipment and its installation. At the time of the ex-post monitoring,
CEB had decided to replace the entire equipment and been processing to prepare andreview.
3.2.1.3 Contribution to the Economic Development

6

As shown in Table 7, real economic growth rate of Sri Lanka is quite positive except
during the Lehman Shock period in 2009. The high growth rate of around 8.0% is
expected also in 2011.
Table 7: Real Economic Growth Rate (%)
2005
2006
2007
2008
GDP growth rate (%)
6.2
7.7
6.8
6.0
Source：World Bank, World Indicators, 2010

2009
3.5

2010
8.0

With the composition of the gross domestic product, as shown in Table 8, industrial
sector and service sector percentages have been increasing against the agricultural sector.
The development of the industrial and service sectors require stable electricity power
supply and thus the project had met such needs. It can be also said that the project had apositive impact on the economic development of the Sri Lanka
Table 8: Composition of Gross Domestic Product in Sri Lanka (%)
Sector
1999
2008
2009
Agriculture
20.7
13.4
12.6
Industry
27.3
29.4
29.7
Manufacture
16.4
18.0
18.0
Service
52.0
57.7
57.7
Source：World Bank, World Indicator, 2010

In summary, it is confirmed that the project has still been playing an important role inthe sustainable electric power supply and the economic development of Sri Lanka at thetime of ex-post monitoring. As for the environmental impact concerns highlighted at thetime of ex-post evaluation, it is also confirmed that internal and external third party
monitoring for the environment has been undertaken since 2006, and these report provedthat the amount of contaminated waste from the project is within the national standard of
Sri Lanka. Further, the project has never caused any problems till today.
3.3. Sustainability
3.3.1

Structural Aspects of Operation and MaintenanceNo particular problem had been identified at this time with respect toinstitutional structures including decision-making process, human resourcesmanagement,

facility

management,

legalsystem,maintenance system.
3.3.2

Technical Aspects of Operation and Maintenance

7

andoperationandNo particular problem had been identified at the time. In the field survey, it is confirmed
there are many engineers who work at the Kelanitissa Combined Cycle Power Plant andhave been working there since its establishment. And those engineers contribute to themaintenance and improvement of the facility. Furthermore, according to the facility
manager, the technical levels of the young engineers have improved compared with thepast, as a result of the CEB's training systems and daily on-the-job training.
3.3.3

Financial Aspects of Operation and MaintenanceAs pointed out in 3.1.1.2 Financial and Economic Internal Rate of Return, the financial
situation of CEB has been the constant budget shortfalls over a long period and thesituation is still not good at present. The cumulative losses reached to 10.5billion rupees
at the end of 2008. To this situation, the government of Sri Lanka took the following
actions to fundamentally change the financial structure of CEB.
¾ With the enactment of Sri Lanka Electricity Act in 2009, Public Utilities Commissionof Sri Lanka (PUCS) became the economic regulator of the electricity industry.
¾ The government took over payment of interest on borrowings for the period from2011 to 2014.
Furthermore, the CEB Finance Office targets to make CEB profitable by 2015 byimplementing the following plans. These plans have been progressing well, CEB shouldin the black and profitable around 2013 according to these plans.
¾ The operation of Coalfired power plant in Puttalam will be started in 2011 and thesecond plant will be fully operational by 2014.
¾ Upper Kotmale hydro energy plant will be operational in 2012 and Broad Land Hyroenergy plant will be operational in 2015.
¾ Supply amount from costly West Coast plant will be expected to diminish from 2014.
PUCSL considers if CEB implements all the above-mentioned plans and thecountry maintains high economic development, the CEB's targets will beachievable.

In addition, it was confirmed that the budget for operation andmaintenance of the Kelanitissa Combined Cycle Power Plant was appropriately
allocated because the fine operation of the plant is directly related to the electricity
sales to utilities revenue of CEB.

8

3.3.4Current Status of Operation and Maintenance

A concerned highlighted in the ex-post
evaluation report was that the future

Picture 1: Lecture at Piliyandalaquality of operations and maintenanceTraining Center

could be degraded due to the aging ofPiliyandala training center. When theevaluator

visitedandstudiedthetraining center, the facility was entirely
renewed, the number of trainees had
been increased, and the inside facility
was also filled with positive spirit.
Moreover, the reputation of the training participants is good, and these days,
the center had been receiving trainees not only from CEB but also fromindependent power industry companies. Therefore all of the identified issues
pointed out at the time of ex-post evaluation have been solved. Table 9 shows
the number of trainees at promotion training program in this training center.
Table 9: Number of Trainees
at Promotion Training Programs in Piliyandala Training Center

Number of Trainees
Source: Piliyandala Training Center

2007

2008

2009

2010

254

405

831

2,029

In summary, no particular problems on the capacity of the implementation
agency and operation and maintenance system were identified, and thefinancial situation concerned at the time of the ex-post evaluation showedsigns of improvement. Therefore, the sustainability of the project does not havea problem.

4．Conclusion, Lessons Learned and Recommendations
4.1 Conclusion
It is confirmed that the project has still been playing an important role for thesustainable electric power supply and the economic development of Sri Lanka at the timeof ex-post monitoring. As for the concerns on the environmental monitoring system
pointed out in the ex-post evaluation report, CEB has assigned an Environmental Officerof the power station and the undertaking of monthly inspections, and in addition, theenvironmental inspection includes the measurement of contaminants from smokestacks
9undertaken regularly by an independent third party since 2006. Therefore it is concluded
that the issues on the environmental monitoring system has been mostly solved
As for the sustainability of the project, there is no visible problem on capacityand operation and monitoring system of the implementing agency.
The financial challenges of CEB, have remained. However, there are signs ofimprovement in the CEB's financial management and the budgets for
operation and maintenance of the Kelanitissa Combined Cycle Power Plant havebeen appropriately allocated due to the importance of the plant for this country.
Therefore, the sustainability of the project does not have a problem at thistime.
The aging of CEB's training center, buildings and training equipment has
been addressed and there has been tremendous improvements, thus theconcerned issues at the time of the ex-post evaluation has been solved.

4.2 Recommendations
To implementation agency:
As for the environmental monitoring system pointed out in the ex-post evaluation of
JICA, it was confirmed that CEB had been putting continuous efforts to improve thesituation. The replacement of the monitoring equipment for the measurement ofconcentration of contaminants from the smokestacks considered by CEB should be well
examined from the aspect of necessity, usefulness; and then most appropriate approachtaken for CEB.
4.3 Lessons Learned
It is not identified.

10

Comparison of Original and Actual Scope
Items

Plan

Actual(1) Outputs
150 MW

165MW

Two or three units with an

One unit with an output of

output of 37-67MW

110MW

Two or three units

One unit

One unit with an output of

One unit with an output of

37-67MW55MW2)Fuel Storage tanks

Two 17,000 ton tanks

Two 4,500 ton tanks3) Cooling water

Direct cooling or a cooling

As planned

equipment

tower(2)Project Period

October 1996 - March 2000

1) Combined cycle
power generation
facilitiesa) Gas Turbinesb) Exhaust heatrecovery boilersc) Steam turbines(42 months)

October 1996 - March
2003(78 months)(3) Project Cost
Foreign currency

10,926 million yen

12,613 million yen

Local currency

5,288 million yen

5,199 million yen

Total

16,214 million yen

17,812 million yen

ODA Lon Portion

13,481million yen

13,406 million yen

Exchange rate

1 rupee＝ 1.4 yen
1 rupee ＝ 1.9 yen(Average between May(October 1996)

1996 - June 2003)

11