The Ceylon Electricity Board (CEB) has signed a Power Purchase Agreement (PPA) with Sahasdhanavi Limited to establish a 350 MW combined cycle power plant, marking a major step in Sri Lanka’s transition to reliable and cleaner energy.

The Sahasdhanavi Power Plant, which will be built, owned, and operated by Sahasdhanavi Limited, is designed to function on regasified liquefied natural gas (R-LNG). After 25 years, ownership of the plant will be transferred to the CEB.

Approved by the Public Utilities Commission of Sri Lanka, construction of the plant is set to begin shortly. The facility is expected to deliver electricity to the national grid within 30 months through Open Cycle operations and transition to full Combined Cycle operations 12 months later.

The plant is expected to play a crucial role in stabilising the national grid, particularly during nighttime and low-wind periods, supporting Sri Lanka’s growing dependence on intermittent renewable sources like wind and solar. By 2028, Sahasdhanavi and similar facilities are expected to fully convert from diesel to R-LNG, halving fuel costs and reducing carbon emissions.

Despite Sri Lanka’s total renewable generation capacity reaching 3,953 MW by February 2025—well above the country’s record peak demand of 2,800 MW—the CEB notes that only about 55% of actual power generation comes from renewables due to seasonal and weather-related fluctuations.

In response, the government approved the development of LNG supply infrastructure in December 2024. The project, led by the CEB and Ceylon Petroleum Corporation (CPC), includes the installation of a Floating Storage and Regasification Unit (FSRU), R-LNG pipelines, and supply facilities that will serve both the power sector and industrial users. Industries such as glass, ceramics, and tiles are expected to benefit from heating cost reductions of up to 40%.

The Sahasdhanavi plant, once operational in Combined Cycle mode, is projected to generate electricity at Rs. 37 per unit (kWh), potentially paving the way for lower tariffs for households and industries.

As part of its broader energy strategy, the CEB is also advancing several other projects, including the Maha Oya Pumped Hydro Project (600 MW by 2032), battery energy storage systems (BESS), and smart grid upgrades aimed at improving efficiency, grid stability, and sustainability.

The CEB has called on the public for continued support as it works to transform the country’s power system and ensure long-term energy security and affordability.