Indecision over power purchase leaves bidders in limbo

Power, Energy, and Business Development Minister Ravi Karunanayake

• Bidders are yet to be informed of decision to cancel supplementary power tender for 100MW

• Two IPPs which have not been commissioned yet await Ministry decision

• CEB plans to utilise 50 generators with 1MW capacity in an attempt to meet the shortfall
  
   

By Chathuri Dissanayake 

Government indecision on supplementary power purchases to meet the projected shortfall in electricity supply during the upcoming dry season has left bidders in the dark on the progress procurement. 

The Ceylon Electricity Board has estimated a requirement to procure 170MW to ensure uninterrupted power supply during the coming dry months, as capacity in the hydroelectricity plants have dropped to an average of 45%, with water levels of Maussakele and Castlereagh reservoir dropping to less than 35, while Victoria Kotmale reservoir levels are at 45%.  

Only Randenigala reservoir, which is reserved for agriculture irrigation activities, remain at 86%. 

Both Independent Power Producers (IPP) and bidders for supplementary power producers have not been informed about a final decision by the Power, Energy, and Business Development Ministry on procurement.

The Ministry is yet to formally inform the three suppliers who bid for the supplementary power tender that the tender is to be cancelled, despite Power, Energy, and Business Development Minister Ravi Karunanayake announcing through media that the tender is to be cancelled, Daily FT learned.

“We have not been officially informed of any decision regard emergency power, we have only read what was in the media,” AlTaaqa Energy Services CEO James Shepherd, one of the three bidders who bid for supplementary power tender to provide 100MW of electricity, told Daily FT.

While appreciating the Ministry’s handling of the tender procedure, noting that early action taken allowed competitive bidding, Shepherd expected the Government to notify them of the decision soon.

“We expect them to inform us of the decision soon, as we will need time to set up the plants for generation. If the tender is going to be cancelled as reported, then we should have our bid bonds released as well,” he said.

Another bidder, who won the tender to supply electricity in two locations out of six tendered, expressed concern over not having enough time to set up for generation.

“If this happens, then the Ministry will have to purchase from an existing emergency power producer who already has plants here,” he said.

There is only one producer with such capacity in the country at present, Daily FT learnt.

The Minister claimed that the prices quoted were higher than expected, leading to the decision to cancel the tender. Karunanayake also spoke of plans to commission two IPPs, which already received the green-light for a three-year contract during the tenure of the previous Minister. The Cabinet last year gave approval for three already-retired IPPs to be commissioned for three more years to meet the shortfall in electricity supply. However, only the Ace Power Embilipitiya plant has been commissioned so far.

The CEB projection to purchase 170MW included 100MW of supplementary power and another 70MW from the two IPPs, Director of Development and media spokesman Sulakshana Jayawardena told Daily FT.  

“There are two power plants which were retired, but got cabinet approval in 2018 for an extension for three years. We are negotiating to purchase 70MW from these power plants.”

“We have to negotiate with the Sapugaskanda and Matara IPPs again, as there was a lot of criticism against CEB commissioning those plants again. We have to negotiate on the capacity cost,” he said, but however acknowledged that a capacity cost will be charged if the plants have to undergo rehabilitation work to bring them up to running condition.

Karunanayake on an earlier occasion said that the Ministry will procure from the IPPs only if they are willing to match the unit price to the sales price of the Ace Power Embilipitiya plant, which was the lowest of the three IPPs. However, the IPPs have not been willing to negotiate the price down, Daily FT learnt.

The CEB is also planning to connect another 50 1MW generators set up by the CEB to the grid, to meet the shortfall in the absence of the supplementary power.

However, test runs need to be conducted on these generators, Jayawardena said.

“We will then be able to meet the demand, unless there is a breakdown in any of the large-scale plants,” Jayawardena said.