COPE raps CEB on compliance issues with regulatory authority

• Finds fault with CEB for refusing to pay regulatory levy, objecting to current DG of PUCSL
• Instructs CEB to pay the fee immediately 
• Finds irregularities with power purchase agreement with ACE Embilipitiya 
• CEB to appear before COPE again 

By Chathuri Dissanayake

The Committee on Public Enterprises found fault with Ceylon Electricity Board (CEB) for refusing to pay the regulatory levy to the Public Utilities Commission of Sri Lanka (PUCSL), instructing them to immediately pay the fee. 

It was revealed at the COPE hearing last week that in a letter signed by its General Manager, the CEB has refused to pay the regulatory levy to PUCSL as long as Damitha Kumarasinghe holds the post of Director General of the institution. 

COPE

This falls in line with the demand made by the engineers’ union of the CEB which called for the removal of Kumarasinghe from the post as one of their demands during their trade union action in June.

“This action is like refusing to pay taxes as long as the current Inland Revenue Commissioner is there. That should not be the case,” COPE Chairman JVP MP Sunil Handunnetti told Daily FT. 

The CEB has been instructed to rectify the issue immediately, he said.

The Committee summoned both parties last week to hold an inquiry on the ongoing disagreements between the two over power purchase agreements with private generators.

“In the March 2017 report on the CEB, when the agreements signed with LTL was examined, there was an issue with power purchase agreements and we issued instructions that a transparent pricing formula should be introduced for all purchases from private generators. It should not be based on discussions with the generator and the CEB. But this has not happened to date,” he said. 

COPE also found irregularities with the power purchase agreement signed with Independent Power Producer (IPP) ACE Embilipitiya. The first power buying agreement was signed in 2004, up to 2015, which included the cost of investment, $ 18 million, in calculation. The agreement came to a close with CEB paying the full investment amount as agreed. 

“At the end of this agreement, the plant should be under the ownership of the CEB. We have already paid closed to Rs. 3 billion for the plant as investment cost,” Handunnetti explained. 

Yet the CEB has signed two more agreements under the same clauses as the original agreement, in 2016 for one year and in 2017 for a three-year period, it was revealed at last week’s hearing. Further, the agreement was signed for emergency power purchases for a three-year period, without having a requirement for emergency buying, Handunnetti said. 

According to the agreement now effective the CEB will be paying an investment cost as per the initial agreement, despite having completed the payment during the first 10 year period. The agreement is yet to be approved by the regulator PUCSL, while payments under the new agreement has been made on special approval by Power and Renewable Energy Secretary. 

Having found irregularities with the agreements the COPE has decided to summon CEB before them again to investigate the matter further. 

“We have instructed them to make available additional material to inquire more into the matter,” Handunnetti said.