TOKYO -- Sojitz has acquired a fossil-fuel power plant in Sri Lanka with an eye on expanding its presence in the field in emerging markets.
The Japanese trading house purchased 90% of the stock in the plant's operator from U.S. energy company AES for what is thought to be 2 billion yen to 3 billion yen ($16.3 million to $24.5 million). It used the government-backed Nippon Export and Investment Insurance, or NEXI, to mitigate business risk. This marks the first time Sojitz has taken a majority stake in a fossil-fuel plant.
The 160,000kW plant in the Colombo District of Western Province combines diesel turbines and steam turbines. It has been in operation since 2003 and supplies electricity to Sri Lanka's Ministry of Power and Energy under a 20-year contract.
That ministry says Sri Lanka's electricity demand is projected to double in the next decade due to economic growth. Opportunities for foreign investment have increased since a change in government in January 2015, and Sojitz hopes to win new orders to operate power plants.
The company aims to gain expertise operating the plant in the hopes it will lead to an expansion of power plant operations in emerging countries, where economic growth is expected to increase power demand.