Daily FT: Power play

  • Ministry calls for tenders for emergency power sans PUCSL approval 
  • Emergency power wanted as experts predict low rainfall 
  • Expensive stopgap as Govt. has failed to implement power projects since 2015
  • Earlier plan of purchasing power from IPPs discarded but could be cheaper 

By Chathuri Dissanayake

As the Government has failed to implement any new power projects over the past three years, the Power and Energy Ministry has decided to purchase emergency powerin 2019 sans approval from the Public Utilities Commission Sri Lanka (PUCSL),as an expensive stopgap measure to offset predictions of low rainfall.

The Ministry has called for bids to purchase 100MW of emergency power, terming it as ‘supplementary power’, without obtaining prior approval from PUCSL, a requirement under Sri Lanka Electricity (Amendment) Act No. 31 of 2013, to meet the demand in coming months, following predictions of low rainfall in February and March.  The PUCSL is yet to receive any request from CEB to procure emergency power, Daily FT learnt.

“The rainfall is expected be low in the coming months and already our Hydropower is running at low capacity. We cannot meet the demand of 2500 MW of power with the existing capacity, so we have to go in for emergency purchases. There is a growing demand at a rate of 5%-6% a year and we have not added any new plants,” Ceylon Electricity Board spokesperson Sulakshana Jayawardena explained.

The situation has been worsened following the retirement of two Independent Power Producers (IPPs),24 MW Ace Power Plant Matara, and 51 MW Asia Power Plant, Jayawardena said.

Although approval from Cabinet was given to extend the agreements of three IPPs by another three years, the CEB, under pressure, shelved the decision for two.However, the CEB renewed the agreement with third IPP Ace Embilipitiya, which has a capacity of 100MW, till 2020, as it is crucial to provide uninterrupted power to the South.

However, the Ministry may commission the plants again if purchasing power is more cost effective than buying emergency power, Power and Energy Ministry Secretary Dr. B. M. S. Batagoda told Daily FT.

“The Ministry will compare the cheaper options after the bids for emergency power are evaluated. And if the IPPs that we had supplying electricity are cheaper, then we will negotiate with them,” he said.

According to him, these plants remain the cheapest at present, with capacity cost at Rs. 1.50 per unit for Ace Embilipitiya, Rs. 2.40 for Ace Power Plant Matara and Rs. 2.60 for the Asia Power Plant.

“Last year we floated a tender for emergency power, and it cost Rs. 28 per unit with a capacity cost of about Rs.3 per unit. The fuel costs would be almost the same. If we buy from a bigger plant then we will have to pay capacity cost of around Rs.4 for a unit to retain the plant.So it would be best to renew the agreements with the IPPs through negotiation if the new purchases are more expensive,” he explained.

The need for purchase of emergency power has increased as the CEB has failed to commission new power plants to cater to the growing demand. Despite Cabinet approval being given to call for bids for a number of projects, no new plant has been commissioned by the CEB. Among the projects to be commissioned are tenders for a 100 MW barge-mounted HFO power plant in Galle; 4x24MW Heavy Fuel Oil (HFO) plants included in generation plans since 2015, which are yet to be tendered;and a 300MW LNG Plant has been tendered, but has run into controversy.

The CEB Engineers Union has maintained its opposition to emergency power purchases, as it is only a temporary measure and an expensive way to addressing shortages in capacity to meet demand.

“We are against temporary power purchases like this, as it is done at a very high price and this does not address issues of long-term generation capacity,” CEB Engineers’ Union President Saumya Kumarawadu told Daily FT.

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