The important role of the new Power and Energy Secretary

 The Ministry of Power and Energy is responsible to ensure citizens are supplied with continuous 

electricity at a reasonable cost, delivered to the consumers through the Ceylon Electricity Board. But the CEB is the biggest loss-making organisation in the country, which lost Rs. 30.4 billion in 2018, while 

billing the customers with the highest electricity charges in South-East Asia - Pic by Shehan Gunasekara

New President Gotabaya Rajapaksa appointed new secretaries for the ministries. The most important ministry under the current situation is the Ministry of Power and Energy, now including CEB and the petroleum sector. 

The important position of the Secretary was awarded to a lady Wasantha Perera, a Special Grade officer of SLAS. She was former Secretary, Ministry of Health, Nutrition and Indigenous Medicine and previously as Director General of Sri Lanka Institute of Development Administration (SLIDA). As she is expected to head an important ministry, the President would have selected an efficient and knowledgeable person.

The Ministry of Power and Energy is responsible to ensure citizens are supplied with continuous electricity at a reasonable cost, delivered to the consumers through the Ceylon Electricity Board. But the CEB is the biggest loss-making organisation in the country, which lost Rs. 30.4 billion in 2018, while billing the customers with the highest electricity charges in South-East Asia.

As for uninterrupted power, during March and April 2019 citizens were faced with 4 to 6 hour power-cuts during the hottest period of the year and repeat of similar situation in 2020 is quite a possibility. As such the new Secretary is expected to take suitable action to ensure continuous electricity supply to consumers.

Concerns of power-sector technocrats

After the Government appointed the new Secretary for Power and Energy Ministry, a large number of technical persons from Sri Lanka and abroad, mostly retired, but concerned about the country, in email discussions have expressed concern over the Secretary’s ability to control the power and energy sector. However, none expressed any knowledge about the new Secretary.

The concern arose after the series of bungling by the former Secretary Suren Batagoda who is responsible for the current disastrous situation of the power sector. Some who made remarks have had personal contacts with Suren Batagoda during their work as well as outside.

One commented: “As our subject is power and energy we have to deal with both the Minister (Mahinda Amaraweera) and the Secretary (Wasantha Perera) who are both unknown quantities in the Power and Energy portfolio and how they perform as a team is a wait-and-see situation and hope they would be more effective than their predecessors. Power and Energy does not get the importance it deserves and no politician in Sri Lanka, let alone the President and PM, really appreciates the important role it plays in the economy of a country and they all take it for granted.”

CEB engineers’ requests

Within a week of Wasantha Perera assuming duties, she got a sample of things to come, as the CEB General Manager and engineers met the Minister of Power and Energy Mahinda Amarawera. Their main demand was to disregard proposed government to government power projects and to call international bidding for future power projects. 

They were especially concerned of India, Japan and Sri Lanka joint venture for a Floating Storage and Regassification Unit (FSRU) and pipelines to import, store, regassify and supply Liquid Natural Gas (LNG). The project is expected to be implemented by Petronet LNG Ltd. of India, Sojitz Corporation and Mitsubishi Corporation of Japan along with Sri Lanka Gas Terminal Ltd., a subsidiary of SLPA.

CEB engineers claim although projects were offered as government to government basis, finally the contract is passed over to selected private companies without cost evaluation, contract conditions and unknown final price, resulting country being saddled with additional costs. Now, after the President’s visit to India, agreement made between two Presidents would take priority. But for the new Secretary the issue is not critical and she could wait and see.

Critical issue

The most critical issue not apparent at the moment is the CEB’s ability to supply continuous electricity to consumers during 2020. During last March and April, the country faced four to six hour power-cuts. By last December end most hydro-power reservoirs were nearly full and were generating power. 

Although rains ended in December, CEB continued to run hydro-power plants at full capacity and water in reservoirs dwindled fast. Meanwhile, hot weather made citizens use more fans and air conditioners increasing power consumption, finally leading to power cuts. Will it be different this year?

To overcome the power shortage the Government was forced to bring back three privately-owned power-plants of total 170MW capacity, which were retired earlier, for a two-year period. Clearly some CEB engineers manipulated the situation and were successful in reaching their objective. In addition they wished to obtain 200MW power from a barge-mounted power plant, but the request was turned down.

Meeting the challenge

This year with heavy rains almost all hydro-power reservoirs are running full, but an unusually long rainy season would be followed by a similar long dry period. Thus south-east monsoon cannot be expected before June. Meanwhile, next general election would be around end-April and power-cuts in March-April as 2019 would be disastrous for the Government in power.

The situation needs action in two fronts. First conserve water in reservoirs from early January beginning by using maximum thermal power, hydro-power being used only to meet the peak power demand. In addition, there are over 600 small solar power producers (less than 5MW) registered with Sri Lanka’s Sustainable Energy Authority, after payment of a fee, capable of generating 1,500MW of power have been waiting for over three years. 

But CEB engineers claiming legal conflicts refused to approve the solar projects. If approvals are granted immediately with necessary legal amendments, small solar producers could fill the void of dwindling power production.

Private power producers

Mahaweli based hydro-power fulfilled country’s electricity needs until late 1980’s and proposed coal power project in Norochcholai was opposed by environmentalists and the Bishop of Chilaw claimed the dust from power plant would damage the church. The issues delayed the project until President Mahinda Rajapaksa decided to go ahead in 2004.

During the interim period CEB promoted oil-based power, most expensive generating fuel. These power plants, owned by CEB also private power producers (PPP) produced electricity and purchased at a high cost. Private power plants constructed in 1990’s and in early 2000 with a 15- to 25-year contract period, most have completed their contracted period.

The rates payable for electric power produced by PPPs are based on the cost of plant, interest on loan payment, depreciation and running costs, totalling very high sums. Now, with the completion of contract period, loans have been settled, power plant costs depreciated, power producers could supply electricity at a much lower cost. But unfortunately, CEB never demanded a reduction of rates and power producers continue to be paid same electricity prices. The situation resulted in CEB high-ups receiving undue benefits from extended power suppliers. 

The result was CEB engineers took pains to object and delay new power projects and no new power plants came into stream over the past five years or not even awarded for construction. The new Secretary could direct CEB officials to renegotiate power rates purchased from PPPs who have completed their contract periods.

Immediate challenge

This year too CEB engineers will try their old tricks, by wasting water in hydro-power reservoirs. They would attempt to bring back the 200MW barge-mounted power plant which they tried in last April and failed.

To prevent CEB engineers wasting water from hydro-power reservoirs, the Secretary could take the following action:

a. Instruct CEB that from January beginning, use maximum thermal power and hydro-power only to tide over peak demand. 

b. Instruct CEB officials to submit past daily records of power generation of every power producer hydro, coal and thermal (govt. owned and private) from early November and continue daily. 

c. Allocate a ministry officer to study the records submitted, note and inform the Secretary of any irregularities.

The Secretary could instruct CEB to sign contracts with solar power producers and request them to go ahead with their proposed projects immediately. CEB engineers would sure to protest highlighting conflict of legislation. 

Now that Parliament has been dissolved till early January, legal conflict cannot be rectified until the commencement of the new Parliament. The Secretary may need to contact the President and request him to give an assurance to prospective solar producers.

Basic problem

Power generation concept start with CEB’s ‘Least Cost Long Term Power Generation Plan’ (LCLTPGP), a 20-year power plan revised every two years, indicating proposed new power generating projects to meet country’s increasing demand. The plan indicates type of power plants to be introduced in each year, fuel type and generating capacity of the plant. 

The plan is expected to be accepted by the Public Utilities Commission of Sri Lanka (PUCSL), an independent body. The PUCSL studies the proposals, amends as necessary prior to approval. But CEB is reluctant to accept modification by the PUCSL and the conflict between two organisations delays implementation. While CEB prefers coal plants, the PUCSL wishes LNG and renewable energy instead.

LNG usage  

The world is moving away from coal due to environmental reasons, but CEB wishes to have more coal power plants. CEB’s 2018-2037 Power Generation Proposal included 2,700MW of power generated from 6 coal plants. They were modified by PUCSL replacing by LNG. The changes were refused by CEB, but CEB’s protests were supported by Suren Batagoda, creating an impasse.

In 2010, a 300MW power plant was established in Kerawalapitiya capable running on LNG, also currently proposed 300MW Kerawalapitiya power plant is expected to run on LNG. LNG is the cleanest power source and is cheapest next to hydro. However LNG usage needs importing, but to date, CEB has failed to come with a proposal to unload, store imported LNG and a distribution network to run existing power plants on LNG.

LNG unloading and storage

Usage of LNG needs importing and storage. Also country has proven LNG gas fields in Mannar and much more are expected. Thus any proposal need to satisfy both. Currently the FSRU proposal (discussed earlier) to be located in Colombo harbour is expected to satisfy immediate requirements. CEB claims now they have finalised tender specifications for a FSRU with ADB assistance and they are ready for competitive bidding for such a plant. But how long the procedure and tender award take?

The 50-day Government, formed by joining SLFP with Mahinda Rajapaksa’s alliance with blessings of President Sirisena in 2018, during the first Cabinet meeting approved the setting up of a Floating LNG Terminal north of Colombo harbour to supply one million tons of LNG a year for 20 years, a controversial unsolicited proposal brought forward by a Korean company, supposed to be under government-to-government basis.

Has the CEB prepared a long-term LNG requirement plan, including accommodating Mannar gas? Especially considering a FSRU located in Colombo harbour would only be feasible for short-term to overcome immediate requirement. The country’s long term LNG requirements would be heavy and need be accommodated in either a. Dedicated LNG harbour off Kerawalapitiya coast, b. LNG storage in Hambantota harbour and a pipeline to Colombo or c. A LNG storage in Galle harbour, currently not used for ship handling anymore. 

Kerawalapitiya LNG plant

Tenders for the construction of 300MW Combined Cycle power plant at Kerawalapitiya was called and opened in April 2017. The lowest offer was from LTL Holdings (a CEB subsidiary but independent) quoted Rs. 14.98, second was WindForce & RenewGen at Rs. 15.97. After a long process taking over two years, it was decided award the contract to LTL, but WindForce appealed to President Sirisena, who instructed CEB to award two contracts to both at their tendered rates. But the award was contested and the case lies in Court.

In addition to above President Sirisena during his tenure has consented for three LNG plants to India, Japan and China, but their locations, cost of projects and the cost of power supplied has not been disclosed.

Power generation mess

The above shows the mess in country’s power sector today, with power generation capacity barely sufficient meet today’s needs and not a single large power plant under construction or even awarded during the past five years. 

But Patali Champika Ranawaka, the first Minister for Power and Energy in the Yahapalanaya Government, submitted the ‘Sri Lanka Energy Sector Development Plan for a Knowledge-Based Economy 2015-2025’. He was replaced in late 2015 and his proposals were disregarded by subsequent Ministers.

If the present Government awards the Kerawalapitiya 300MW power plant contract immediately, the electricity production would be three years away. Meanwhile meeting the power demand during the period would be crucial.

While number of hydro-power projects are expected to be brought in line, they alone cannot meet to increasing demand. Meanwhile, a large number of renewable power plants as solar power small and large, bio-energy, wind and mini-hydro which were proposed years ago are held back by CEB. If these power plants are allowed to proceed immediately and progress kept track they could meet the deficiency.

Over-strained CEB

The entire electricity sector is the responsibility of CEB, from planning the Long-Term Power Generation Plan, identifying power sources, preparation of tender documents, calling tenders, tender evaluation and award, monitoring progress, establishment of infrastructure, running power generation plants and distribution of electrical energy, a long list.

Can a single organisation carry out all above responsibilities, without neglecting some? Thus it would be necessary to rethink CEB’s role and divide responsibility among different organisations created for the task. Analysis and modification of CEB prepared Long-Term Power Generation Plan is the responsibility of PUSCL, and CEB needs to accept modifications without grumbling.

CEB dragged the country down in two sectors. 1. Failure to award contracts in line with the power generation plan. 2. Deliberate neglect and obstructions over development of renewable energy by the private sector.

In new power generation plants, CEB could prepare tender documents. But documentation need be checked and modified if needed and calling for tenders, evaluation and award of contracts need be carried out by a separate organisation.

Renewables under new authority

Procurement of renewable energy (under 10MW) involves hundreds of small private power producers. But for over two years CEB has blocked giving acceptance to solar, mini-hydro, wind and biomass power producers, irrespective of the established law of feed-in tariffs. If electricity production under 10MW be opened to private sector and produced electricity be accepted at the agreed rates, would result a substantial increase in environmentally friendly renewable energy.

Encouragement of solar power would result factories and buildings with large roof areas generating part of their power requirement solar panels on roofs would reduce air-conditioning load giving additional advantage. Currently electricity producers under ‘Soorya Bala Sangramaya’ or the battle for solar energy, have been treated step-motherly.

For CEB handling hundreds of thousands of small solar producers, is a difficult task. To avoid the impasse administration of small power producers need be brought under a separate authority (Sustainable Energy Authority?). The change would result substantial increase in power generation under solar, wind, bio-mass and mini-hydro from small producers.

Conclusion

The above is a glimpse of issues, problems and suggested solutions waiting for Wasantha Perera, the new secretary of Power and Energy Ministry. No one could foretell of all problems anticipated. The country suffered severely under the former Secretary and expects improved performance from you.

Over the years a large number of articles have appeared in newspapers on the problems of the power sector and are available on the internet. If the new Secretary spends her spare time to download and study them, it would enlighten her on past happenings and will help her to make correct decisions. On behalf of right thinking citizens of the nation, I wish you good luck and courage to bring prosperity to the country.