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Sri Lanka power utility plans to re-connect over 200MW of expired IPPs

Mar 21, 2016 09:15 AM GMT+0530 | 2 Comment(s)

ECONOMYNEXT - Sri Lanka's state-run Ceylon Electricity Board is planning to re-connect de-commissioned private plants either through extensions of power purchase agreements or outright purchase, to boost stand-by capacity, Chairman Anura Wijepala said.

"We are awaiting government policy," Wijepala said. "We can either extend the agreements or purchase the plants. But we need cabinet approval.

"We would prefer to purchase the plants then they would be in our control and use them for stand-by power."

Sri Lanka suffered almost a week of power cuts this month due to delayed starting of the coal plants after an emergency shutdown, following a national power outage due to fault in the transmission network. The coal plants also need a stand by generator for safe shutdown.

Sri Lanka is also now in the height of the dry season, which extends goes up to April.

Though a coal plant connected 900 MW of capacity over the last five years about 300 MW of private thermal capacity expired over the last three years.

The coal plants also cannot be used to full capacity during off peak, as they can increase instability in the system and are de operated at a lower output (de-loaded).

The power purchase agreements of several IPPs (independent power producers) including ACE Embilipitiya 100MW, Heladanavi 100MW, ACE Horana (24) and Ace Matara (24), and Lakdhanavi (22) have expired in 2012 and 2015 but they were not renewed.

Wijepala said Lanka Transformer group, a CEB affiliate which controls Heladanavi, had been instructed to stop dismantling its 100 MegaWatt plant until a decision is made. ACE Embilipitiya remains intact.

Aitken Spence had already sold ACE Horana had already been dismantled and sold to a Pakistan firm. ACE Matara had also been sold to another firm by Aitken Spence.

Sri Lanka's state-run Sunday Observer newspaper said cabinet sanction will be sought to buy power from ACE Embilipitiya, Heladanavi and ACE Matara.

The current administration in 2015 gave the nod for the CEB to buy Colombo Power, a 60MW barge mounted plant, whose power purchase agreement expired.

The build-operate-transfer plant had a clause in the contract that it could be bought at the end of their contract period and the CEB now owns it.

Athula Wanniarachchi, Convenor, CEB Engineers’ Union, was quoted by the Sunday Observer as saying that the utility could have purchased the plants at a lower price last year. He claimed that the regulator had blocked the move, though it was not clear how the regulator can block procurement decisions of the utility.

Under current law, plants either have to be in a generation plan or they have to be bought outside the plan through cabinet approval.

The CEB in its 2013 long term generation plan (LTGP) called for the extension of the smaller IPPs saying a 5-year extension would be beneficial. But it was not followed through, and was dropped subsequently a sector official said.

Other industry analysts also say the PPA's of expired plants, which had their capital costs recovered, could have been extended for lower capacity charge than a new plant, which would cover operating expense and a small profits and a refurbishment if needed.

However at the time there was also a political bias against private plants, with then then minister refereeing to them as the 'mafia' which interfered with the CEB.

"We decided to shut down three of these diesel power stations this year to stop that mafia," then Minister Champika Ranawaka was quoted as saying at a press conference. http://powermin.gov.lk/english/?p=3711

"With this closure there will be more and more attacks against the ministry of power and energy as well as myself."

Critics say most of the country's problems with power ranging from blackouts to highs cost had been due to political interference to undermine LTGP, including delaying coal plants which forced the CEB to buy liquid thermal plants to replacethem.

The rest of CEB's problems come from requests to raise prices when costs rise. The 2011/2012 balance of payments crisis was also triggered by a refusal by politicians to raise fuel prices.

Prices were only raised after the rupee fell from 113 to 130 to the US dollar. (Colombo/Mar21/2016)


 

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2 Comments

  1. Anil Cabraal March 24, 06:33 AM

    I wonder why CEB has resisted renewing the power purchase agreements with small hydro power developers whose PPA have expired at prices less than the cost of coal power from Norochchalai and now in a self inflicted crisis is ready to extend thermal IPP PPA at much higher cost. Am I paranoid or is there a conspiracy here?

  2. sacre blieu March 22, 08:49 AM

    Today, there no such thing called SHAME. People in position would go to any length to make a killing at the cost of the public, by bribing government officials and even in the process of valuation inflating its true value. We now see the current situation as holding the public to ransom, due to the essential nature of electricity, for filthy lucre. The virus of corruption is deeply embedded. Lee Kuwan Liew, when he was in the process cleaning up Singapore, he was ruthless and newer allowed laws delay to interrupt, as otherwise Singapore would still be a den of criminals, etc.

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