ENERGY WARS | Sunday Observer


22 April, 2018

The power struggle between the Ceylon Electricity Board (CEB) and its regulator Public Utilities Commission of Sri Lanka (PUCSL) takes a turn with the CEB’s Engineers’ Union declaring a work to rule action with effect from May 8, this year, if their demands are not met by the government.

Although the union initially planned to resort to trade union action by last Friday it was postponed by two weeks considering the Vesak season.

According to the Chairman of the Engineers’ Union, Saumya Kumarawadu, their demands include the approval of the Least Cost Long Term Generation plan proposed by the CEB and to immediately start the construction of power plants; allocate land to construct the proposed least cost large power plants; introduce a mechanism through the Treasury, where the people are not burdened with the increasing power prices due to the failure of non-implementation of the least cost generation plan; and amend the Electricity Act No 20 of 2009 to eliminate unwanted hurdles for the independent operation of the CEB.

Speaking to the Sunday Observer, Chairman Saumya Kumarawadu says, they will not take a step back until and unless their demands are met.

“Our trade union is not in the habit of going into union action for trivial matters or for personal demands. The number of times we have opted for trade union actions are not many, however, we do not hesitate to take action when there is a national crisis. Now, we are at a national crisis which calls for action,” he said.

At present, according to CEB calculations while the total power generation of the country stands at Rs 15 billion this increases by Rs 1 billion every year.

The PUCSL, the regulatory entity for utilities in the island was introduced under the Public Utilities Commission of Sri Lanka Act No. 35 of 2002, which is entrusted with policy formulation, advisory, inspection and consumer protection. The duties include ensuring that the power generation plans formulated by the CEB is within the government’s power policy and within the legal frame of the Electricity Act.

According to PUCSL, Director General Damitha Kumarasinghe, the government policy is to go for LNG and renewables, and not coal. Therefore, the least cost long-term generation plan formulated by the CEB was not approved by the PUCSL on the basis that it was not within the government’s energy policy.

CEB, however, blames the PUCSL for catering to a different agenda that would lead to an energy crisis.

“What the CEB has suggested is an energy mix, in order to ensure that we do not depend on one power source and run the risk of facing an energy crisis. An energy mix should be inclusive of coal, LNG, solar, wind, hydro and renewables. But, the generation plan formulated by the PUCSL consists only of LNG power plants which can be disastrous as we would be depending too much on one power source,” Kumarawadu explained.

Another allegation levelled by the CEB is that LNG plants are not constructed within a strategic plan and that a proper procurement method is not followed by the government when purchasing LNG. We don’t say no to LNG “As a trade union, we do not say that LNG should be completely turned down as a power source, but there should be a proper mechanism to purchase LNG that should not be harmful to the country.

We have drawn the attention of the President and the Prime Minister to this matter many times” Kumarawadu said.

In their letter addressed to the President, the Prime Minister and line Ministers, dated March 20, the Trade Union explains that procurement of LNG is done without the involvement of the CEB, who is the direct consumer.

“The use of LNG in the country should be started in keeping with a strategic plan prepared only after conducting a proper study.

At a time when there is no such plan in force a series of unsolicited proposals for LNG use (storage terminals/long-term supply contracts and power plants) have been brought forward by various parties,” the letter reads.

Accordingly, the union shows that by not having a proper procurement methodology there is a reluctance for competitive bidding, and investors end up reaping benefits for them, ignoring the country’s requirements and formulating entities locally to circumvent legal hurdles and regulations and competitive bidding procedures.

It has also been pointed out that the LNG purchasing quantity is higher than the local requirement. The Union shows, the local requirement will not exceed 0.6 Metric tons per annum (MTPA), varying from 0.3 MTPA during wet condition to about 0.8 MTPA under extremely dry conditions. However, in the said LNG agreement, it has been recommended that 2.7 MTPA should be purchased for a period of 20 years.

Speaking to the Sunday Observer, Energy Expert and an independent Consultant, Dr Thilak Siyambalapitiya, says, more countries still opt for coal above other power sources.

“If you consider other countries in the region they are still mainly focused on coal. Countries such as India, Bangladesh, Malaysia and China still depend on coal power largely for their electricity generation, as it is the most low-cost resource available in the market. Another factor to be considered is the price fluctuations in the market. It is viable that a country has an energy mix that is able to absorb any price shocks,” Dr Siyambalapitiya said.

A life span of a coal power plant at most is 40 years; the current situation in the power sector in the world is slightly different to what is being said. “China builds a coal power plant every week for each bad power plant they shut down, he said.

According to Dr Siyambalapitiya due to the delay in completing the Norochcholai coal power plant the CEB had no option but to go for thermal power purchasing which is more costly than hydro, LNG or coal.

“The completion of Norochchoali was delayed, due to many reasons. Some made it a political issue; some made it an environmental issue and many other things.

But, no one realized the country was on the verge of an energy crisis, hence no one took any action. Come 2001 we had power blackouts going into mid-2002.

According to Dr Siyambalapitiya, the only option for getting out of the power crisis was to go for thermal power purchasing.

Reiterating the importance of maintaining an energy mix he went on to state that one of each is not going to remedy the issue. “By building one expressway you don’t solve the transportation issues. These are evolving matters. We cannot just say, one coal, hydro or thermal power plant is sufficient for the country,” Dr Siyambalapitiya pointed out.

A country needs coal power plants, but it is important they are managed in the manner an advanced country would manage. Also, it is important that environmental hazards are properly regulated and kept to a minimal while continuously monitoring it.

Speaking on the CEB Engineers’ trade union action, Secretary, Ministry of Power and Renewable Energy, Dr Suren Batagoda told the Sunday Observer, the reason for them to seek such drastic measures is due to the lack of professionalism shown by the PUCSL.

“While they have amended some of the proposed power plants in our long-term generation plan they have very willingly approved 500 MW LNG terminal. They seem to be taking a double standard in doing their job,” the Secretary complained.

However, a highly placed source within the PUCSL, denying these allegations said, they have not deviated from the power and authorities granted to them, and have always acted within their powers.

“We are not involved in the implementation mechanism. What concerns us is to ensure that the power generation plan is within regulations. What is more important to us is that the country can face the energy demand. By 2026, 1,350 MW should have entered the national grid. This can come in many ways, but what matters is that this is met at the required time,” he said.

Stakeholders of the energy sector continue to be at odds with each other on trivial matters while the demand keeps increasing. Earlier this year the Ministry of Power and Renewable Energy extended emergency power procuring agreements with private power suppliers at high prices.

The burden of the loss that the CEB continues to incur is trickled down to the consumers. If these authorities do not come to a consensus it will not be too far where the island is faced with another energy crisis resulting in long hour power cuts that we experienced back in 2001 and 2002.