Significant discrepancies have emerged between the signed Power Purchase Agreement (PPA) for the Sahasdhanavi Power Plant and the methods used to raise funds for the project, raising concerns that consumers could end up paying billions of rupees more for electricity.
It has also come to light that the Sobadhanavi Power Plant, which is identical to Sahasdhanavi, was constructed at a cost of USD 76 million lower. The Sobadhanavi PPA similarly exposes consumers to currency risk, highlighting a potential financial burden.
The Sahasdhanavi 350 MW combined cycle power plant, capable of running on both diesel and natural gas, entered into a PPA with LTL Holdings Limited on 3 April 2025. LTL Holdings, the plant’s owner, is majority State-owned, with the Ceylon Electricity Board (CEB) as its largest shareholder.
The agreement was signed by R. Pitigalage, Deputy Chief Operating Officer of LTL Holdings, on behalf of the company, and by Dr. Tilak Siyambalapitiya, Chairman of the CEB. Notably, Dr. Siyambalapitiya was also serving as Chairman of LTL Holdings at the time of signing, which many observers have flagged as a potential conflict of interest.
The equity for the Sahasdhanavi project, totalling USD 90 million, has been recorded as a US dollar investment, with the Ceylon Electricity Board (CEB) committing to an annual return of USD 10.2 million to LTL Holdings as part of the fixed capacity charges. Authoritative sources have confirmed these figures as accurate. The capacity charge is a guaranteed payment in fossil fuel power plant PPAs, obligating the CEB to pay LTL Holdings even if the plant does not generate electricity during the period, as long as the plant is “made available.”
By structuring the equity return in US dollars, any depreciation of the Sri Lankan Rupee directly increases the cost to consumers. For instance, a 5% Rupee depreciation from 300 to 315 would raise the annual capacity charge by approximately Rs 153 million, regardless of plant operation. With the PPA spanning 25 years, sustained Rupee depreciation could have a significant financial impact. For context, the US dollar was valued at Rs 80 in 2000 and has risen by 375% to Rs 380 in 2025. If a similar trajectory continues, Sri Lankan electricity consumers could end up paying billions of rupees extra due to the classification of the equity investment in US dollars rather than in Rupees.
Although in the PPA the capacity charge is marked as a USD investment, the documentation available indicates that at least a majority of the equity infusion planned for the plant, is not a dollar investment but a Rupee investment, raised from within the country in Rupees.
In August 2024, LTL Holdings announced that it would launch the Colombo Stock Exchange’s largest Initial Public Offering (IPO) amounting to Rs 20 billion. (https://ceylontoday.lk/2024/08/22/ltl-holdings-plans-largest-ipo-raising-rs-20-b/). On page 13 of the prospectus of the IPO, (available at https://www.ltl.lk/wp-content/uploads/2024/09/LTL_Teaser_09-September-2024.pdf), the company states that the funds raised by the IPO will be used to develop the Sahasdhanavi plant and Rividhanavi plant (a 100 MW solar plant of which LTL Holdings owns a 50% stake, with the balance 50% owned by Windforce Plc).
The IPO, initially suspended by the Government in 2024 after coming into power, was later approved in a Cabinet Paper dated 19 March 2025, signed by Minister Kumara Jayakody. The Government decided to proceed with the IPO, citing the need to raise capital for the Sahasdhanavi Power Plant. The Cabinet Paper emphasises that the primary objective of the IPO is to fund the development of Sahasdhanavi. It also recommends that the Ceylon Petroleum Corporation (CPC) invest Rs 8.6 billion to acquire 597 million shares, representing over 43% of the total capital expected to be raised through the IPO.
As both the CEB Chairman and LTL Holdings Chairman roles were held by the same individual — Dr. Tilak Siyambalapitiya at the time of the PPA’s execution, and currently by Ministry Secretary Professor Udayanga Hemapala — it is likely that they were aware that the capital infused into the project is a Rupee investment, not a US dollar investment, and of the potential impact on CEB costs due to Rupee depreciation, which would ultimately be passed on to consumers. Efforts to obtain a comment from Energy Ministry Secretary Professor Hemapala had not received a response by the time this article went to print.
Controversy-ridden PPA
This is not the first controversy surrounding the Sahasdhanavi PPA. When the original PPA was submitted for Cabinet approval, the Cabinet Paper (11/2025/P, dated 31 January 2025) cited a levelised tariff of Rs 20.15 per unit of electricity produced. However, in a letter dated 3 April 2025, the Public Utilities Commission of Sri Lanka (PUCSL) informed the Ministry Secretary that this figure was incorrect. PUCSL noted that the Rs 20.15 levelised cost was calculated using outdated assumptions: natural gas at USD 10/MMBTU, an exchange rate of Rs 195 per USD, and diesel at Rs 110 per litre—rates applicable in 2021.
Adjusting to current values — natural gas at USD 11.2–15.5/MMBTU, an exchange rate of Rs 300.75 per USD, and diesel at Rs 286 per litre — PUCSL calculated the levelised cost using natural gas to range from Rs 35.81 to Rs 43.25 per unit, a significantly higher value. If the plant relies solely on diesel due to the unavailability of natural gas, the cost could rise to Rs 72.11 per unit. Other estimates provided by CEB and Sahasdhanavi suggested potential costs between Rs 37–40 per unit.
In an interview with Ceylon Today, the Secretary to the Ministry of Power, Professor Hemapala, mentioned that since the Government has not identified a natural gas supplier, he is unable to give an indication of natural gas prices. He also mentioned that he is unable to state what the unit cost of electricity from natural gas will be when the supply is set up.
Thus, the Government has stated that natural gas is a key mechanism to reduce the electricity cost of consumers, the level of uncertainty on pricing and high exposure to exchange rate with even equity investments placed in dollars, raises concerns about whether this will actually reduce costs or increase costs once all is done.
Sobadhanavi also a dollar investment
Public records indicate that the PPA for the currently operating Sobadhanavi plant — an identical 350 MW combined cycle facility developed by LTL Holdings — also records an equity investment of USD 70 million, denominated in US dollars. The plant is already operational, with an annual capacity cost of approximately Rs 15 billion. Sri Lanka’s annual electricity consumption is roughly 15 billion units. These costs are expected to rise further with any depreciation of the Rupee, ultimately passed on to consumers.
The LTL Holdings IPO prospectus notes that 70% of the company’s revenue is linked to foreign currency, including income from overseas projects. The Rividhanavi solar project similarly has a US dollar-linked tariff.
Public records show that the total project cost of the Sobadhanavi Power Plant was USD 214 million, with the remaining financing provided as debt of Rs 43.5 billion from a consortium of Sri Lankan banks led by HNB Bank. In contrast, although Sahasdhanavi is identical, its total project cost is indicated as USD 290 million—USD 76 million higher than Sobadhanavi. This discrepancy is unusual, particularly given that Sobadhanavi was constructed during challenging times marked by Covid-induced price hikes in materials such as cement and steel, as well as heightened financial risk in the country. The reasons behind the USD 76 million premium for Sahasdhanavi warrant scrutiny, especially as the project involves a majority State-owned company.
LNG and price risks
Although Liquefied Natural Gas is required to power this plant (or run on high-cost diesel), LNG infrastructure is not set as yet. The Ministry previously mentioned that a Floating Storage and Regassification Unit (FSRU) will be constructed through a previously announced tender by China Harbour Engineering Company (CHEC), this award has not yet been awarded. The Ministry Secretary also mentioned that Engro, the technical partner of the winning bid by CHEC, has withdrawn from the bid, but CHEC will replace them with another company. The proposal by Petronet to provide LNG for Sri Lanka was to be scrapped, but even this has not been done by the Ministry.
Since the CHEC FSRU will also require over USD 100 million per annum for 10 years, this also puts a heavy exposure to the exchange rate on Sri Lanka’s electricity costs. With the Government poised to begin loan repayments from 2027, if the Rupee depreciates, this will lead to a rapid rise in electricity costs for consumers.
- https://ceylontoday.lk/2025/08/23/s...erious-questions-raised-over-equity-infusion/
It has also come to light that the Sobadhanavi Power Plant, which is identical to Sahasdhanavi, was constructed at a cost of USD 76 million lower. The Sobadhanavi PPA similarly exposes consumers to currency risk, highlighting a potential financial burden.
The Sahasdhanavi 350 MW combined cycle power plant, capable of running on both diesel and natural gas, entered into a PPA with LTL Holdings Limited on 3 April 2025. LTL Holdings, the plant’s owner, is majority State-owned, with the Ceylon Electricity Board (CEB) as its largest shareholder.
The agreement was signed by R. Pitigalage, Deputy Chief Operating Officer of LTL Holdings, on behalf of the company, and by Dr. Tilak Siyambalapitiya, Chairman of the CEB. Notably, Dr. Siyambalapitiya was also serving as Chairman of LTL Holdings at the time of signing, which many observers have flagged as a potential conflict of interest.
The equity for the Sahasdhanavi project, totalling USD 90 million, has been recorded as a US dollar investment, with the Ceylon Electricity Board (CEB) committing to an annual return of USD 10.2 million to LTL Holdings as part of the fixed capacity charges. Authoritative sources have confirmed these figures as accurate. The capacity charge is a guaranteed payment in fossil fuel power plant PPAs, obligating the CEB to pay LTL Holdings even if the plant does not generate electricity during the period, as long as the plant is “made available.”
By structuring the equity return in US dollars, any depreciation of the Sri Lankan Rupee directly increases the cost to consumers. For instance, a 5% Rupee depreciation from 300 to 315 would raise the annual capacity charge by approximately Rs 153 million, regardless of plant operation. With the PPA spanning 25 years, sustained Rupee depreciation could have a significant financial impact. For context, the US dollar was valued at Rs 80 in 2000 and has risen by 375% to Rs 380 in 2025. If a similar trajectory continues, Sri Lankan electricity consumers could end up paying billions of rupees extra due to the classification of the equity investment in US dollars rather than in Rupees.
Although in the PPA the capacity charge is marked as a USD investment, the documentation available indicates that at least a majority of the equity infusion planned for the plant, is not a dollar investment but a Rupee investment, raised from within the country in Rupees.
In August 2024, LTL Holdings announced that it would launch the Colombo Stock Exchange’s largest Initial Public Offering (IPO) amounting to Rs 20 billion. (https://ceylontoday.lk/2024/08/22/ltl-holdings-plans-largest-ipo-raising-rs-20-b/). On page 13 of the prospectus of the IPO, (available at https://www.ltl.lk/wp-content/uploads/2024/09/LTL_Teaser_09-September-2024.pdf), the company states that the funds raised by the IPO will be used to develop the Sahasdhanavi plant and Rividhanavi plant (a 100 MW solar plant of which LTL Holdings owns a 50% stake, with the balance 50% owned by Windforce Plc).
The IPO, initially suspended by the Government in 2024 after coming into power, was later approved in a Cabinet Paper dated 19 March 2025, signed by Minister Kumara Jayakody. The Government decided to proceed with the IPO, citing the need to raise capital for the Sahasdhanavi Power Plant. The Cabinet Paper emphasises that the primary objective of the IPO is to fund the development of Sahasdhanavi. It also recommends that the Ceylon Petroleum Corporation (CPC) invest Rs 8.6 billion to acquire 597 million shares, representing over 43% of the total capital expected to be raised through the IPO.
As both the CEB Chairman and LTL Holdings Chairman roles were held by the same individual — Dr. Tilak Siyambalapitiya at the time of the PPA’s execution, and currently by Ministry Secretary Professor Udayanga Hemapala — it is likely that they were aware that the capital infused into the project is a Rupee investment, not a US dollar investment, and of the potential impact on CEB costs due to Rupee depreciation, which would ultimately be passed on to consumers. Efforts to obtain a comment from Energy Ministry Secretary Professor Hemapala had not received a response by the time this article went to print.
Controversy-ridden PPA
This is not the first controversy surrounding the Sahasdhanavi PPA. When the original PPA was submitted for Cabinet approval, the Cabinet Paper (11/2025/P, dated 31 January 2025) cited a levelised tariff of Rs 20.15 per unit of electricity produced. However, in a letter dated 3 April 2025, the Public Utilities Commission of Sri Lanka (PUCSL) informed the Ministry Secretary that this figure was incorrect. PUCSL noted that the Rs 20.15 levelised cost was calculated using outdated assumptions: natural gas at USD 10/MMBTU, an exchange rate of Rs 195 per USD, and diesel at Rs 110 per litre—rates applicable in 2021.
Adjusting to current values — natural gas at USD 11.2–15.5/MMBTU, an exchange rate of Rs 300.75 per USD, and diesel at Rs 286 per litre — PUCSL calculated the levelised cost using natural gas to range from Rs 35.81 to Rs 43.25 per unit, a significantly higher value. If the plant relies solely on diesel due to the unavailability of natural gas, the cost could rise to Rs 72.11 per unit. Other estimates provided by CEB and Sahasdhanavi suggested potential costs between Rs 37–40 per unit.
In an interview with Ceylon Today, the Secretary to the Ministry of Power, Professor Hemapala, mentioned that since the Government has not identified a natural gas supplier, he is unable to give an indication of natural gas prices. He also mentioned that he is unable to state what the unit cost of electricity from natural gas will be when the supply is set up.
Thus, the Government has stated that natural gas is a key mechanism to reduce the electricity cost of consumers, the level of uncertainty on pricing and high exposure to exchange rate with even equity investments placed in dollars, raises concerns about whether this will actually reduce costs or increase costs once all is done.
Sobadhanavi also a dollar investment
Public records indicate that the PPA for the currently operating Sobadhanavi plant — an identical 350 MW combined cycle facility developed by LTL Holdings — also records an equity investment of USD 70 million, denominated in US dollars. The plant is already operational, with an annual capacity cost of approximately Rs 15 billion. Sri Lanka’s annual electricity consumption is roughly 15 billion units. These costs are expected to rise further with any depreciation of the Rupee, ultimately passed on to consumers.
The LTL Holdings IPO prospectus notes that 70% of the company’s revenue is linked to foreign currency, including income from overseas projects. The Rividhanavi solar project similarly has a US dollar-linked tariff.
Public records show that the total project cost of the Sobadhanavi Power Plant was USD 214 million, with the remaining financing provided as debt of Rs 43.5 billion from a consortium of Sri Lankan banks led by HNB Bank. In contrast, although Sahasdhanavi is identical, its total project cost is indicated as USD 290 million—USD 76 million higher than Sobadhanavi. This discrepancy is unusual, particularly given that Sobadhanavi was constructed during challenging times marked by Covid-induced price hikes in materials such as cement and steel, as well as heightened financial risk in the country. The reasons behind the USD 76 million premium for Sahasdhanavi warrant scrutiny, especially as the project involves a majority State-owned company.
LNG and price risks
Although Liquefied Natural Gas is required to power this plant (or run on high-cost diesel), LNG infrastructure is not set as yet. The Ministry previously mentioned that a Floating Storage and Regassification Unit (FSRU) will be constructed through a previously announced tender by China Harbour Engineering Company (CHEC), this award has not yet been awarded. The Ministry Secretary also mentioned that Engro, the technical partner of the winning bid by CHEC, has withdrawn from the bid, but CHEC will replace them with another company. The proposal by Petronet to provide LNG for Sri Lanka was to be scrapped, but even this has not been done by the Ministry.
Since the CHEC FSRU will also require over USD 100 million per annum for 10 years, this also puts a heavy exposure to the exchange rate on Sri Lanka’s electricity costs. With the Government poised to begin loan repayments from 2027, if the Rupee depreciates, this will lead to a rapid rise in electricity costs for consumers.
- https://ceylontoday.lk/2025/08/23/s...erious-questions-raised-over-equity-infusion/
