Daily Mirror: Cost of electricity in SL is very high compared to other countries in the region

The verbal wrangling between the power regulator Public Utilities Commission of Sri Lanka (PUCSL) and the powerful Engineers Union of the power monopoly CEB, has come to a boiling point with CEB engineers launching trade union action leaving the smooth power generation, transmission and distribution at risk. The Daily Mirror spoke to the President of the CEBEU, Saumya Kumarawadu on the issue. He shared the following views: 

 Q  What is the reason behind the ‘work to rule’ campaign by the CEB engineers?

There has not been an approved Least Cost Long Term Generation Expansion Plan (LCLTGEP)  ​for the construction of much needed power plants of the country since 2015 as the regulator, the Public Utilities Commission of Sri Lanka (PUCSL), failed to approve CEB’s LCLTGEP 2015-2034 and LCLTGEP 2018-2037. The CEB cannot procure or build power plants without a legally approved proper plan.  This situation will definitely lead to a major power crisis for which CEB engineers finally get the blame. As a professional trade union we have a right and responsibility to intervene in this very sensitive issue within our domain.

We had a number of discussions with relevant stake holders and the government in order to get this issue resolved without resorting to trade union actions. Even though their responses at those meetings were positive, no tangible solutions to the issue were foreseeable. This situation made us launch mild trade union actions from time to time. However, when the PUCSL illegally prepared and approved their own Generation Plan discarding the CEB’s LCLTGEP 2018-2037, we decided to fight for the rights of electricity consumers of the country. We started our trade union actions last September in mild form, as mentioned before, withdrawing our members from the Technical Evaluation Committees and Joint Working Groups appointed for the procurement of future power plants. This trade union action was gradually escalated step by step, when we noticed the lethargic approach of the authorities to settle the issue.


“We learnt that the PUCSL was making false statements to the media saying they had only changed the input parameters like coal and LNG prices in the model and their illegal plan had become more economical than the CEB’s plan.”


Ultimately, the President intervened and inquired from the PUCSL the reasons that prevented them from approving the CEB’s Generation Plan. The reason given by PUCSL was that the government has a policy of not constructing any more coal plants in the country and, on the contrary, CEB’s plan containing coal power plants. The President clarified that there is no such government policy and advised the PUCSL to grant the approval for the CEB’s LCLTGEP 2018-2037. When the regulator ignored the advice of the head of state too, we had no alternative other than resorting to work- to-rule campaign to win our very fair demands.

 Q  As far as you know why does the PUCSL not approve the LCLTGEP running to 2037 from 2018?

Even before the CEB prepared the LCLTGEP 2018-2037, the PUCSL had decided for what plan the approval should be granted. Their main objective was not to ensure formulation of   the best Generation Plan for the country, but to use their authority to make way for investors who were willing to make money out of power generating projects. Since they did not receive the plan they had in mind from the CEB, they prepared and approved their own plan rejecting the CEB’s plan.  This action of approving their own plan is totally illegal as they don’t have a mandate to do so as per the section 43(2) and 43 (8) of the Sri Lanka Electricity Act No. 20 of 2009. This is just like a person going to a Municipal Council to get his house plan approved, being instructed to put up a house handing him a plan designed to the liking of the MC.

We learnt that the PUCSL was making false statements to the media saying they had only changed the input parameters like coal and LNG prices in the model and their illegal plan had become more economical than the CEB’s plan. But, actually what happened was they had forcibly  removed  coal plants in the CEB’s plan giving irrational reasons even before the model was run. Even if they ran their model assuming their input data were correct, coal would still be there in the outcome.  On the other hand, the CEB had submitted input parameters to be used in the model well in advance to the PUCSL and they had never disputed applicability of them until their plan was published. However, they unilaterally changed the input parameters in order to get the plan they wanted and then ordered the CEB to implement it.

 Q  The PUCSL does not want to approve coal power plants in Sri Lanka’s future power generation. As such, why do you fight for coal power generation?

​When deciding on future power plants, we have to consider not only the generating cost but also a number of other factors. Among them energy security, technical constraints and environmental concerns are key. When making your judgment on power generating technology, due consideration should be given to all those key aspects. If only the environmental pollution is considered, we will end up with a Generation Plan that will give rise to host of other issues such as high cost of electricity, low reliability and vulnerability for energy insecurity. The number one reason the CEB has selected coal power plants for our future power requirements is to ensure the energy security. To have better energy security, we need to have a proper mix of coal, LNG and renewable energy sources. If we are going to depend only on one firm energy source like LNG as proposed by the PUCSL, we are taking a very high risk as then the electricity cost of the country would overly depend on LNG prices. In addition to that, coal is still considered as one of the cheapest options to generate electricity. This shows very clearly when looking at the number of coal power plants planned to be constructed by other countries in the world in future.

 Q  Many countries in all continents have begun phasing out coal power generation. But you want Sri Lanka to depend on coal power. Why?

​By now 40% of the world’s electricity demand is met by coal and many countries like Indonesia, Malaysia, Vietnam, and Bangladesh in our region have planned to put up more coal power plants in their countries. It is better to inquire why countries like Indonesia and Bangladesh, being LNG producers. have decided to construct more coal power plants. Australia is the second largest LNG exporter in the world and yet they produce as much as 63% of their electricity demand using coal.
Like older people who consume less food, countries like the USA, China and India, which were overusing coal power, have started gradually reducing coal. They are shutting down coal plants, which are harmful to the environment, built in 1970s with older technology.  But countries competing for foreign investments like Bangladesh, Malaysia, Indonesia and Vietnam have plans to increase their coal share in order to make energy prices more attractive to investors.

It is no secret that the cost of electricity in Sri Lanka is very high compared to other countries in the region. Because of that, electricity is subsidized to domestic and industrial consumers. Since the electricity tariff is not cost reflective, every year the CEB makes a loss close to Rs. 50 billion. Before commissioning the Norochcholai coal power plant, average cost of electricity was as high as Rs. 23.66 per unit and after commissioning the three coal power plants, the cost of a unit dropped to Rs. 15.07.  However, cost of electricity has an upward trend again as the coal power plant planned to be constructed in Sampur was abruptly stopped. If the country has to be developed, more and more FDIs need to be attracted to the country. But, prevailing high electricity cost has become one of the key factors that discourage such investments as any industry today is energy intensive.

Read the full Article: http://www.dailymirror.lk/article/-We-have-to-depend-on-coal-power-until-our-economy-becomes-more-stable–151764.html

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