Sri Lanka’s Ceylon Electricity Board ‘profits’ overstated; China debt service excluded
ECONOMYNEXT – Profits state-run Ceylon Electricity Board has been arrived at without accounting for the interest payments on a 1.3 billion dollar loan from China to build a coal power plant, Deputy Energy Minister Ajith Perera said.
Perera said the CEB had taken a 1.346 billion dollar loan from China to build a 900 MegaWatt coal plant but power users were not paying its cost.
The loan’s interest and capital was serviced from taxes taken from the people by the Treasury, and is not taken in to account when calculating the profit, Perera told parliament.
The capital cost is usually taken into the profit and loss account through a depreciation charge.
Perera did not specify the interest payments of the loan but Exim Bank of China’s concessional 20-year (preferential buyers’ credit) loans can be as low as 2 percent a year indicating a charge of around 2.5 billion rupees or higher without taking into account currency depreciation.
Ceylon Electricity Board reported a ‘profit’ of 1.5 billion rupees up to August 2016 down from 20.7 billion rupees last year following a drought and a breakdown at a coal plant.
The 1.3 billion US dollar coal plants, built by ousted President Mahinda Rajapaksa is among the best investments made by the government where cost of generation has been slashed, despite the plants having some technical problems.
There are also some environmental concerns, compared to Japanese plants built with cleaner technology.
MegaWatt for MegaWatt, a coal plant will give twice or two and a half times the energy from a good hydro power plant. (Colombo/Dec03/2016)