Japan’s Sojitz has acquired a 163-MW diesel-fired combined cycle power plant in Sri Lanka, further strengthening its presence in the South Asian country.
Sojitz purchased a 90% stake in AES Kelanitissa, which owns and operates the 163-MW power plant on the outskirts of Colombo, from US-based AES, the Tokyo-based company said last week.
The remaining 10% equity stake in AES Kelanitissa is held by Hayleys, a major conglomerate in Sri Lanka, Sojitz said.
Sojitz did not disclose the value of the deal with AES. The Nikkei business daily reported that the deal was believed to be worth between 2 billion yen (US$17.1 million) and 3 billion yen (US$25.6 million).
Sojitz is the only Japanese company involved in the Sri Lankan power sector. The 163-MW project is Sojitz’s second independent power producer (IPP) project in the country.
Sojitz has been a major shareholder of Asia Power, another IPP project company in Sri Lanka, since it started to operate a 50-MW thermal power plant (TPP) in 1998.
Sojitz said that Sri Lanka’s stable economic growth had led experts to predict a 6% annual increase in electricity demand.
However, about 35% of the country’s current 3,932 MW of generating capacity comes from hydropower, making blackouts a common problem during the dry season.
Thermal power generation can provide both stability to the power grid and a flexible backup when fluctuations in supply occur, which has led many to call for the further spread of thermal power within Sri Lanka, Sojitz said.
“This acquisition will contribute to the stable supply of electricity in Sri Lanka, covering roughly 7% [2,000 MW] of peak demand for the country’s population of nearly 21 million people,” Sojitz said in a statement.
“Sojitz will actively pursue [power] business opportunities in high-potential markets, including Asia, the Middle East, Africa and the Americas,” the firm said.
Sojitz has so far been involved in overseas IPP projects such as the Sohar 2 and Barka 3 projects in Oman and the Riyadh PP 11 project in neighbouring Saudi Arabia.