Govt. launches crucial industrial energy savings initiative with PPP model

As Sri Lanka’s domestic manufacturing industries are continued to be challenged by rising energy costs, Sri Lanka’s Industry and Commerce Ministry moved into implement industry grade energy efficiencies at factory level, using the Public Private Partnership (PPP) model.

 “As we face a climate of global recession and increasing energy costs, international markets demand more and more low cost products. To reduce our industrial and manufacturing costs and survive, we decided to create this special project,” announced Deputy Minister of Industry and Commerce Jayaratne Herath, starting off the new initiative on 14 December. “This Rs. 4.5 million (US $ 39500) project, under the guidance and supervision of Minister of Industry and Commerce Rishad Bathiudeen, will enable us to initiate manufacturing at lower costs so that we can release products at competitive prices to local and international markets. At first, we are targeting to reduce industrial energy consumption by 10%” Herath revealed.

In the first stage of the new initiative by the Productivity Division of the Ministry, the Energy Efficiency Improvement Programme for Selected Industries, will commence from January 2012.

Deputy Minister Herath was addressing the inauguration of the awareness session on the project held at Cinnamon Grand, Colombo on December 14, jointly conducted by the Ministry of Industry and Commerce and Sri Lanka’s Metropolitan Group, the private sector player in the project.

A special 10 member steering committee under the Ministry will supervise the project progress.

According to the Central Bank, Sri Lanka’s power demand is increasing by 7-8% annually. As for industries in Sri Lanka, a total of 48000 industrial power connections were active in 2010 and power demand for industries (only from Ceylon Electricity Board) increased by 14% in the same year while LECO, CEBs’ subsidiary, separately reported 10.1% demand growth from industries.

The Central Bank in its 2010 annual report warned: “With the already high tariffs prevailing in the country, increase in the tariff applicable to the industrial and general purpose categories may affect the cost of production of industries and thereby, on external competitiveness.”

“Despite the serious financial difficulties currently afflicting the developing countries of the world, our industrial sector reported 8.4% growth in 2010 – thanks to the Development Policy Framework under the Mahinda Chinthanaya vision of President Mahinda Rajapaksa,” said Secretary, Ministry of Industry and Commerce Tilak Collure, addressing the event.

“Industrial sector constitutes of 29% of GDP and 74% of our exports are industrial exports. To sustain this trend in a turbulent international climate, we need to effectively manage our costs. We cannot hope to achieve global competitiveness either by compromising on product quality or through slashing our workforces.  The key therefore is to trim the major production cost components such as energy. Energy efficiency is the way to low costs. Realising the urgency of this challenge, which everyone is now talking about, the Productivity Division of our Ministry effectively spearheaded the new initiative with this PPP model,” Collure stated.

Among the direct benefits expected from the new initiative are reduction in energy usage and costs. The indirect but significant benefits are higher productivity and improved profits and bottom line to participating firms.

The awareness seminar on 14 December was the first step in the Rs. 4.5 million project where a team of experts made their presentations on efficient use of motors and pumps, industrial lighting, energy efficient measures in HVAC systems, boilers and compressors in energy efficiency.

According to Metropolitan Group Chairman J.J. Ambani, the project, to be implemented by his subsidiary Metropolitan Engineering (ME), will commence in 2012 January and end in September 2012. “Metropolitan Engineering (ME) has been chosen by the Ministry of Industry and Commerce after a rigorous process to carry out Energy Audits for selected factories. ME is a Rs 500 Mn (annual turnover) subsidiary of the Metropolitan Group (annual turnover Rs. 5 billion) and an Energy Services Company (ESCO) registered with Sri Lanka Sustainable Energy Authority specialising in Energy Management Solutions and Consultancy.”

Describing the implementation steps, Ambani revealed: “Once we start the project, we will visit each selected factory for a walk-through audit, carry out detailed energy audits and will provide an audit report for each factory identifying energy saving opportunities and solutions. We expect the selected firms to provide historical data available with them including energy usage, bills etc. We also expect them to provide information of any energy saving improvements already done and access to facilities and senior management support during the audit especially while taking measurements.”

Among the 16 companies enlisted for energy efficiency audit in this project are, Lankem Ceylon Plc, Brandix Textile Pvt Ltd, Phoenix Industries Ltd, Acme Packaging Ltd, Global Vynil (Pvt) Ltd, MRF Lanka, GTB Colombo Corporate Pvt Ltd, Rubco International, Creative Polymats, Clinco Rubber Mouldings, Chandeep Enterprises, Union North, Electro Metal Pressing, EMP PVC Technology, Sachitha Plastic Manufacturers, and Senas Plywood International.

Also present during the session were D.P Wickremeratne (Director, Productivity Improvement of MI&C) and Additional Secretary – Regional Industry Development W.D Jayasinghe.