Preparing to power through another dark year

The Public Utilities Commission recently permitted power outages of two hours and 20 minutes, mostly due to a decline in reservoir water levels and excessive fuel consumption for electricity generation. Now two-hour power outages occur in Sri Lanka. 

A three-hour curtailment that was requested by the Ceylon Electricity Board had been declined. The Public Utility Commission’s consent is required in order to increase electricity rates in two stages between January and June 2023, as approved by the Cabinet. 

The electricity price should rise by almost 70% in order to make up for the current loss. It is impossible to achieve stable power supply without changing the electricity rates, as Power and Energy Minister Kanchana Wijesekera noted, adding that it is better to change the electricity bill twice a year. He also mentioned plans to increase renewable energy in 2023, saying that this would be Sri Lanka’s best source of energy.

The Electrical Board currently owes almost 650 billion rupees in debt to many parties, including banks and electricity suppliers. A spokesman of the Electricity Board said that of the money to be paid, almost 35 billion rupees should go to companies who provided renewable energy and 75 billion rupees should go to companies that provided thermal power. 

Accordingly, it was stated that at the very least a portion of the 50-billion-rupee loan that is anticipated to be received will go toward paying vendors. If electricity will have to be purchased from other thermal power plants, the cost will be very high, mentioning that the hope of CEB is to generate electricity at a low cost.

The high cost aside, due to a lack of coal supplies, the Power Plant’s ability to continue producing energy will be doubtful in the upcoming year. The Norochcholai Lakvijaya Power Plant is Sri Lanka’s primary source of electricity. The power plant provides more than 40% or 5,400 gigawatts of Sri Lanka’s annual electricity needs. For this, approximately two million tons of coal or 38 coal ships with this fuel source is needed.

By now at least half of these ships ought to have arrived. Before the Warkan or high-tide Season, the stock of all 38 coal ships should arrive at the Norochcholai Power Plant for uninterrupted electricity generation. However, we have only so far got four coal shipments with one more ship coming. 

Further complicating matters, Warkan will begin in April 2023, and by that time all of the coal stocks ought to have been unloaded. At the power plant site, at least half of the inventories need to have been unloaded as of now, while in reality only four out of 19 are even docked. As a result, it is now extremely doubtful if the Lakvijaya Power Plant will produce power at full capacity in the upcoming year.

Adding insult to injury, CEB relies on the Government-owned Lanka Coal and Ceylon Petroleum Corporation with both companies frequently involved in procurement controversies. Paying more than 385 rupees per litre for furnace oil when a 200 rupee import would suffice in the most recent scandal. The CEB typically obtains furnace oil and residual oil from the country’s own refinery and does not typically import cheaper furnace oil.

However, the refinery is not consistently in operation since it cannot obtain oil in the midst of the biggest currency crisis in the island’s recent history. One of the regulator’s responsibilities is to promote the CEB’s operational efficiency. It is common practice to regulate costs based on global benchmark prices to promote procurement efficiency. The petroleum industry’s official regulator, however, is not the PUCSL.