Tuesday, 16 July 2013 00:58
-
- {{hitsCtrl.values.hits}}
The foundation of the modern economy is the energy sector, stated LIRNEasia Founding Chair and moderator of the session Prof. Rohan Samarajiva. “When we talk about energy in Sri Lanka there are two primary narratives – one is all about waste, inefficiency and corruption. The kind of mercantilist kind of thinking that is prevalent in the country is that we should be reducing energy imports and producing it internally.”
Joining him and Anil Cabraal were Additional Secretary (Technical), Ministry of Power and Energy Ranjith Gunawardana, Sri Lanka Sustainable Energy Authority Director General Dr. Thusitha Sugathapala, Sapugaskanda Oil Refinery Modernisation Project Director E.M. Piyasena, Public Utilities Commission of Sri Lanka Director General Damitha Kumarasinghe and University of Colombo Senior Lecturer Dr. T.L. Gunaruwan.
Q: Could you share your views on the current energy situation?
Piyasena: Energy is a crisis because the ever-escalating prices and supply constraints have caused a lot of problems in all sectors across the board with regard to energy prices. Many people believe that the main energy sources will only last or 30 to 40 years. However, there have been recent discoveries of hydro carbons in the world.
The US discovered gas deposits – it currently imports about 50% of their hydrocarbons especially liquid hydrocarbons, but in the future, they will find their own sources without importing a single barrel. Similarly, liquid hydrocarbons have been found in Venezuela, heavy oil amounting to more than all the oil reserves discovered in the world so far.
Therefore, oil and gas it won’t diminish any time soon and will last at least another 100 years. The supply side is strong. The main issue is what price can we get this commodity at? Over the last 10 years, oil prices were $ 20 to $ 30 and now, it’s three times more. Unless you stabilise the rupee, it will be very difficult to balance this situation – that is the starting point.
Q: We have a national energy policy that says that we should limit reliance on oil and oil based sources – that would leave the field open to renewable and coal.
Gunawardena: We need to consider all possible energy generation options. When compared to coal, LNG prices are very high. Recent studies have been done because there is a lot of lobbying for LNG to see whether LNG will pick up. It has been considered in the plan as no more coal plants will be permitted after 2025 – coal has been restricted. Then, LNG was picked up for 2029 for a 250 megawatt plant which will cost an extra $ 207 million. The third option was maintaining a 60% limit on coal power generation. If you freely study the option of coal, LNG and other sources, LNG won’t pick up because coal is cheaper which is why it was not in the CEB expansion plan up to now.
Q: What about nuclear?
Gunawardena: Same situation – it won’t pick up. For it to be viable, we need a large plant of over 1,000 megawatts. If 100 megawatt plants become viable, they will be feasible.
Q: We are told that we cannot use more renewable energy because the system is small and that it cannot absorb the volatile nature of renewable power. We can’t use very large economical sources of power as well because our system is too small. Norochcholai is also running below comparable efficiency levels. How can we make our system larger so that we can have more efficient plants or more renewable energy – how about linking up with south Indian trade, or do something to raise the off peak load?
Gunawardena: The biggest constraint is that we have a very low off peak, around 800 megawatts. Around that time we de-load it to 150 megawatts and a coal power plant can’t be started and stopped daily. The balance is taken from hydro these days. We can’t have large plants especially nuclear until we increase off peak load. We have implemented several incentives where the off peak tariff is very low but it hasn’t pick up that much. To introduce large plants, the economy must grow. Singapore is a smaller country than us but they have a huge load because the country has developed its economy.
Q: Do we use energy for productive activity? How can we address these issues?
Gunaruwan: Without solving the transport problems, it is impossible for us to talk of any future energy crisis. Rather than switching off televisions or eliminating three-wheelers, why can’t vehicular users pay the right price? We subsidise a bus or train which is understandable but why do we let the private vehicles of the rich man run on the road with under-loaded vehicles free of charge? It is the most criminal subsidy.
We are talking about education. Why aren’t we talking about road space been given free of charge? The minute you start charging for private vehicles, people will switch to trains and buses. A medium term plan to improve the transport system is also required. The least efficient CTB bus is more efficient than any car on the road – just looking at the fuel the private vehicles consume it’s a crime.
If you can bring transportation into the picture, LNG may be one of the reasons why we should consider diversification. Have LNG in your basket as well. My hunch is that 75% of the petroleum is drunk by cars, three-wheelers and motorbikes – let’s find a solution. I think Cabraal made a very valid point. Why are we only 30% fuel efficient in comparison to Japan? Promoting an appropriate transport system and focusing on modern technology may be the answer. If the Government has money to widen the width of the Thimbirigasyaya road, how can they not have money for one third of that – the issue is with prioritisation? Let’s make the prices right so that people will be induced to move away from private transportation to public.
Do you think CEB is inefficient? The energy cost alone is Rs. 23, you consume it at Rs. 6 and then you complain that the CEB’s inefficiencies are eating into this. The CEB is one of the most efficient industries as far as I am concerned as it is machine operated and you can calculate exactly how much can be generated and for how much. Politically, it may be true to say that the CEB and railways are run inefficiently. However, if you provide the railways free access to the rail as much as private cars are allowed free access to the road, railways can be breaking even in no time. Why is it that Sri Lanka Railways is the only organisation to pay for its track, buildings, bridges, signals etc.?
Q: When we procure new sources of generating power, they will all have to be competitively priced. In the current Electricity Act says that for state-to-state relationships, the competitive procurement rule will not apply. This law has not been passed yet – what are your thoughts on this?
Gunaruwan: I hope it won’t be passed because if there is anything to be gained from it, it is competition. Let the purchaser have the right to choose.
Q: What are your thoughts on the PUCSL tariff and renewable energy?
Sugathapala: We are missing a very fundamental issue here. What we need is not the energy but the energy service. A very fundamental requirement is for a country to become sustainable but we need resources for that. Although we have resources, we need the capacity to exploit it – this is an area in which we are lacking. Although we have renewable energy as our own resources, we have to depend on technology from other countries. We need our own research and development, innovations and inventions. We have to combine resources and applications.
Q: We have ambitious targets to use non-conventional renewable energy – could you expand on this?
Kumarasinghe: Cost of resources is not the only cost that we need to look into. 10% of electricity should be through non-conventional renewable methods – this is in the policy. The price of renewable energy is one that is set for 20 years. Energy security is a very important aspect. Are we controlled of we base our entire system on oil? Fuel diversification should be a strategy and a Government strategy should be there per the act on fuel diversification and the pricing should be done based in this plan, about 20 to 30 years ahead of planning.
Q: Industries are been given incentives. Why can that not be extended to heavy users in the residential sector?
Kumarasinghe: That aspect is being looked into. We are doing a study on introducing tariffs for domestic users as well. It has already been extended to general purpose customers. It is important that we in the electricity sector think about how cost can be reduced. Cost and quality goes together. We supply everyone with the sane product and we provide 24 hour electricity. The quality of electricity is relatively good, hence the price is high – think of it as if we are providing everyone with a Mercedes.
Q: Are you calling 24 hour electricity a luxury?
Kumarasinghe: No it’s not but we are providing it.
Q: How successful are carbon credits as an incentive? Renewable incentives – are these a small percentage in Sri Lanka compared to peer countries? Why is wind power not taking off?
Cabraal: On carbon credits, after the EU economy collapsed, it’s not worth doing it at the current prices. As developing countries go, it’s hard to generalise across countries. India is moving up there but Sri Lanka is not lagging in that sense – 6.5% is pretty decent but we can do more. Biomass is part of the mix. The biggest difficulty in a biomass project is fuel supply because those who have the land have no incentive to use their unproductive land for anything but the mandatory needs. Give the private sector and other developers access to grow biomass. 1,000 megawatt does not need much, however, there is a lack of access to assured fuel supply and banks won’t lend so projects won’t get off the ground as a result of these factors.
