The largest independent power producer (IPP) project in Sri Lanka’s history was signed at the end of last year. With seven export credit agencies (ECAs) involved in the bank debt, the deal also sets a tenor benchmark for Sri Lanka, achieving the longest tenor ever for offshore commercial debt in the country.

Furthermore, the debt package for the project represents the largest commercial borrowing in Sri Lanka.

West Coast Power, a newly-formed single purpose company, was established to build, own and operate a 300MW combined cycle power plant at Kerawalapitiya, on an IPP basis. The joint venture entered into a 25-year power purchase (PPA) with the Ceylon Electricity Board and a 25-year fuel supply agreement (FSA) with Ceylon Petroleum Corporation.

The project is seen as critical to help alleviate the country’s anticipated power shortage. Some 200MW of power is available on open cycle and 100MW on steam cycle.

Owing to the diverse sub-contracting and sourcing for the project, financing proved challenging, requiring seven ECAs in all – including the ones providing reinsurance.

The ECA facilities for the deal stretch the tenor to 14 years door-to-door, with two years grace and a12-year repayment in 24 semi-annual instalments of principal and interest.

The commercial facility is 10 years door-to-door, with two years grace and eight years repayment in 16 semi-annual instalments of principal and interest.

The finance starts off as a bridge facility of 180 days totalling €70mn underwritten by HSBC which is then taken out by four tranches of 14-year ECA debt and a 10-year commercial facility as follows:


  • US Ex-Im Bank facility (€17.363mn) 


  • Coface facility (with reinsurance from Austria’s OeKB and Italy’s Sace) (€39.12mn) 


  • Hermes facility (with reinsurance from Poland’s Kuke) (€34.006mn) 


  • Atradius facility (€24.803mn) 


  • Commercial facility (€36.906mn) 

    “What makes the deal stand out is the involvement of seven ECAs. It’s five tranches of debt: one commercial and the four ECA tranches of debt,” says Laura Connolly, manager, project and export finance, at HSBC in Hong Kong. “The Hermes tranche had reinsurance from Polish ECA Kuke and the Coface tranche has reinsurance from the Italian and Austrian ECAs. West Coast Power is the largest IPP in Sri Lanka with the project having been earmarked as one of the country’s most critical in order to meet its short and long-term power needs. The number of ECAs involved, the importance of the project along with the additional requirement to deliver a large bridge financing and long-term commercial loan made the deal a rewarding yet challenging one to close.”

    The project has a 70:30 debt-to-equity ratio. The Sri Lankan ministry of finance is giving a 100% unconditional guarantee for the debt obligations of the borrower.

    West Coast Power’s shareholders are: the Government of Sri Lanka; local engineering, procurement and construction (EPC) contractor Lakdhanavi; Lanka Electricity Company; and Employees Provident.

    Deal Information:



    West Coast Power (Private) Ltd
    Amount: €152mn
    Sole MLA: HSBC
    Law firms: Norton Rose, English law; Julius & Creasy, Sri Lankan law
    Guarantor: Ministry of Finance of Sri Lanka
    Tenor: 10-14 years
    Key Suppliers: ABB; Alfa Laval; GE; Nalco Technologies; NEM; SPX
    Date signed: December 2007