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Sri Lanka regulator approves stop gap power plants to avert crisis: LNG in

ECONOMYNEXT – Sri Lanka’s power regulator has given the nod for state-run Ceylon Electricity Board to buy alternative plants on an interim generation plan which was rejected at the same time, after the sudden scrapping of a planned coal plant threw the sector into a crisis.

The CEB’s 2015 Least Cost Long Term Generation Plan (LCLTGEP) was earlier rejected by the Public Utilities Commission of Sri Lanka (PUCSL), on multiple grounds and the utility was asked to submit an amended one without coal plants.

The CEB on July 27 had submitted a framework base case plan for 2017-2036 instead (generations plans are updated every two years with high low and base case demand) with 2016 now in to the second half.

The power sector was thrown in to crisis after President Maithripala Sirisena announced publicly earlier this year that a planned joint venture coal project with India was cancelled in favour of liquefied natural gas plants, but no directive was issued in writing to the utility.

"…[C]onsidering the gravity of the power situation in 2017-2020 period, the Commission would consider power plants identified for the period 2017-2020 in the LCLTGEP as an alternative to the delay in Sampur Coal Power Plant," the regulator said in a letter issued on July 05.

"Hence approval is granted to the Transmission Licensee to proceed with the procurement of power plants identified for the period 2017-2020 in the submissions made vide your letter dated July 27, 2016 as part of the LCL TGEP and any such procurement is to be carried out in compliance with the provisions of the SL Electricity Act."

The regulator however rejected the base case generation plan saying it was not responsive to the original concerns raised when the 2015 plan was rejected.

The original plan was rejected on shortcoming in the demand forecasting methodologies where CEB may have erred in over-forecasting demand but given frequent delays and political interference it had probably done more good than harm, some analysts say.

The regulator said the 2015 plan had insufficient investment on demand side management (way to reduce use of power), built more renewable energy plants, include LNG as an alternative to coal and updating negative externalities of coal plants.

In addition the base case plan did not provide data for evaluation, no justification was given for submitting a part of the 2017 plan, and policy guidelines were pending.

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A least cost scenario was also not visible.

According to at least one recent study, LNG would be at least 10 percent more expensive than coal, power sector analysts say, though attempts are under way to find more concrete data.

The base case plan included a 300MegaWatt LNG combined cycle plant in the Western province. However the planners had also kept coal plants in.

CEB engineers had already withdrawn from a hurried procurement process for LNG plants initiated by the ‘good governance’ administration.

They have indicated that getting involved in such practices without an approved generation plan may land them in the Financial Crimes Investigation Division or similar agency in the future.

In the past emergency and expensive plants had been pushed into the CEB through ‘power commitees’ with cabinet approval after delaying planned plants. (Colombo/Aug05/2016)

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