Sri Lanka imposes power cuts after delaying thermal plant
ECONOMYNEXT – Sri Lanka has started cutting power after failing to award a contract to build a 300 MegaWatt power plant for over three years amid corruption allegations and also cancelling coal plant that was about to be built, making a reality of warnings given by analysts, engineers at the state-run power utility and industry analysts.
State-run Ceylon Electricity Board said up to four hours of power cuts will be imposed on consumers in all parts of the island with one hour in the day time and the rest in the day time. (link to load shedding times)
Three years ago CEB’s engineers union, industry analysts and the power regulator had warned that power cuts were likely in 2018 as the government failed to award a 300 MW thermal power plant to a private firm which was to tide over the country until the coal plant came on line.
But there were no power cuts in 2018 amid better rainfall and slower demand growth.
"We can expect a government announcement by 2018, when indications of the crisis become apparent – typically (during the hot months from) February to April," power sector analysts Tilka Siyambalapitiya said in 2016 shortly after President Maithripala Sirisena cancelled a coal power plant which was about to be built. (Sri Lanka faces power shortage with coal plant delay)
"The government will say ‘we will pay the bill for diesel and customers would not be burdened’. There will be load shedding (power cuts)."
The government also failed to award a stop gap 300 MegaWatt thermal plant for around three years amid allegations of corruption.
CEB’s engineers union had also warned that the scrapping of the coal plant will push up power costs and if the tariffs are not raised taxes charged from other goods will be used to cover losses in power.
"If the CEB makes losses, the costs will eventually have to be recovered from the public with taxes on food or value added tax," then CEB engineers union chief Athula Wanniarachchi said. (Sri Lanka consumers warned on impending ‘electric shock’ after coal plant scrapping).
In 2018 the CEB lost 25 billion rupees and losses could worsen in 2019.
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The Public Utilities Commission of Sri Lanka has also given similar warnings.
“PUCSL envisages an energy shortage in years 2018/ 2019 unless the plants identified in the approved plan relevant to the period are implemented on time, the regulator said in 2016. (Sri Lanka regulator stresses urgency of new power plants to ward off shortage.)
“The real challenge is to get these plants implemented," PUCSL director general Damitha Director General Damitha Kumarasinghe told a news conference in 2016.
"We have only one and a half to two years. We’re looking at very quick implementation."
There was also a tug-o-war between the regulator and the CEB after amid allegations that data in a power plan was mis-represented to show that long term costs of coal was higher than liquefied natural gas.
The regulator is to take legal action against the CEB for cuting power secretly without getting permission from the regulator, Sri Lanka’s Daily FT newspaper reported.
In Sri Lanka power supply is a state monopoly and the people themselves cannot set up a power plant and even sell to a neighbor, which generates shortages.
Power cuts are commonplace all over South Asia except in Mumbai, India where electricity is provided by Tata, a private firm, which escaped expropriation by then Prime Minister Nehru. (Colombo/Mar26/2019)
Economic Intelligence Unit of the Ceylon Chamber of Commerce
Jehan Perera - Executive Director National Peace Council