The Ministry of Power and Energy says, around 50,000 people have been affected owing to power failures caused due to inclement weather.
The Spokesperson of the Ministry, Sulakshana Jayawardena, said the staff at the CEB are working on restoring the supply of electricity to affected areas.
The electricity supply had initially been disrupted to nearly one million people due to the adverse weather.
The Ceylon Electricity Board (CEB) is set to incur a loss of Rs 29 billion this year. Latest statistics show that the sales revenue is at Rs 206 billion while other income took the figure to Rs 222 billion. The expenditure has been placed at Rs 287 leaving a deficit of 65 billion. Allowing for depreciation it would work out to the loss of Rs 29 billion.
This is besides the CEB requiring a further Rs 50 billion to buy emergency power.
These developments come at a time when the CEB has not launched any major programmes to enhance the country’s power output since 2014.
http://www.sundaytimes.lk/article/1036308/rs-29-billion-shock-for-ceylon-electricity-board-ceb
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Two Ceylon Electricity Board (CEB) Engineers have filed a writ application in the Court of Appeal, seeking a ‘Stay’ order on the implementation of the country’s long term power generation plan.
The move follows a dispute between the CEB and the Public Utilities Commission of Sri Lanka (PUCSL), the country’s power sector regulator, over the generation plan approved by the latter.
The petition, filed on October 19, names 11 respondents. Those named include senior officials of the PUCSL, CEB, the Ministry of Power & Renewable Energy, and its Minister Ranjith Siyambalapitiya.
The petitioners argue that 1st respondent, PUCSL, has neglected and failed to comply with procedural requirements, when approving the CEB’s Least Cost Long Term Generation Expansion Plan (LCLTGEP) 2018-2037. The petitioners further allege that the 1st respondent had also acted arbitrarily by amending the generation plan without first consulting the transmission licensee; the CEB, and forcing conditions of its own on the CEB regarding the plan. They argue that the 1st respondent has no powers whatsoever to do so.
The petitioners also claim that, the PUCSL and its officials had acted with ulterior motives to discredit coal power generating plants and promote Liquid Natural Gas (LNG) plants.
The petitioners are seeking an interim injunction staying the decision document of the PUCSL on the implementation of the LCLTGEP 2018-2037, until the final determination of their application.
The petition is due to be taken up for hearing on Tuesday.
http://www.sundaytimes.lk/171126/news/ceb-engineers-file-writ-application-against-pucsl-270168.html
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https://sinhala.news.lk/news/political-current-affairs/item/26159-2017-11-20-06-53-08
The Finance and Mass Media Ministry yesterday entered into two loan agreements with the Asian Development Bank (ADB) to borrow US $ 150 million for the development of 3400 kilometres (km) of rural roadways and US $ 200 million for the implementation of a 100 megawatt (MW) wind power generation project.
The 3,400 km of rural access roads, inclusive of 340 km of national highways, will be upgraded under the agreement signed through the Second Integrated Road Investment Programme.
The significance of this programme is that these roads will be developed to suit all weather conditions.
Improving the capacity of road agencies with respect to safeguards, road safety, maintenance, research capacity and road design and construction is another component of
the programme.
The programme will be implemented in the Northern, Eastern, Uva and Western Provinces.
Under the first phase of this programme, 3,108 km of rural access roads and 248 km of national roads in the Southern, Central, Sabaragamuwa, North Western, North Central Provinces and Kalutara District in the Western Province are being improved and maintained.
The total investment cost of the first tranche of this project is US $ 172.1 million. ADB provides US $ 150 million and the government’s contribution will be US $ 22.1 million.
Meanwhile, the proposed 100 MW wind farm will be constructed in Mannar Island of the Northern Province.
In addition, wind park infrastructure will be developed, including the wind park’s internal medium voltage infrastructure, internal cabling and access roads, establishment of a renewable energy dispatch control centre for forecasting and controlling and managing intermittent 100 MW wind power generation.
The total investment cost of this project is US $ 256.7 million, of which, US $ 200 million will be provided by ADB as a direct loan to the Ceylon Electricity Board (CEB) under a Treasury guarantee. The balance US $ 56.7 million will be financed by the CEB.
ECONOMYNEXT – Sri Lanka’s energy regulator has said it will look at an ‘alternative structure’ to the state-owned power utility in expanding power generation to prevent its delays in adding plants from damaging the economy.
The Public Utilities Commission of Sri Lanka (PUCSL) estimates the total expected financial loss due to implementation delays of the Ceylon Electricity Board’s 2018-2020 plant schedule in the long term generation expansion plan is Rs50.62 billion.
The financial loss due to any further delay beyond what is forecast will cost Rs3.43 billion for each month, it said in a statement on the financial impact of delay in implementation of power plants.
“The government may consider a change in industry structure if the generation plan implementation cannot be efficiently carried out within the current structure,” it said.
Asked to explain, the PUCSL said: “Procurement of generation plants on a timely basis is a responsibility of the transmission licensee, which is CEB.
“Delays in implementation of plants will have an adverse effect on the economy. Therefore, if this cannot be achieved within the existing structure, then we need to look into an alternative structure. Determination of the structure should be done by a specialist in that area.”
(COLOMBO, November 20, 2017)
CEB’s procurement processes delay power plants required to be constructed
Delays in implementing planned power plants could cost the country Rs.50.8bn
Power Ministry secy. says disagreements between PUCSL and CEB engineers causing delays
The Public Utilities Commission of Sri Lanka (PUCSL) recently recommended the government to consider changing the structure of the power industry, if the Ceylon Electricity Board (CEB) cannot bring the procurement process for the planned power plants to normalcy, to avoid a possible power crisis and Rs.50.8 billion in losses.
“The government may consider a change in the industry structure if the generation plan implementation cannot be efficiently carried out within the current structure,” the PUCSL said in a report.
The CEB has run into delays in the procurement processes to implement the power plants required to be constructed in the 2018-2020 period.
“The Public Utilities Commission has been continuously monitoring the progress of the CEB in implementing the approved plan and has observed delays in the procurement process of power plants expected to be commissioned by 2020,” the utilities regulator’s report said.
According to the PUCSL, in addition to the Rs.50.8 billion loss, which would be incurred due to the cost escalations and the requirement to power the country with expensive thermal power generation in the interim, each extra month of delay beyond forecasted would cost Rs.3.43 billion per month.
“These financial loss or cost overrun figures are merely the primary outcomes of implementation delays. The cumulative effect of implementation delays over the next three-year period can very likely trigger a power crisis that can seriously affect the national economy,” the PUCSL said.
At the recent Sri Lanka Energy Forum organised by the PUCSL, National Policies and Economic Affairs Deputy Minister Dr. Harsha de Silva pledged to take action against the CEB officials who contribute towards further delays in the power sector tender processes, after inconsistencies and delays were reported on the 300MW Kerawalapitiya liquefied natural gas (LNG) power plant procurement.
Power and Energy Ministry Secretary Dr. Suren Batagoda yesterday downplayed the impact of the PUCSL report.
“Various people have various views about this,” he told Mirror Business during a telephone interview, when questioned on the implications the publication of this report has on the country.
When reminded that the PUCSL was a government institution and such a report therefore communicates an official view of the government, Dr. Batagoda said that delays have taken place because of the disagreements between the PUCSL and engineers who sit on the committees on the proposal evaluation and implementation process.
“It’s the disagreements between the engineers and the PUCSL. The engineers are not willing to accept the power generation plan approved by the PUCSL,” Dr. Batagoda said.
Dr. Batagoda said that there would have been inevitable delays for the projects approved under the generation plan, even if there was no disagreement between the two parties.
Speaking specifically on the 300MW LNG power plant currently in the procurement process and which the PUCSL had expected would come online by January 2019, Dr. Batagoda said that it would have been impossible to bring it online by 2019 even under the normal circumstances.
“It anyway would have been 2020,” he said, while adding that the tender board for the LNG plant is currently evaluating five bids.
Meanwhile, the PUCSL noted that it is assuming the 122MW Uma Oya hydro plant and the various solar, wind and mini-hydro projects planned for 2018-2020, would be delayed by one year.
The CEB engineers want coal to be included in the power generation plan, although the approved plan, which focuses on the environmentally friendly LNG fuel and other renewable energy sources, was chosen among the scenarios that the PUCSL requested the CEB to submit.
The Public Utilities Commission of Sri Lanka (PUCSL) has predicted that the cumulative effect of implementation delays over the next three years “can very likely trigger a Power crisis that can seriously affect the national economy”. The Electricity Regulator has also taken a stand against Emergency Power being bought to meet the energy shortfall that may be caused by implementation delays, and said the costs must not be passed onto the customers through tariffs.
The PUCSL yesterday issued a 5-page Report titled, ‘Financial Impact of Delay in Implementation of Power Plants’. The power plants referred to are in the Ceylon Electricity Board’s (CEB) Generation Expansion Plan.
“The Commission does not recommend purchasing Emergency Power in the future, to meet any capacity or energy deficit due to implementation delays of these upcoming Power Plants, and is of the view that such costs should not be passed through to the consumers through tariffs,” the Report states. “The Government may consider a change in industry structure if the generation plan implementation cannot be efficiently carried out within the current structure.”
The Report warns that Sri Lanka will suffer a staggering loss of Rs 50.62 billion due to implementation delays in the 2018-2020 Power Plant schedule. Any delay beyond the estimated periods forecast by the PUCSL, will cost a further Rs 3.43 billion a month. The Regulator “has been continuously monitoring the progress of the CEB in implementing the approved plan, and has observed delays in the procurement process of Power Plants expected to be commissioned by 2020”.
The Kerawalapitiya 300 MW natural gas-fired Power Plant, the 122 MW Uma Oya Hydro Plant and various solar, wind and mini-hydro projects are now overdue. And cost overruns and load shedding (interruption of an Electricity supply to avoid excessive load on generating Plants) are prominent and direct consequences of these delays.
The Asian Development Bank (ADB) is to support the construction of a 100 MW wind farm in Sri Lanka with a $200 million loan.
Accrding to a report in the Modern Power systems website the wind farm, located in Mannar Island in the north of Sri Lanka, is considered to be the country’s first wind farm and is scheduled to start operations in 2021.
ADB will provide the Ceylon Electricity Board (CEB) with a $200 million loan for the $256 million project, which will help the country to meet its renewable energy goals. The project will also help CEB to establish procedures that will allow for further wind farm developments in the future, the report claimed.
ADB principal energy specialist Mukhtor Khamudkhanov said: “The new wind power generation project will not only provide access to a clean and reliable power supply in Sri Lanka, but also create an environment for further wind power development through future public-private partnerships.
“Diversifying the country’s power generation through clean, renewable energy sources will improve the country’s energy security and environment.”
Sri Lanka generates around two-thirds of its electricity from coal and oil. It has a target of generating at least 20 per cent of its power from renewable resources by 2020.
http://www.sundaytimes.lk/article/1034357/adb-to-support-100mw-wind-farm-in-sri-lanka
The government is now committed under the structural benchmarks of the IMF to introduce a pricing formula for fuel in March and a pricing formula for energy probably by September, next year,” Coomaraswamy told a forum in Colombo, this week.
State-run Ceylon Electricity Board (CEB) has a near total monopoly in electricity generation and a total monopoly in transmission and distribution in Sri Lanka, while Ceylon Petroleum Corporation (CPC) has only one private sector competitor—Lanka Indian Oil Company PLC.
Both the CEB and CPC have been selling their products and services at subsidized prices and as a result, have accumulated losses running into billions of rupees, becoming two of the largest loss-making state-owned enterprises (SOEs).
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Although the government directs these two state-owned utilities to sell their products and services at subsidized prices, no budgetary transfers are done to support these subsidies, leaving them with a precarious financial predicament, which becomes toxic with their inherent inefficiencies.
A pricing formula will allow these utilities to price their products and services in a cost-reflective manner and keep the political interferences at bay. Successive governments have used electricity tariffs and fuel prices to sway
http://www.dailymirror.lk/article/Pricing-formula-for-fuel-by-March-next-year-electricity-by-September-139224.html
Nov 09, Colombo: The Governments of China and Sri Lanka have taken steps to implement a joint project to establish a 400 MW Liquefied Natural Gas (LNG) power plant in Hambantota.
The project will be implemented with the prime objective of providing electricity to the industrial zone proposed to be constructed at Hambantota and to overcome the power scarcity that may occur in the future.
The project is expected to be implemented as a Joint Venture between the China Machinery Engineering Corporation (CMEC), nominated by the Government of China and the Ceylon Electricity Board.
It will be included in long term energy plan approved by Public Utilities Commission and implemented with relevant approvals.
The proposal made by the Minister of Power and Renewable Energy Ranjith Siyambalapitiya to implement the proposed project with relevant approvals was approved by the Cabinet.
The Sri Lankan government has decided not to set up anymore coal power plants in the country and hopes the country to be 100 percent powered by renewable energy by 2030.
India’s largest importer of liquefied natural gas, Petronet LNG Ltd will soon form a joint venture with Japanese and Sri Lankan companies to set up a Liquefied Natural Gas terminal near Colombo in Sri Lanka
http://www.colombopage.com/archive_17B/Nov09_1510244353CH.php
ECONOMYNET – Sri Lanka’s state-run Ceylon Petroleum Corporation, a key trigger of economic instability in the country, has lost 68 billion rupees in the nine months to September 2017, amid mis-pricing of fuel, officials said.
CPC is now losing 11 rupees on a litre of petrol, 7 rupees on a litre of diesel and 25 rupees from kerosene, after paying turnover taxes.
Sri Lanka’s government has still not made a decision on implementing a price formula, Petroleum Minister Arjuna Ranatunga said.
“The decision on pricing formula has to be taken by the government,” Ranatunga told reporters. “Unfortunate thing is if we try to get a formula done, it will affect the masses,” he claimed.
“In the future there can be a change. But at the moment we are not looking at it. I do not think it is the best time to do it, since the cost of living has gone up.”
Energy however is used less by the poor, and mostly by the rich. Economists say 70 percent of the fuel sold in the country are consumed by the upper 30 percent of income earners in society, an economist said last week.
The consumption of either petrol, diesel or electricity goes up with income.
Central Bank Governor Indrajit Coomaraswamy said off-budget subsidies given by CPC and CEB has been a problem.
Losses of the CPC or Ceylon Electricity Board or both has also triggered balance of payments crises in the past when they were accommodated by central bank credit, when interest rates were not allowed to go up, with the rupee collapsing, pushing inflation up and hurting the poor most.
Later taxes collected from foods of the common people including from hospital bills, are used by the Treasury to subsidize CPC and CEB, whose customers included exporters who sell goods in countries with higher income levels.
Read more:
http://www.economynext.com/Sri_Lanka_s_Ceypetco_loses_Rs68bn_in_nine_months-3-9106-8.html
By Niranjala Ariyawansha
http://www.ceylontoday.lk/print20170401CT20170630.php?id=32896
The former President and the former Secretary of the Ceylon Electricity Board Engineers Union (CEBEU) have filed action in the Court of Appeal seeking a ban on the Least Cost Long Term Generation Expansion Plan (LCLTGEP).
They allege that it was prepared illegally by the Public Utilities Commission of Sri Lanka (PUCSL) acting beyond the authority granted to them in the Sri Lanka Electricity Act.
They have also requested a Writ Order to withdraw the letter sent on 3 August 2017 to the General Manager…of the CEB by the PUCSL, stating that the LCLTGEP should be implemented immediately.
This case has been filed by former president Athula Wanniarachchi and former Secretary Chamil Edirimuni of the CEBEU.
Wanniarachchi told Ceylon Today that the CEB will not implement the ‘illegal LCLTGEP’.
LCLTGEP, which was prepared by experts of the CEB, was submitted to the PUCSL on 5 May for approval.
However, it was rejected and the PUCSL prepared another plan and sought approved for implementation.
According to the Sri Lanka Electricity Act No. 20 of 2009, only the CEB has the authority to prepare a LCLTGEP. The PUCSL has the authority only to grant approval for it and to correct any shortcomings if any, and to provide guidelines for a better plan on providing electricity to the consumer at a lower cost.
plan that determines the least cost electric power plant schedule for next 20 years has gone for public consultation.
An avalanche of public comments has criticized the plan for favouring conventional technologies. The approval for the plan is withheld and a public discourse on electric power generation has developed. Amid the chaos emerges an alternative generation plan that is cheaper than the originally proposed plan.
By the way, this is a series of events that happened in South Africa.
The Integrated Resource Plan prepared by the Department of Energy in South Africa is the equivalent of the Least Cost Long term generation Expansion plan prepared by CEB in Sri Lanka.
The new version of Integrated Resource plan (IRP 2016) had been published for public comments on November 2016. The plan has been the subject of number of controversies, due to some missing appendices, outdated technology costs, artificial constraints (forced conditions) imposed on renewable technologies, and incorrect externality costs to name a few. Some submissions have gone to the extent of calling the IRP unconstitutional for its reliance on coal power. The “Council for Scientific and Industrial Research”(CSIR) has made a submission in response to the draft plan pointing out some highly flawed assumptions that have gone into the original Plan and has proposed a revised plan which costs much less than the original ‘least’ cost plan that had been proposed.
The fundamental nature of power system planning is undergoing a slow transformation where planned power systems are transforming to market oriented ones
The technology costs are the key assumptions that had been challenged by the CSIR submission in South African case. South Africa has this well-known and highly acclaimed Independent Power Producer Procurement Programme (IPPPP) in place to procure renewable and conventional power plants using a competitive tendering process.
CSIR has used the actual technology costs from these auctions with prudent adjustments using most optimistic forecasts for nuclear and coal costs, and pessimistic forecasts for renewables energy costs and Natural Gas prices, to rerun the model while also removing imposed constraints placed on renewables in the initial plan. The result has been a least cost scenario that costs 70 billion rand/year less than the original plan. The additional costs of energy storage systems required to ensure frequency stability, has also been quantified (again using conservative estimates about future technology advancements and cost reductions) where it had been noted that the worst case cost for all scenarios are well below 1% of total cost of power generation by 2050. The cost of transmission network infrastructure has also been calculated again with high cost assumptions and again, the new revised least cost plan has turned out to be 20-30billion rand/year cheaper than the original plan. The complete submission of the CSIR with detailed calculations and simulation results can be accessed from their website. In a nutshell, it had been proven that avoiding CO2 emissions is no longer a trade-off, but has become the least cost option in power system planning studies.
In Sri Lanka, the Ceylon Electricity Board submitted the Least Cost Long Term Generation Expansion plan for the approval of Public Utilities Commission of Sri Lanka, on May 5, 2017 and a public consultation on the plan was held on 15th June 2017.
The public consultation attracted 36 comments from various organizations, and individuals, most of which were critical of the plan. The Commission based on the submissions made during the public consultation process, directed the CEB to run 12 additional scenarios and submit results to the commission. The commission based on scenarios submitted by the utility approved a revised plan on 20th July 2017, at which point the hell broke loose.
CEB management has questioned the legality of the process and the authority of the regulator while the unionized engineers of the CEB who have vowed to defend the original plan through hell and high water have refused to accept the Least Cost Plan approved by the regulator and is threatening trade union actions if the regulator does not approve the original plan submitted by the utility.
There are a number of striking similarities between the case of South Africa and Sri Lanka.
Fuel costs forecast are at the heart of both controversies. The original plan (IRP 2016) of South Africa assumes an unrealistic low technology cost (Levelised cost of electricity LOCE) for coal and nuclear while assuming higher than actual prices for Renewables. The original plan of CEB also assumes lower coal prices and higher natural gas prices.
Both electricity industries operate for the most part as vertically integrated monopolistic utilities. And the public discourse pertain to the two plans have also followed a similar arc thus far.
At the same time, there are significant differences between two situations. The Sri Lankan process is less rigorous than South African one and the stakeholder involvement is weaker as a result.
The Integrated Resource Plan of South Africa attracts comments from a plethora of organizations from various sectors most if not all of whom are well informed about the planning process and models that involves PLEXOS software. In Sri Lanka, CEB believes that the generation planning process and the model that involves WASP IV software and linear optimization, is perhaps slightly less challenging than rocket science and that none other than Electrical Engineers of CEB can probably wrap their heads around profound intricacies of the generation planning model and power systems.
In South Africa, non-electrical engineers such as energy economists, scientists, financial analysts, policy experts get involved in the generation planning discourse and make significant contributions based on their individual expertise that refines the plan. In Sri Lanka, omniscient electrical engineers of CEB are believed to be the experts in all matters including economics, demand and price forecasts, energy markets, financial analysis, and social and environmental externalities that are relevant to generation planning model.
In South Africa, the discussion on the IRP 2016 is mostly objective and is about the planning process, models, scenarios and parameters. In Sri Lanka the discussion on LCLTGEP has become sentimental, emotionally charged, and sometimes digresses to topics tangential to the issue at hand including conspiracy theories and patriotism. In hindsight, there are a lot that Sri Lanka can learn from South Africa about generation planning.
However, this comparison will be grossly incomplete if it doesn’t acknowledge and take into account the size of power systems and the fact that South Africa is an interconnected system, where Sri Lanka operates as an isolated islanded power system.
But let’s consider an interconnected system for a moment.
The national grid of UK, a 70GW power system operates with three interconnections, the 2GW French interconnection, 1GW BritNed interconnection with Netherlands, and two 500MW connections with Northern Ireland and republic of Ireland.
In the case of Sri Lanka, proposals about an Indian interconnection had been around for decades with number of various pre-feasibility studies conducted at different instances. There might have been, socio political concerns, pricing models, technical issues when the proposal was considered in 1970’s for the first time, but not anymore.
Wheeling charges however will be on the higher side due to transmission losses of Indian system. Yet, a rough calculation with conservative estimates (wheeling charges upto Kerala plus twice the transmission cost of Sri Lankan system) will show that electricity can be procured from the spot market of these power exchanges, for less than 20 LKR/kWh (landed cost in Sri Lanka), much less than what Sri Lanka is paying for emergency power via PPAs.
Long term contract prices are bound to be less than day-ahead market prices. The 65,000 MW of coal power plants in India, stranded without fuel and dispatch instructions is a well-known fact and in this context Sri Lanka can procure energy from India sans pollution if it decides to.
Yes, transmission constraints are present. But reactive power compensation can be done with a larger controller at HVDC converter stations, which will not only strengthen the transmission system, but also facilitate renewable integration in time to come. California Independent System Operator’s (CAISO) western energy imbalance market (EIM) recently started to trade electricity in a sub-hourly market, a move that will reduce the reserve margin requirements of system operators, and thereby overall costs.
In UK, national grid uses market mechanisms to obtain about 15 types of various ancillary services from electricity generators. The emergence of electricity markets has led certain planning requirements to be replaced by market mechanisms. Though power exchanges in India currently don’t provide these services at the moment, the industry is moving there slowly. Sri Lanka meanwhile is struggling to implement a SCADA system.
The electricity sector is rapidly changing, that has posed new challenges to the generation planning exercise, all around the world. The electricity demand is becoming more and more stochastic in nature, rendering once revered demand models obsolete. The uncertainty associated with a long term demand forecasts has increased rapidly due to technological disruptive forces, behavioural and lifestyle changes etc… With the increasing renewable energy penetration, planners will soon be required to consider a forecast demand curve instead of the existing practice of using ‘Load Duration Curve (LDC)’ for planning capacity additions at the unit commitment level, because the variable nature of renewable energy will be imposing different ramping requirements and peak load hours on rest of the generators in the system.
The fundamental nature of power system planning is undergoing a slow transformation where planned power systems are transforming to market oriented ones.
Markets always have the potential to transcend politics, bring down prices by promoting competition and ultimately serve as economic optimization tool. However a strong and mature regulatory regime is an essential prerequisite before moving to a market oriented model. Establishing a robust and transparent power procurement programmes like the IPPPP in South Africa and establishing a fair and transparent generation planning process are the first steps Sri Lanka can take in that direction.
Dileepa Karunarathna is an Electrical Engineer by profession and is serving as Assistant Director – Tariff and Economic Affairs, at the Public Utilities Commission of Sri Lanka. The writer’s view does not reflect the view of the Public Utilities Commission of Sri Lanka.
The Government’s plans to procure emergency power plants vital to avert a potential power crisis in 2018-2019 suffered a blow after the Ceylon Electricity Board Engineers’ Union (CEBEU) decided to withdraw from all Technical Evaluation Committees (TECs) in charge of power plant procurement.
The CEBEU’s move marks an escalation of trade union action launched last month amid a bitter dispute over the CEB’s Long Term Power Generation Plan.
Among the emergency procurement plans that have been hit are the 300 Megawatt (MW) Combined Cycle Power Plant at Kerawalapitiya, 100MW barge mounted diesel plant in Galle and four 18MW diesel power plants.
“The Government has also taken Cabinet approval to acquire 100MW of emergency power during the coming dry period from February to May next year, but our members will not work on these high cost procurements,” CEBEU Executive Committee Member Athula Wanniarachchi insisted.
He revealed that two 300MW units of the Lakvijaya Coal Power Plant in Norochcholai were scheduled to be shut down on separate occasions for routine maintenance next year for at least 45 days. As such, he warned that meeting the power demand would be difficult next year.
Mr. Wanniarachchi charged that no action had been taken to build a large (thermal or hydro) power plant since Lakvijaya’s Unit 3 was commissioned in 2013. As a result there is a huge power deficit at present and the situation would only worsen in 2018-19.
“The Government should take total responsibility for repercussions which might arise due to non-functioning of TECs working on medium-term and short-term power solutions,” he stressed, claiming the union gave the Government ample time to solve the issue.
The crisis stems from a dispute between the CEB and the Public Utilities Commission of Sri Lanka (PUCSL), the power sector regulator, over the country’s Least Cost Long Term Generation Expansion Plan (LCLTGEP) 2018-2037. The CEB alleges the plan approved by the regulator in July this year was not the plan it submitted. It charges that the PUCSL had exceeded powers vested with it in amending the plan, a charge which the regulator strongly refutes. The PUCSL claims that its analysis found that a “coal free” scenario submitted by the CEB was cheaper than the “base case” plan it recommended, which included coal power plants.
Meanwhile, Power and Renewable Energy Deputy Minister Ajith P. Perera said the Parliament’s Sectoral Oversight Committee (SOC) on Energy had taken up the matter several weeks ago and all sides had agreed that the LCLTGEP needed a review.
“We also came to an agreement on the inclusion of coal power plants in the plan,” he said, indicating that proposals for coal power plants would be submitted to the Cabinet and the PUCSL again for approval.
As such, the Deputy Minister said there was no point in the CEBEU intensifying its trade union action.
Mr Wanniarachchi, however, said while an agreement had indeed been reached at the oversight committee some weeks ago, there had been no movement since then.
When contacted, United National Party Parliamentarian Ashu Marasinghe, a member of the SOC on Energy, said the committee hoped to convene again before the end of the month to finalise its decision. He, however, said any changes should be made in line with the Government’s energy policy.
“The Government has also taken Cabinet approval to acquire 100MW of emergency power during the coming dry period from February to May next year, but our members will not work on these high cost procurements,” CEBEU Executive Committee Member Athula Wanniarachchi insisted.
ECONOMYNEXT – Fitch Ratings Lanka said it given Sri Lanka’s state-owned power utility, Ceylon Electricity Board (CEB), a National Long-Term Rating of ‘AAA(lka)’ with a Stable Outlook.
CEB’s rating is equalised with that of the sovereign, rated B+/Stable, based on the strong linkages with its parent, in line with Fitch’s Parent and Subsidiary Rating Linkage criteria, a statement said.
“The equalisation takes into consideration CEB’s strategic importance to Sri Lanka in ensuring power security and supply of affordable electricity to the public,” it said.
Fitch said it expects CEB to continue to make losses in 2017 and its balance sheet is significantly weak for a utility company as it sells power below cost at subsidised rates but does not foresee the government implementing a pricing formula in the near-term, given the political and social implications.
The full rating report is given below:
Fitch Ratings-Colombo-13 October 2017: Fitch Ratings Lanka has published Sri Lanka-based Ceylon Electricity Board’s (CEB) National Long-Term Rating of ‘AAA(lka)’ with a Stable Outlook. CEB is fully owned by the Sri Lanka sovereign (B+/Stable).
CEB’s rating is equalised with that of the sovereign based on the strong linkages with its parent, in line with Fitch’s Parent and Subsidiary Rating Linkage criteria. The equalisation takes into consideration CEB’s strategic importance to Sri Lanka in ensuring power security and supply of affordable electricity to the public.
KEY RATING DRIVERS
Strong Linkages with State: Fitch believes the Sri Lankan government uses CEB as a vehicle to provide an essential public service. CEB provides electricity at subsidised tariffs without much financial compensation from the government. Fitch assesses the linkages between CEB and the state to be strong, reflecting high ownership and management control, explicit guarantees and financial support through equity infusions and debt funding. CEB’s strategic importance to the state stems from being the country’s sole grid operator and distributor and accounting for the majority of generation capacity. We expect the state to provide extraordinary support to CEB over and above most other state entities.
We do not expect the government to liberalise the electricity sector or privatise CEB in the medium term, as high generation costs would compel the government to continue providing subsidies, which can be done primarily through a state entity. As such, we do not expect CEB’s linkages with the state to weaken.
Weak Standalone Profile: CEB’s standalone credit profile is weaker than its support-driven rating of ‘AAA(lka)’ due to exposure to high regulatory risks, a weak operating performance and debt-laden balance sheet. However, Fitch believes providing a notch-specific standalone credit view of CEB is meaningless due to poor margin visibility. This stems from a lack of clarity on a tariff framework and absence of a cost-reflective pricing formula, which could adequately cover its generation costs. State support will be necessary to sustain CEB’s operations over the medium term, as Fitch believes electricity will continue to be sold below cost.
Monopoly Status in Power Sector: CEB has almost full network connectivity and accounted for more than 75% of the Sri Lanka’s generation capacity at end-2016. CEB will be the key driver in achieving the government’s target of increasing current installed capacity by 2.5x within 20 years to meet electricity demand, which CEB expects to rise by 5% per annum over the long term. New capacity in mini hydro, thermal and renewable energy will come from private players, but CEB will undertake all large power-generation projects and improvements to the transmission and distribution network, which require significant capital investments.
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