Sampur swindle?

By Cheranka Mendis

As losses mount at the Ceylon Electricity Board and its pressures reflect on the monthly electricity bills of consumers, more losses estimated at Rs. 7.63 billion are to be expected annually if the legally null agreement of the proposed Sampur Power Plant is carried forward.

Coalition against Corruption yesterday brought to public notice that the agreement signed in October 2011 between Indian National Thermal Power Corporation (NTPC) and then CEB Secretary and CEB Project Director is null and void as it does not have the consent and approval of the Cabinet, CEB Director Board and the Public Utilities Commission as legally required.





Protecting the secrecy of the deal, even John Seneviratne, who then acted as Minister of Power and Energy, was also not notified of the agreement. However, work on the power plant is expected to commence soon, they said.

Noting that the 500 mega watt coal power plant is riddled with loss-making liabilities for the country, Coalition against Corruption Co-convenor Saman Ratnapriya stated that according to the agreement, the losses come under three stages.

Efficiency of the power plant which is expected to be maintained at 40% according to international standards has been noted at 33% in the agreement, which will mark losses between Rs.2.6-4.9 billion annually for the CEB.

The annual maintenance cost which is estimated at US$ 20.5 in the feasibility report has been recorded as US$ 33.5 million which will incur losses of Rs. 1.56 billion when calculated under the current exchange rate. The ROE value has been noted at 12% in the agreement, which would drive forward losses close to Rs. 1.2 billion.

When the agreement was signed, the entire capital cost of the project also remained blank, the Coalition said, so that the CEB and NTPC officials could later add a high cost and swindle money. Now estimated at US$ 500 million, NTPC will only put in US$ 75 million for the project while the loss-making CEB has agreed to put in another US$ 75 million. The remaining US$ 350 will have to be borrowed and will be recorded as debt.

“When all this is considered, losses of CEB will increase from Rs. 7.63 billion from the Sampur project alone,” Ratnapriya said. “Moreover all these losses will have to be borne by the consumer.”

The Government has now issued a Cabinet paper noting that the loss will be taken care of by the Treasury. Requesting Cabinet ministers not to accept the paper, he noted that the losses should be acquired from the officials who engaged in such fraudulent activities and not the general public.

“The Government has already increased electricity prices to an extent that the general public is under severe pressure. From the recent increase, the Government expected revenue of Rs. 222 billion,” he asserted. “After the announced ‘concession,’ the estimated revenue for the Government is Rs. 214 billion.”

The recent power agreements have all been made under sham conditions, Ratnapriya said noting that the Norochcholai plant which has failed 21 times during a period of a year was given to China National Machinery Import and Export Corporation (CMEC), even though under the tender process the bid should have been awarded to NTPC. Yugadanaw plant has also failed 17 times, he said. “A unit of hydro power costs Rs. 3.50, but thermal power unit costs between Rs. 20-40. Why buy the thermal power unit at a higher cost?”

Member of the coalition Joseph Stalin added that this would mean Rs. 1,525 being added to the energy consumers’ monthly bill in the near future. “We must immediately cancel the agreement as it does more harm to the country than good.”

“CEB is being maintained in a way that it promotes corruption and fraud. After the retirement of Chief Financial Officer Sunil Perera in November 2011, no one has been appointed to the position. There is also no chief human resource officer at CEB.”

Stalin added: “If the Government can manage losses of companies such as Mihin Air which has recorded losses of Rs. 8,500 million over a five-year period and SriLankan Airlines with losses of Rs. 20,500 million, why can’t it bear the losses of CEB and not pressurise the consumers this much?”