Wednesday, 5 March 2014 00:00
The possible takeover of the Norochcholai Power Plant by the Chinese company that built it hit headlines a few weeks ago, only to be refuted strongly by the company. Yet it still raises questions over efficiency and the eventual result that the people will buy at a US$ 1.35 billion cost.
Built by China National Machinery and Equipment Import and Export Corporation or CMEC, the project ran into hitches well before it was even opened. A large fire broke out on 24 October 2010. According to the Ceylon Electricity Board (CEB), there were no casualties but construction had to be sped up to meet the opening deadline.
On 22 July 2012, the power station ceased operations due to a leak in one of the thousands of tubes carrying water between the boilers. The country was put into controlled regional power outages to cope with the missing 300MW. On 8 August 2012, a tripping of the power line from Lakvijaya caused the power station to cease operations. The generation capacity of the power station exceeded its designed levels of 300MW on 29 January 2013, causing a complete shutdown. The plant was reactivated a day later.
In fact the frequent breakdowns received so much attention that Opposition politicians had plenty of ammunition to hurl at the Government. After more than a dozen breakdowns, things deteriorated to the extent that the Chinese company offered to take ownership of the Norochcholai plant from the Government and write off the US$ 360 million loan that was committed. This was admitted to media by Petroleum Minister Anura Priyadarshana Yapa about a year ago.
Then CEB engineers protested the move based on the logic that if the Chinese company was given control it would then have the authority to sell power at any cost it pleases to the Sri Lankan Government, resulting in the overburdened taxpayer having to literally pay the price. Unfortunately, the current situation is little better.
There has also been controversy over corrupt coal power purchases and incompetent energy policies that are moving towards coal power at a time when the rest of the world is gravitating into renewable energy. Yet the main criticism regarding the frequent breakdowns is that Chinese projects do not allow for adequate technology and expertise transfer.
Prominent economist Dr. Saman Kelegama during a recent presentation on Chinese-funded projects pointed out that skills transfer in Chinese projects is significantly lower than in projects done with other countries. For example, he highlighted collaborations done with India in the 1980s that gave Sri Lanka the legacy of buses and tyre manufacturing, which shows 80% or more of skills transfer. This is in direct contrast to the Norochcholai situation. These are exacerbated by reports of infighting within the CEB.
The Government has urged the speedy completion of the next two phases and according to some reports the second stage is almost ready to be opened. The Government has also promised cheaper power with the commissioning of the completed project. Whether it has the capacity to function remains to be seen.
The drama surrounding the Norochcholai Power Plant has spilled over to Sampur as well, with reports of a top CEB official advising the Government against it. Sri Lanka’s transition to coal power has been something of a shock to all and clearly requires greater transparency, stakeholder input, access to better technology and expertise.