A committee appointed by Prime Minister Ranil Wickremesinghe to solve a deadlock Sri Lanka’s power utility and the regulator has proposed a solution, raising hopes that threatened power cuts will be averted on June 12.
A trade union of engineers had warned that they will shut down a coal plant next Tuesday for which an environmental license had been denied, because the under work-to-rule they have to work by the book.
The Ceylon Electricity Board Engineers Union is on work-to-rule over a controversy involving changes made by the regulator to a long term power generation plan from which coal was removed, and liquefied natural gas was introduced which they say will lead to more expensive power.
A proposal was made that the regulator withdraw its decision which led to controversy and approve it in the interim with conditions, sources said.
Shutdown on so-called ‘illegal’ plants will be averted if the CEB is informed in writing of a settlement to the deadlock before next Tuesday.
In the meantime the CEB has to work on a new power plan under a new energy mix involving both coal and LNG and submit to the regulator for approval as soon as possible.
The government had already proposed three large LNG plants outside the long term generation plan which is made on the least cost basis taking into account energy security in the form on a mix on fuels.
The union has earlier also warned the government not to procure plants without competitive tender and on a so-called take-or-pay basis.
LNG prices collapsed unexpectedly in 2014, even in Asia, especially after natural gas output rose in the US, but demand takes several years to catch up. Crude prices also collapsed in 2015, but have since picked up.
LNG prices rose sharply this month, to around 9.60 US dollars per million British Thermal Units, up 32 percent since April, despite the northern winter season being over, as industrial demand gradually picked up.
New power plant take several years to build and even for industry to switch, distribution, receiving and storage has to be built, all of which take time analysts say.