ECONOMYNEXT – Delays in power sector reforms by successive Sri Lankan governments and strong resistance for new plants have resulted in the island nation’s ongoing power crisis, industry analysts said.
Sri Lanka has been facing announced and unannounced power cuts in recent weeks.
The Public Utilities Commission of Sri Lanka (PUCSL), the electricity sector regulator, on Thursday (27), provided some temporary relief to the public by rejecting a proposal by the state-owned Ceylon Electricity Board (CEB) for scheduled power cuts.
But industry analysts said though the power crisis is due to a dollar shortage to import fuel, a lack of reforms including not going for mega power plants mixed with small-scale renewable energy projects were the key reasons for the crisis.
“Every time a new power plant comes along, trade unions and some people with vested interest cripple the new supplier coming to the country,” a power sector source told EconomyNext.
“Each government has been warned of this crisis since early 2000. But there was no genuine effort to address this issue.”
The public, businesses and investors have been confused by the government’s conflicting statements on the power crisis at the moment.
“They are clueless about the next power cut,” the insider said.
Successive governments had over the years planned coal, thermal, Liquefied Natural Gas (LNG), wind, and solar power plants to face the coming crisis. But except for the Chinese-built Norachchoali coal-fired power plant, nothing has materialized.
“Renewable energy plants are unlikely to address the power crisis at the moment as our existing grid system is not ready for that. We need major investment to revive that,” a private sector power expert told EconomyNext asking not be named.
“We need some mega power plants to avoid the shortage.”
President Gotabaya Rajapaksa’s administration has set a target to increase renewable energy to 70 percent in the total energy mix by 2030.
Repeated warnings of a possible power shortage have been neglected by successive governments due to lack of capital and protests by trade unions over new power plants.
The latest LNG deal with US-based New Fortress Energy in now in courts due to several fundamental rights cases filed against it.
The US company was awarded the deal when bids were on the process. The company did not bid for Sri Lanka’s first LNG deal.
Several Indian projects also failed to take off due to strong trade union action and the government cancelling them later.
Government sources have told EconomyNext that some trade union members could have been involved in sabotaging the continuous power deals in the past.
“The CEB trade unions do not want new plants coming up as they lose their importance,” one government source said.
“The trade unions are strong enough to cripple the power supply even if the country has all the resources to generate more than adequate power for the country.”
CEB trade unions are said to be stronger than its top officials. The CEB chairman M M C Ferdinando resigned on Wednesday after a new General Manager was appointed amid protest against Fernando’s appointment.
Successive governments always try to manage the power crisis instead of addressing the core issue which is improving the generation capacity, analysts say.
With the present crisis, the government has been contemplating fuel imports on a credit line, daily power cuts, reducing vehicle usage to save fuel, and asking generator owners to use their own power sources instead of using the national grid.
“When there is a shortage of electricity, the owners of generators are encouraged to supply their electricity demand from those generators initially,” PUCSL chief Janaka Ratnayake said on Thursday.
“The demand for electricity on the national grid will decrease and it will be easier to meet the national demand in case of a shortage.”
“In the second phase of this program, we are looking at options to connect the generators owned by state and private companies to the national grid in case of a shortage.” (Colombo/Jan27/2022)