Power problems

The power sector continues to lurch from one challenge to the next as the Attorney General has refused to support a barge mounted power plant due to significant issues, and Sri Lanka still remains without any emergency power provisions in the second half of the year.

It was reported over the weekend that the Government has set up two committees to procure 500MW of electricity after the Attorney General (AG) shot down an earlier proposal to buy 200MW of ‘emergency power’ from a barge-mounted plant without following tender procedures.

The appointment of the new technical evaluation committee (TEC) and Standing Cabinet-appointed procurement committee (SCAPC) is the continuation of a saga dating to when Ravi Karunanayake became Power and Energy Minister in January this year.

Since then, he has submitted multiple Cabinet papers seeking approval for varying quantities of emergency power without any scientifically backed data on how much the country really needs. This is problematic because the Public Utilities Commission of Sri Lanka (PUCSL), which is supposed to rubber stamp emergency power purchases, do not have the data to do so as it was not given to them by the Ceylon Electricity Board (CEB). 

This is another by-product of the non-cooperation policy followed by the CEB for several years to not sit on tender boards and support the roll-out of new power plants. As a result of this tug of war, the Government has been unable to provide sustainable solutions to Sri Lanka’s growing power needs.

Due to sporadic rains expected this year, the Power Ministry has presented but later changed several proposals to buy emergency power. In May, Cabinet sanctioned a proposal to buy 200MW from a Turkish Karpower barge to be connected at Kerawalapitiya for six months; and another 200 Karpower barge to be connected in Galle for nine months. This proposal caused much consternation because it was done without calling tenders, without including the PUCSL, and Karpower was to controversially be given a licence to import fuel directly, which would have driven up prices.

The AG observed that even though the price per unit was given as Rs. 26, these hidden costs would have pushed up costs higher. Historically even independent power producers have had to purchase oil from the Ceylon Petroleum Corporation (CPC) and not import directly. 

The CEB’s Additional General Manager (Transmission) has already expressed concerns regarding this Power Purchase Agreement. He has said, for instance, that the deal has not been specifically approved as an “emergency procurement” under the Electricity (Amendment) Act. In addition, there is a large gap of transparency without the PUCSL. Despite the considerable cost, these barges are not a sustainable solution for the power sector and could drive up already uncompetitive prices.

Sri Lanka is already struggling with sluggish growth with the economy only expected to expand by 3% in 2019. With elections drawing closer, the Government cannot afford to face public ire if load shedding is to become necessary. It is imperative, therefore, that there is greater transparency and accountability in transactions of the power sector. It is also important that the stakeholders within the power sector, especially the CEB and PUCSL, work together to formulate decisions that work in the best interests of Sri Lanka.