Ceylon Electricity Board all out to avoid power cuts amid deep financial crisis

ECONOMYNEXT – Sri Lanka’s state-run Ceylon Electricity Board is in a deep financial crisis, the power ministry has said as the utility is going all out to avoid power cuts and buy at least 200 MegaWatts of short term capacity.

Sri Lanka is entering the driest period of the year, in the first quarter, with Power Minister Mahinda Amaraweera warning that there could be power cuts in March, as inter-monsoonal rains are not expected until April.

Each year Sri Lanka needs around 200MW of capacity to keep up with demand, though demand growth has been low in recent years. Up to the third quarter of 2019, generation grew only 4.1 percent to 11,900 GigaWatt hours.

The CEB is likely to float a tender to acquire at 200 MegaWatts of short term power, to avoid power cuts, an official at the utility said.

The CEB has also extended a 100MW short term power deal struck in 2019 which had expired.

At the moment one 300MW coal plant is down and a CEB owned gas turbine and combined cycle is also being shut for repairs.

Minister Amaraweera had warned that the CEB may have to acquire more short term power.

Minister Amaraweera said the regulators and power sector entities were not working closely to solve the problems and called on them to unite and solve problems in the sector.

The Public Utilities Commission of Sri Lanka is expected to revise electricity prices every six months but that has not happened.

The last administration was due to start market pricing electricity under an International Monetary Fund backed program, but that has not happened.

Minister Amaraweera had said the CEB was in a ‘deep financial crisis’ (dhadi moolya arbudayaka), owing 83 billion rupees to state-run Ceylon Petroleum Corporation, 4.3 billion to independent power producers after being hit with an 85 billion rupees loss in 2019.

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The utility is in a financial crisis, with no price hikes since a cut in 2013, a coal plant about to be build cancelled in 2015.

Meanwhile the rupee has collapsed from 131 to 182 to the US dollar due to contradictory monetary and exchange policies of the central bank pushing up the cost of imported fuel and also debt repayments.

The CEB has built up a hydro reservoir storage which is enough to generate 1,000MegaWatt by the first week of January, deliberately running thermal power to conserve water, which is 85 percent of total storage up from around 800MW last year. (Colombo/Jan14/2020)