CEB comments on the Agrico Agreement

During the period 1990 -91 the LTTE launched an attack in Vanni and captured the A9, also destroying the power lines from Vavuniya to Chunnakam in Jaffna. Subsequently power to the Jaffna peninsula was supplied by a 20 year old CEB owned Diesel power station in Chunnakam.

This power station was taken over by the Armed forces through the Rivirasa operation launched in 1996. However with the increase in demand in the Jaffna peninsula this power station was incapable of meeting the demands, as it was a very old power station. Therefore during 1999 - 2003 power supply to Jaffna was interrupted periodically. Due to this situation 2 private power stations (Agrico -15MV and Cool Air-13MV) had to be deployed to cater to the power needs of the area on a short term basis. However due to the prevailing situation the cost of electricity from these two thermal power stations were relatively higher than the rest. However due to the main power supply being disconnected from Vavuniya, the contract had to be extended every year costing the CEB a colossal sum which kept escalating and which had transformed into a major money making operation.

On 24 May 2006 according to a gazette notification the then Minister of Power and Energy John Seneviratne, as a solution to this problem decided to remove the 2 earlier thermal power stations by 2007 and instead introduced "Northern Power" thermal Power station. The initial 15MV agreement however was later increased to 30MV. It was in operation from 1 April 2008.

At the initial stages of this agreement there were problems faced. The first problem was that unlike in other agreements where new machines were required to be used, since it was not mentioned in the Gazette notification; 30 year old machinery was being used. Secondly unrealistic operations cost was added while prices of new machines were quoted even for the older machines. Thirdly the CEB had not certified the suitability or condition of the machines. This however was a known secret within the CEB where the General Manager had personally intervened and certified the relevant private company.

It was no secret that the CEB Mafia was behind the private power company.

Furthermore on the pretext of importing spare parts for the machinery they had replaced entire machines with the funds of the CEB. However in spite of all this expense, they have yet to supply the 30MV that was agreed on, and the CEB has been unable to obtain this capacity for the Jaffna area. Although they were able to close down the "cool air" power station in 2009, Agrico could not be shut down. Hence Agrico who only had agreement for 2 years in Jaffna paved its way to stay on for 10 years. Although periodic approval was sought in cabinet, northern power has not been able to deliver on its promises.

However since Minister Patali Champika Ranawaka disagreed to extend their contract "Nothern Power" was shut down on 13 January 2011. However the CEB has thus far been unable to take possession of this power station. It was believed that those who were instrumental in bringing in Northern Power later over a dispute had joined in paving the way for Agrico to take over.

Subsequently Minister Ranawaka appointed a committee comprising Prof. K.K.Y.W. Perera, and former CEB DGM Tissa Herath together with several specialists in the field to visit the power stations in Jaffna. This committee found that Northern Power had a maximum capacity of 22 MV with a certified capacity of 18 MV. Therefore to meet the 35MV requirement of Jaffna CEB and Agrico were needed.

On 13 January 2011 the Agrico agreement ended. If its term was not extended Jaffna faced power shortages. With the intention of taking undue advantage of the situation, Agrico decided to raise its charges by 20%. Meanwhile after meetings with the minister, secretary, and the chairman, and several other officials it was decided not to extend the contract of Northern Power and to construct the High power Vavuniya-Chunnakam power lines and supply electricity, and postpone the Agrico agreement until 31 December 2011, and not increase the amounts and while the Lakdanavi power station was to be decommissioned, it was decided to recommission it in Chunnakam, and then terminate the Agrico contract.

Due to Agrico failing to agree to the price stability, talks dragged on. But later due to the orders of the Minister to acquire Agrico by the government, they agreed to the charges. Thereafter on 29 March 2011 there was an amicable agreement between the Government and Agrico, which gained cabinet approval on 5 April 2011. However now there seem to be a tug-of-war between the CEB and Lakdanavi regarding prices.

The fraud and discrepancies in the power sector in the North and issues regarding Northern Power and Agrico has revealed the extent of corruption and fraud taking place in the Power sector. The Power sector Mafia is powerful to the extent of destroying anyone who went against their plans. That is the noise we hear from the CEB right now.