EXTENDED COST BENEFIT ANALYSIS OF SAMANALAWEWA HYDRO ELECTRIC PROJECT

Abstract

The Samanalawewa Hydro Electric Project and its water commanding area is the subject ofthis study. This project is a single purpose hydropower project, which harnesses the watersof the Walawe Ganga by damming the river at the confluence of the Belihul Oya andWalawe Ganga at an elevation of 400m Mean Sea Level. The reservoir covers an extent of897 ha at normal high water level and its catchment covers an area of 341.7 km".

As this was a single purpose project, much attention was not paid to other aspects such assupplying irrigation water for down stream and other environmental impacts. Thereforethis study sought to estimate the economic loss due to the reduction of land area and paddyyield at selected down stream areas. In addition, it aims to estimate the economic value oflost carbon sequestration function of the Samanalawewa reservoir submerged area and toincorporate the above values in an extended Cost/Benefit analysis for the Samanalawewaproject.

Primary and secondary data were used for this study, which involved a farm householdsurvey. This research disclosed that the scarcity of water due to the dam has resulted in11.64% of yield reduction (equivalent to 36<;44.38 bushels or Rs. 10.5 million) and 24.89%of land become uncultivated (equivalent to 444.27 acres or RS.II. 7 million) annually. Theglobal warming damage costs due to .he lost carbon sequestration function of thesubmerged area is estimated to be Rs. 0.22 million annually. The estimated economic valueof surplus water in terms of foregone powe. generation from the leak at paddy harvestingperiods (April, September and October) is Rs. 95.33 million.

The extended cost benefit Analysis showed that EIRR equals 6 %, NPY equals Rs. (-)1980.23 million, and BC Ratio equals 0 47. The implications of these results on futurepower-sector project planning are also discussed.