ECONOMYNEXT – Sri Lanka’s Ministry of Energy is planning to break up state-run Ceylon Electricity Board into 14 separate generation, and the current independent regulator will be abolished, its Chairman Janaka Ratnayake said.
Sri Lanka’s Public Utilities Commission and the Ministry of Energy has had disputes over recent tariff hikes.
Sri Lanka’s power sector has come under corruption allegations due to a model of having a single buyer for electricity leading to lobbying to pay artificially high tariffs without tender through standardized power purchase agreements as well as take-or-pay deals for LNG according to critics.
Ratnayake said according to a concept plan in his possession, the independent current regulator will be abolished and replaced with an Electrical Commission, where members can be replaced more easily by the political establishment.
One company set up under the Companies Act will take over assets and liabilities relating to the Laxapana Complex hydro plants, another will take over Mahaweli hydro plants owned by the CEB.
Residual hydro plants including Uma Oya and Kukule Ganga will be taken over by a third.
The Norochcholai coal power plant will be taken over by another firm.
Kelanittisa and Sapugaskana power plants would be taken over by another firm. The Mannar wind plant will be taken over by a separate company.
Transmission will be owned by another firm.
Power will be purchased by another single firm. Sri Lanka’s power sector corruption is largely due to having a single buyer (monopsony) according to critics.
There is no commercial incentive for monopoly buyer to reduce the purchasing costs as such firms do not have retail customers. (Colombo/May03/2023)