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Thursday, 28 March 2019 01:53 - - {{hitsCtrl.values.hits}}
By Chathuri Dissanayake
The Ceylon Electricity Board yesterday sought approval from Public Utilities Commission (PUCSL) to procure 100 MW of supplementary power and sign agreements with two independent power producers as a means of addressing the deepening power crisis.
The two procurement deals, which were recommended by the CEB as a short-term solution to avoid the current power shortage, have been marred in controversy leading to delays in procurement, culminating in the power shortage.
Despite Power, Energy and Business Development Minister Ravi Karunanayake earlier saying that no supplementary power will be purchased even after calling for bids, he said the Ministry will be signing procurement agreements.
“We will be signing them up next week,” he told Daily FT.
However, it was not immediately clear if the PUCSL has granted approval to proceed with the procurement process.
As a means of managing the current shortage, Karunanayake also obtained Cabinet approval to carry out a public awareness campaign to save electricity by switching off two lights in very household for the next three months. The campaign also involves a set of guidelines for all Government institutions to take measures to reduce electricity consumption in government offices, religious and commercial institutions by 10% by switching off lights one hour before the usual time and turning off all unnecessary lights.
The Minister also obtained approval to issue a fresh policy roadmap for the electricity industry with aims to address current issues, energy mix and security, tariff methods, power generation, transmission and distribution systems, energy conservation, consumer services, and issuance of licences.
“This will amend the laws to iron out the disparities in the Electricity Act as well,” Karunanayake said.
The disparities in the Electricity Act and the Sri Lanka Sustainable Energy Act have been key reasons for delays in approving electricity generation projects. The Ministry is also set to introduce an all-new application procedure for generation licence in a bid to fast track approvals, while introducing a new feeding tariff for all small-scale power producers.
The new approval system requires all existing applicants to resubmit their applications, which is likely to further delay implementation of renewable energy projects, industry stakeholders warn.
“The new process is likely to delay us further. We have asked the Minister to evaluate our applications as it has been delayed already after spending over Rs. 100 million on application fees alone,” Solar Industries Association (SIA) Secretary Lakmal Fernando told Daily FT.
SIA earlier stated that 590 applications to set up mini solar projects are pending approval years after submitting.
The new application system aimed at weeding out bogus applicants will require the investors to obtain all the approvals from different agencies before submitting the Letter of Intent (LOI) from the Ceylon Electricity Board.
Minister Ravi Karunanayake, however, said that the CEB will take into consideration the concerns to explore the possibility of evaluating the applications separately without requiring them to go through application process again.
“We will see if CEB can, and if not, they will refund the money,” the Minister told Daily FT.
Fernando also expressed concern over the introduction of the new tariff, noting that a rate which does not include an Internal Rate of Return (IRR) of at least 19-20% will not be able to sustain the industry.
“If it is too low, no business will get in and no bank will fund such investment. If the rate does not match with the investors’ expectations, we will see a natural death of the industry,” he warned.
