Power sector structural, tariff, and renewables overhaul crosses red lines
The Power Sector Reforms Secretariat has added new controversial amendments to the electricity draft bill, drawing criticism from stakeholders, the Sunday Times learns.
These amendments have been recently discussed under the theme, ‘How the proposed power sector reforms can address the persistent issues in the Sri Lanka power sector'. The Secretariat head, Dr. Pradeep Perera, delivered a speech as a guest speaker at the first members' day luncheon meeting.
Power and Energy Minister Kanchana Wijesekera announced this week that the revised bill has been sent to the Legal Draftsman's Department for review. He said he hoped to present it to Parliament next month, following Cabinet endorsement.
The Sunday Times learns that the CEB Engineers' Union, which has its own technical know-how, or other trade unions have not been given the chance to provide input to the draft bill.
Among those amendments, the Cabinet is tasked with approving the least-cost longterm generation and the CEB's expansion plan, which was up until now granted approval by the Public Utilities Commission of Sri Lanka (PUCSL) as the power sector regulator, CEB sources said.
The approval of the longterm power generation plan to be prepared by the NSO (national system operator) has been clarified, and it will be approved by the Cabinet of Ministers after review by the regulato, according to the proposed amendments.
When the Cabinet approves the generation plan, again, political influences come into play, unions claim.
To reduce the authority of the PUCSL on the National Electricity Policy, to determine the electricity tariff, and to advise the government, it has been proposed that a National Electricity Advisory Council (NEAC) be established.
“The PUCSL's position as the technical and economic regulator of the power industry has been made explicit, and the NEAC's role as an advisory body to the government on national tariff policy, national electricity policy, and other policy topics has also been clearly defined,’’ according to the proposed amendment.
Once Cabinet approval is received, the subject minister will issue policy guidelines to the PUCSL. Those guidelines are issued to ensure the independence of the regulator, based only on policy matters.
Meanwhile, a new regulation has been added to specify the procurement process. It is mentioned that the default procurement procedure is transparent and has competitive tendering; however, exemptions are granted for power generation projects approved by the Cabinet of Ministers before the Act becomes effective.
A senior member of the Ceylon Electricity Board Engineers Union (CEBEU) said that to facilitate Adani and Poonakary solar investors who have entered the power industry through the back door without any formal tender procedure, this clause has been included. It reads: “Exemptions are granted for power generation projects approved by the Cabinet of Ministers prior to the coming into operation of the new Act.’’
The Cabinet has already approved the controversial wind power plant of the Adani company and the Poonakary solar power plant.
Another critical amendment is that instead of the clause, “The national power grid has to be controlled by the central government," in terms of the 13th Amendment to the Constitution, it has been proposed to issue transmission licences to private investors and hand over ownership to them.
Clarification has been made to the provisions on transmission investors in the private sector. As common user facilities inside the national grid, transmission lines run by the national system operator will be open to private sector ownership, maintenance, and investment. An availability-linked payment to recoup their investment will be due to these transmissions asset investors, it has been stated.
With such additional transmission licences, giving the ownership of that asset in particular to another party, a significantly large geographical area would be restricted to other power plant developers and investors (e.g., large solar and wind) due to the inability to connect to the national grid, and this may create an indirect monopoly for the owner of that additional transmission licensee over that particular geographical area.
A top CEB official said the provision is a serious threat to the concept that the “national grid” should be controlled by the central government.
A top Power and Energy Ministry official who wished to remain anonymous said: “The cabinet cannot take decisions on behalf of the country, especially when it affects the sovereignty of the country. It should be Parliament.’’
The CEBEU said CEB trade unions were deliberately kept out of the process of drafting the amendments (both the previously failed attempt and the new attempt).
“We have given some of our main concerns about the bill in writing and are currently unaware whether they have been incorporated. Further, we hope to have a detailed intellectual discussion to elaborate on them before the submission of this bill for Cabinet approval this month, as per the information we received,” a CEBEU official noted.
The PUCSL's position as the technical and economic regulator of the power industry has been made explicit, and the NEAC's role as an advisory body to the government on national tariff policy, national electricity policy, and other policy topics has also been clearly defined