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Serving Sri Lanka

This web log is a news and views blog. The primary aim is to provide an avenue for the expression and collection of ideas on sustainable, fair, and just, grassroot level development. Some of the topics that the blog will specifically address are: poverty reduction, rural development, educational issues, social empowerment, post-Tsunami relief and reconstruction, livelihood development, environmental conservation and bio-diversity. 

Monday, August 22, 2005

Delaying the implementation of power projects : A great loss to the economy

Sunday Observer: 21/08/2005" by Rashomi Silva

Sri Lanka has got a wrong mixture for power generation with over 65 percent of power generating through oil, the most expensive power generating resources, while in the world context, little more than 7 percent of power is produced using oil based resources, say experts.

Delaying the introduction of low cost power plants and dragging feet on the Norochcholai coal power project and the Upper Kotmale Hydro Power project can ruin the country's economy to a greater degree, than the two decades of war can, said Ananda Piyatilake, a project engineer at the CEB distributing office. "Each delaying day of the Norochcholai power project cost the country Rs 22 million and the Upper Kotmale power project cost Rs 10 million," he said.

With the 1996 power crisis the proliferation of relatively low capacity thermal power generating plants using petroleum fuels, has contributed to high electricity tariff, he explained.

"We in Sri Lanka with the highest electricity tariff, use the most expensive source, namely diesel for power generation which does not suite the need of a developing country like ours,"

According to the pattern of power usage in Sri Lanka the base load demand around 700MW (base load is the amount of electricity generated throughout the day on 365 days of the year) and a peak demand of over 1500MW (between 6.30pm- 9.30pm).

Common practice is to generate electricity using low cost option during the peak time and if the necessity arises to use diesel and other oil based options for generation during the peak hours, he explained. With the Upper Kotmale Hydro Power project which is likely to be the last mega scale hydro power project the country could have, experts stress the importance of introducing other options for power generation to fill the gap between the demand and supply of electricity.

Amidst protests from the employees for the proposed power sector reforms, the Ministry appointed a committee headed by the Ministry secretary Weerahandi to make recommendations and to formulate a concept paper that can be used as a legal framework in future reforms.

Committee discussions were based on proposals forwarded by an alliance of the CEB trade unions and the Paper presented by the Committee has identified a 'tripod' situation that was responsible for the present crisis, and has recommended a tripod solution for it.

"For the first time in the history of the CEB this year the committee has emphasised the importance of new and cheap power generating options with particular emphasis on coal based power generating plants," a union officials said. The need is for a clear policy on low cost power plants as a long term measure for the existing crisis within the Ceylon Electricity Board, a cost reflective price tariff and a suitable restructuring system.

Just like a tripod cannot stand if one of the legs are broken the CEB cannot survive in the long run if we ignore one of the conditions," he said. "This has to be a parallel process".

The implementation of UKHP is a positive move in this direction, but due to strong opposition from various parties it was finally decided that the project scope be limited to the St. Clair's water falls, instead of tapping five other water falls.

This would reduce the capacity of the power plant and would fall short of the need of present power requirements.

While mapping out long term plans for low cost power plants he emphasised the necessity of revising tariff rates to keep up with the world fuel rates.

"This is where the reforms become important, We have to have a certain amount of autonomy for the CEB.

Whenever we propose a tariff increase the government point blank would refuse and consequently the CEB has to suffer great deal of losses," he said.

The inability of the CEB to increase tariffs together with the increase of fuel price, depreciation of the SL Rupee and the consequent increase in capital and operational cost and the high prices paid to independent power producers reduce the CEB capacity to make profits.

"Of course the CEB is not above human errors. There are inefficiencies in operational and structural components and weakness on the part of the staff, but contribution of this part is relatively low, compared with the other factors,"

The bottom line however is that the CEB needs restructuring but, the restructuring has to be a parallel process with the introduction of low cost power generating options.

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