CPC suspends fuel supply to CEB plants due to non-payment of bills

• Outstanding runs up to Rs. 80 b
• IPPs also in trouble as CEB delays settling payments due, leading to funding issues

The Ceylon Electricity Board (CEB) yesterday announced possible power cuts as the Ceylon Petroleum Corporation (CPC) refused to release fuel to thermal power plants exceeding the borrowing limit.

The grid has lost 150 MW, with some emergency power suppliers and some independent power producers not being issued fuel, leading to one hour-long power cuts in several areas in the country, Power and Energy Ministry’s Information Director Sulakshana Jayawardena told Daily FT.

The CEB has run up a bill of Rs. 80 billion with CPC without making payments prompting the latter to block fuel supply for all thermal plants which CEB has payments arrangements with the CPC. This includes emergency power plants of 20 MW each. The 20 MW plant in Hambantota run by V Power was not running yesterday as there was no fuel. According to sources V Power has been informed that fuel sufficient for two days will be issued to the plants.

Second V Power plant of 20 MW in Horana which is to be commissioned today will also have fuel sufficient to run the plant for only for two days, Daily FT learnt. Another IPP adding 20 MW to the grid has also been forced to shut their plant down temporarily yesterday as they are unable to finance fuel purchases till CEB settles outstanding bills to the tune of Rs. 200 million for supply of electricity last month. IPPs pay the CPC directly for the HFO fuel purchases. However some IPPs are running into financial difficulties due to non-payment of bills by the CEB.

The CPC took the decision to halt fuel supplies as they are unable to issue fuel “above the borrowing limit”, CPC Chairman G.S. Withanage told Daily FT.

“If we do so the officials will be held accountable later and we cannot risk this,” he said.

CEB officials rushed to have negotiations with the CPC to come to a settlement. The Treasury has agreed to release part of the funds needed to settle the outstanding with the CPC, Jayawardena said.

However Daily FT was not able to confirm if CEB will have funds to settle outstanding bills that the CEB has with IPPs adding to the grid.