Trade union action loom over Sri Lanka’s disputed LNG power plan

ECONOMYNEXT – Engineers of state-run Ceylon Electricity Board have given notice of trade union action over what they call a ‘fake’ generation plan’, where liquefied natural gas plants were claimed to be cheaper than coal.

The Public Utilities Commission of Sri Lanka (PUCSL), the power regulator, controversially struck down coal plants in a least-cost, long-term generation expansion plan (LCLTGEP) after boosting costs by coupling with a pump storage facility, a kind of battery made up of two reservoirs.

"We warned you well in advance, 6 months ago first (in February) and then three months ago again (in April), that the PUCSL is plotting take off coal and force LNG into the LCTTGEP," the CEB Engineers Union wrote to the minister of power. "Then after what we have predicted happened exactly, we requested for the intervention of the ministry a month ago. Unfortunately, all have fallen on deaf ears."

The CEB Engineers Union said unless a favourable reply is received by September 07, their members will withdraw from technical evaluation committees on new plants except those required to avert a power crisis over 2018-2020. If nothing is done by by September 21, engineers will withdraw from emergency plant TECs as well.

The Union said it reserved the right to take further action.

Sri Lanka developed a national energy policy and guidelines to stop expensive ad hoc plants being pushed into the CEB so that the lowest-cost plants (least cost) are built, which is contained in a national energy policy and parts of the governing act of the CEB.

However, from time to time, after delaying coal for various reasons, including due to religious and environmental lobbies, the more expensive power plants had been pushed by various power committees. The cabinet of ministers can also decide to circumvent tendering to go for plants.

The CEB Engineers Union demanded that ‘only lawfully approved issued’ policy guidelines be used to buy new plants, and a ‘duly prepared and submitted’ long-term generation plan be approved. They also requested a cost-reflective tariff and timely allocation of land for new plants.

The CEB itself had protested to the power regulator after it approved a power plan by removing coal, under controversial circumstances.

By amending the plan unilaterally, the regulatory commission had exceeded its powers and has violated the commission’s own least-cost general expansion code, the CEB claimed in a July 25 letter written under the hand of the general manager.





A strong push for liquefied natural gas has been made by several big groups in Sri Lanka for over a decade. LNG is cleaner than coal, although it was more expensive at the time. But, LNG prices have fallen sharply over the last few years, partly due to North American gas production, making it more affordable.

The engineers claim that Sri Lanka has achieved a world’s first by ‘proving’ that LNG was cheaper than coal.

Uncertainty remains whether prices will revert back to long-term normal when LNG use expands with more power plants and infrastructure gets fired by the fuel remains to be seen, analysts say.

However, many industry analysts say it is a good option to diversify fuels and have LNG in the mix. LNG can also be used for other purposes including public transport.

Last week, the cabinet of ministers decided to build up to 1000MegaWatts of LNG plants over several years.

The current United National Party administration that came into power in 2001 also scrapped a coal plant planned for Puttalam, putting the country into crises, which analysts say may point to a pattern.

However, this time, President Maithripala Sirisena also came out with a statement cancelling a planned coal plant in Trincomalee. (Colombo/Sept04/2017)

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