While the nation baked under an unrelenting sun and endured unscheduled power cuts that negatively impacted the economy, the Ceylon Electricity Board (CEB) has been dragging its feet on implementing a scheme that would have prevented power cuts and been more financially prudent.
In September 2018, the Cabinet approved a memorandum prepared earlier that year by Prime Minister Ranil Wickremesinghe in his capacity as the Minister for National Policy and Economic Affairs, proposing that stand- by generators owned by government institutions be harnessed to boost the country’s power supply. However, Counterpoint learns that the proposal is yet to be fully implemented, with only data of available stand-by generators and their capacities compiled. In fact, according to knowledgeable sources, it was only in late March this year that the CEB management had instructed officials to speed up the activities relating to the Cabinet decision which was approved in September last year. It has, however, stated a source, not yet provided the resources required to carry out this activity.
Speaking on condition of anonymity, sources told Counterpoint, that by installing synchronising equipment with the assistance of the CEB, the stand-by generators could be connected to the grid as embedded generators. The procedure would have taken about two months to implement. And the nation would have been spared the unscheduled power cuts imposed in March and April.
The memorandum stated that the country faces chronic power shortages because of the drought, construction delays hampering the commissioning of major power plants, the non-implementation of the generation expansion plans, and reliability issues involving existing power plants.
Constant power shortages, either when the grid fails or owing to load shedding over the years, have resulted in many commercial and industrial enterprises as well as government entities investing in stand-by generators or online battery systems. It is these generators that were being targeted to help boost the country’s power supply during crisis periods. Counterpoint learns that a total of nearly 1500 MW is available through stand-by generators. Of that, government institutions have a capacity of around 200MW.
The memorandum recommended that the CEB enter into agreements with state Institutions to obtain power at cost-based rates approved by the PUCSL. The recommendations prepared earlier also included tapping in to the private sector entities that own more than 1GW of stand-by power and also developing an incentive plan. It was hoped that power could be obtained from both the government owned and private sector entities simultaneously.
The CEB is to assist in synchronising the generators with the national grid, while the PUCSL will be tasked with drawing up policy guidelines which would allow the sale of power from stand-by generators to the CEB.
(Source as obtained by Counterpoint)
It was envisaged that since the state and private sectors utilise their generators only when the national grid fails, or there is load shedding due to power shortages, the CEB could avoid power cuts, by using the generators at full-rated capacity only when needed.
The importance of this scheme is that it would no longer be necessary to procure extremely costly short-term emergency diesel power generation from privately run entities where the CEB must meet minimum generation/monthly capacity charge commitments.
The cabinet memorandum pointed out that since the generators would only be used for a few weeks at a time the CEB would benefit, “as compared to a forecasted shortage when procuring emergency diesel power, a few months in advance.”
Instead, the CEB has once again purchased emergency power that is generated with diesel fuel and costs more in the long run. And in this case, it was not even purchased in advance, but after the nation had endured several weeks of power cuts. Earlier this month, in a bid to mitigate the effects of the power crisis, Cabinet permitted the purchase of 100 MW of emergency power from three private companies. Accordingly, Agrekko International Project Ltd. will provide 24 MW and 10 MW respectively to the Pallekele sub-station and the Galle sub- station at the rate of Rs. 30.20 per kilowatt, while V Power Holdings Ltd. will provide 24 MW to the Hambantota Grid station and 24 MW to the Horana sub-station at the rate of Rs. 28.43 and Rs. 28.70 per KW respectively. A third purchase from Altaaqa Alternative Solutions Global FZE will supply the Mahiyanganaya Grid sub-station with 10 MW at Rs. 30.58 and 8 MW at the rate of Rs. 30.63 per KW to the Polonnaruwa sub-station.
A source close to the energy sector told Counterpoint that instead of imposing unscheduled power cuts, the CEB could have dealt with the crisis by implementing load shedding for institutions which own generators. Since such institutions would automatically switch to their generators when the power is cut, they would not be inconvenienced, while the public who do not own generators could have been spared the power cuts.
“It’s the diesel mafia, within the CEB and ministry officials, that is preventing the installation of a low cost and more effective plan,” one source alleged. The latest purchase is for a six month period, while the actual use of that emergency power would be for less than a month, the source stated, adding that with the onset of rains in the coming months, there would be no requirement for short term emergency diesel power generation. The financial obligations that come with such emergency purchases however, have to be met, even when not used, they said.
COPE Chairman and JVP Parliamentarian Sunil Handunnetti, addressing the media in early April, echoed the same sentiments when he accused the CEB of ignoring warnings of the Public Utilities Commission of Sri Lanka (PUCSL) in implementing the long term power generation plan. He alleged that the power crisis is a result of the mafia within the CEB which continues to purchase emergency power instead of going with the more cost effective options. The Cabinet, he said approved the synchronizing of generators belonging to government establishments, from which, according to him, about a 130MW could be secured.
In fact, a committee appointed by President Maithripala Sirisena in 2016 to investigate the constant power outages too had recommended the use of stand-by generators to mitigate the situation.
The committee’s interim report recommended that that the generation capacities of State and private sector stand-by generators in and around Colombo be assessed and a usage and payment plan be developed immediately. District and Provincial Secretaries were also to be instructed to carry out a survey of available back-up generators in private homes, businesses, factories and the military camps, so they could be connected to the national grid when required, and a suitable form of payment developed.
However, as Counterpoint has reported in previous issues, too, the CEB ignores government recommendations and opts for the more costly and less efficient forms of power generation. In April last year the CEB extended by three years its lease of the Ace Embilipitiya Power plant, which is owned by Aitken Spence PLC. At the time, a CEB source justified the purchase stating, “The Ace Embilipitiya Power Plant is needed, because it provides power to the Southern Province. Without it the South will be in the dark during the night peak; that is from 6.30pm to 10.30pm. We need an option like Ace to power the Southern Province during this time.”
The reality, though, as we all know, is that the South has been subjected to unscheduled power cuts these past several weeks, both during the day and at night!
On April 10, the Cabinet also approved a proposal submitted by the Power, Energy and Enterprise Development Minister, Ravi Karunanyake to set up a committee that would identify short, middle and long-term plans that would ensure uninterrupted power supply in the future.
Interestingly, a Long Term Generation Expansion Plan (LTGEP) covering 2015 -2034 is in existence, though most of its recommendations are yet to be implemented. In fact, in June 2017 in a letter addressed to the CEB Chairman, Dr. B M S Batagoda, Secretary, Ministry of Power and Renewable Energy urged the former to ensure that the LTGEP is implemented as a matter of urgency to avert further situations involving the power crisis the country faces. Informing the Chairman that the PUCSL had notified the Cabinet Sub- Committee on Economic Management that the implementation of the LTGEP was very slow, which would result in a serious power crisis, Dr. Batagoda asked that the scheduled list for tenders be called for the various planned power plants so that the 2015-2034 target could be adhered to, as a matter of urgency.
It is apparent that despite recommendations and cabinet directives the CEB has its own agenda, and the government lacks the will to whip it into shape.