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Sri Lanka planning more power sector reforms

ECONMYNEXT – The Sri Lankan government is contemplating further changes in the power sector’s structure with a wholesale market with limited competition being considered for 2016, a new report said.

The changes could involve moving the Independent Power Producers to a competitive market, introducing merchant power plants, and allowing the wheeling of power, the report by the Asian Development Bank, has said.

Wheeling allows areas of a utility like the Ceylon Electricity Board (CEB) with too much supply to transmit excess power to other utilities with too much demand.

Initially this could be between the same legal entities, such as from a micro hydro in a tea estate to the company headquarters in the city, and within local areas like for example, from one block of a large tea estate to another block, using the local utility distribution network. Subsequently, power could be sent from one entity to another, the ADB report said.

Merchant power plants are those without power purchase agreements for the sale of power and are found in modern, competitive electricity markets where the power plant owner’s revenue is based on electricity sold into the spot market at the prevailing price.

The ADB report said tariffs for all affected parties in Sri Lanka would have to be reviewed and revised to establish a wholesale market for electricity, More substantial reform could extend to establishing independent companies out of the six CEB licensees.

These would report to the CEB holding company, but operate as separate profit centers, similar to the arrangement in place for the government-owned distribution company, Lanka Electricity Company. (Colombo/July 11, 2015)

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