DEALS AND DEALS Fore­cast­ing a power short­age

BE­HIND PROCURING EMER­GENCY POWER

Daily Mirror (Sri Lanka) - - OPINION - By Nir­mala Kan­nan­gara

All three bid­ders agreed to pro­vide sup­ple­men­tary power at their se­lected sites for six months

This Min­istry will take ac­tion to ob­tain cov­er­ing ap­proval of the cab­i­net to award the con­tracts

It’s learned that the CEB re­port had been sub­mit­ted to the sub­ject Min­is­ter

Eye­brows have been raised as to why the five­mem­ber Min­is­te­rial Com­mit­tee headed by Prime Min­is­ter Ranil Wick­re­mas­inghe, that was ap­pointed by the Cab­i­net of Min­is­ters to pro­pose ur­gent re­me­dial mea­sure to avoid power cuts, took a de­ci­sion on April 10, 2019 to an­nounce an emer­gency sit­u­a­tion in the coun­try and gave per­mis­sion to the Cey­lon Elec­tric­ity Board to pro­cure emer­gency power, when the coun­try was not fac­ing an emer­gency sit­u­a­tion.

Ac­cord­ing to Sri Lanka Elec­tric­ity Act, when the Cab­i­net de­ter­mines that there is an emer­gency sit­u­a­tion it war­rants procuring of emer­gency power, at least cost, and al­lows the

Cey­lon Elec­tric­ity Board (CEB) with the ap­proval of the Pub­lic Util­i­ties Com­mis­sion of Sri Lanka to pro­cure emer­gency power by­pass­ing Gov­ern­ment pro­cure­ment guide­lines.

It is al­leged that the sole rea­son to go for procuring emer­gency power is a di­rect con­se­quence of the CEB and the line min­istry’s fail­ure to im­ple­ment the Least Cost Long Term Gen­er­a­tion Ex­pan­sion Plan (LCLTGEP)

2015-2034.

It is al­leged that this de­ci­sion had been taken to pro­cure 200MW from Turkey with­out call­ing ten­ders at a much higher price than that of the prices the CEB is now in the process to pro­cure 100MW from three se­lected com­pa­nies after com­pet­i­tive bid­ding. Th­ese three com­pa­nies are from the UK, Dubai and Hong Kong.

Ac­cord­ing to the doc­u­ments this news­pa­per is in pos­ses­sion of, th­ese three com­pa­nies have agreed to sup­ply elec­tric­ity for six months within the price range of Rs.28.43 to Rs.30.63 per kw, al­though the pro­posed plan by the good gov­er­nance ad­min­is­tra­tion to pro­cure 200MW from M/s Ka­rad­eniz Hold­ings from Turkey un­der an emer­gency sit­u­a­tion is ap­prox­i­mately

Rs.35 per kw in­clud­ing gov­ern­ment taxes. Con­sid­er­ing a Cab­i­net memo no: 19/1263/113/040-1 dated April 20, 2019, pre­sented to the cab­i­net by the Min­istry of Power and En­ergy, the Cab­i­net of Min­is­ters had granted ap­proval ( No: 19/1283/102/024-1 dated April 26, 2019), to pur­chase emer­gency power

from the Turk­ish ship mounted power plant (Pow­er­ship). Al­though it was de­cided that the max­i­mum price that could be paid was Rs.26

per kw, the Turk­ish sup­plier has agreed to sup­ply at a rate of Rs.24.984/kw con­sid­er­ing the ex­change rate as Rs.180/ 1 US$.

How­ever, sub­se­quently to this de­ci­sion,

Min­is­ter Ravi Karunanaya­ke has pre­sented yet an­other cab­i­net memo, seek­ing cab­i­net’s con­sid­er­a­tion to amend para­graph 2 of the ear­lier cab­i­net de­ci­sion as, the max­i­mum net price (in­clu­sive of taxes) per unit of elec­tric­ity to Rs.26.20 pro­vided that the taxes ap­pli­ca­ble for the im­port of Heavy Fuel Oil (HFO) should not be in­creased from the present prices and the ex­change rate should not in­crease more than

Rs.180 per 1 US$. In the said memo, a re­quest has been made to di­rect the Min­istry of Fi­nance to grant ex­emp­tions of pay­ment of ap­pli­ca­ble taxes to im­port HFO for the above pro­ject or au­tho­rize the CEB to pay any ap­pli­ca­ble taxes.

“Ini­tially the Gov­ern­ment wanted to show that they are procuring power at a lesser price than the prices the max­i­mum rate the cab­i­net has de­cided on. Then it was in­creased to Rs.26.20 in­clu­sive of taxes. A re­quest had also been made to ex­empt other ap­pli­ca­ble taxes to im­port HFO or to in­struct the CEB to pay the ap­pli­ca­ble taxes. If th­ese taxes are added to the unit cost of

Rs.26.20, the rate would be more than Rs.35/

kw. The Cab­i­net of min­is­ters would give the con­ces­sion to the Turk­ish com­pany but the bur­den of th­ese ap­pli­ca­ble taxes has to be borne by the tax­pay­ers,” a Se­nior CEB of­fi­cial told the

Daily Mir­ror. It was in 2016 the CEB for the first time pur­chased a ca­pac­ity of 155MW emer­gency power also known as sup­ple­men­tary power to meet the then de­mand. As emer­gency power pro­cure­ment in 2015 was costly, a plan was in­tro­duced to im­ple­ment low --cost power plants to meet this ever-in­creas­ing power de­mand to which the PUCSL had given its per­mis­sion. But how­ever, Nei­ther the CEB nor the Min­istry of Power and En­ergy took ini­tia­tives to im­ple­ment th­ese low-cost plants and since 2016, emer­gency power pro­cure­ment at a high cost has grown from 155MW to 720MW by 2019.

Ac­cord­ing to the sta­tis­tics avail­able, 155MW had been pur­chased in 2016 while 180MW had been pur­chased in 2017, 320MW in 2018 and the latest plan is to pur­chase 720MW for 2019.

“The fail­ure to im­ple­ment the low-cost power plants un­der the Least Cost Long Term Gen­er­a­tion Ex­pan­sion Plan (LCLTGEP) 20152034 has seen a dras­tic in­crease in emer­gency power pur­chase since 2016. Had the CEB im­ple­mented this plan, we could have pur­chased low-cost elec­tric­ity by now with­out bur­den­ing the power crashed na­tional cof­fers,” a for­mer Se­nior CEB En­gi­neer said.

The prices of the three bid­ders from the UK, Dubai and Hong Kong are -low­est bid sub­mit­ted for 24MW for Pallekele Grit Sub-sta­tion for six months was M/s Ag­gereko In­ter­na­tional Pro­ject Ltd; of Glas­gow, Scot­land, the UK for

Rs.30.20 per kw. 10MW for Galle Grid Sub­sta­tion was M/s Ag­gereko In­ter­na­tional Pro­ject Ltd; of Glas­gow, Scot­land, the UK for

Rs.30.20 per kw, 10MW for Mahiyan­gana Grid Sub­sta­tion was M/s Al­taaqa Al­ter­na­tive Solutions; of Dubai, UAE for Rs.30.58 per

kw, 08 MW for Polon­naruwa Grid Sub­sta­tion

was M/s Al­taaqa Al­ter­na­tive Solutions; of Dubai, UAE for Rs.30.63 per kw, 24MW

for Ham­ban­tota Grid Sub­sta­tion was M/s V Power Hold­ings Ltd; of Hong Kong for Rs.28.43 per kw and 24MW for Ho­rana Grid Sub­sta­tion was M/s V Power Hold­ings Ltd; of Hong Kong for Rs.28.70 per kw

It is in this back­drop, the cab­i­net of min­is­ters has given the ap­proval to pro­cure 200MW emer­gency power based on an emer­gency sit­u­a­tion with­out fol­low­ing pro­cure­ment guide­lines from Turk­ish ship mounted power plant (Pow­er­ship) from M/s Ka­rad­eniz

Hold­ings for six months, which will cost the coun­try ap­prox­i­mately a stag­ger­ing Rs.15 bil­lion. On 11 April 2019 Ka­rad­eniz Hold­ings has sub­mit­ted a pro­posal for the im­me­di­ate sup­ply of 200MW power ship. On the same day,

Prime Min­is­ter Wick­re­mas­inghe

in a con­fi­den­tial note to the Cab­i­net re­quested its ap­proval to an­nounce a calamity sit­u­a­tion in the coun­try to make way for the CEB to pur­chase power from the Turk­ish Com­pany on an emer­gency ba­sis with­out call­ing ten­ders.

The con­fi­den­tial note dated April 11, 2019, to the Cab­i­net (Ref: PMO/

NC/12/2019) un­der the head­ing- Mea­sures to be taken to over­come the chal­lenges in the pro­vi­sions of an un­in­ter­rupted power sup­ply and con­tin­u­a­tion, Premier Wick­remesinghe states that un­der his chair­man­ship, the Min­is­te­rial Com­mit­tee has de­cided to de­ter­mine that there is an emer­gency sit­u­a­tion and there is a need to pro­cure emer­gency power for an un­in­ter­rupted power sup­ply.

The let­ter fur­ther states, ‘Ref­er­ence is re­quested to the cab­i­net de­ci­sion no:

19/1185/113/040 dated April 9, 2019, which ap­pointed a Min­is­te­rial Com­mit­tee un­der my Chair­man­ship to sub­mit rec­om­men­da­tions to the cab­i­net on the mea­sures to be taken to over­come the power cri­sis.

‘Ac­cord­ingly, the Min­is­te­rial Com­mit­tee met on April 10, 2019 and de­cided to de­ter­mine that there is an emer­gency sit­u­a­tion un­der Sec­tion 43(4)(c)(ii) of the Sri Lanka Elec­tric­ity (Amend­ment) Act No: 31 of 2013 which com­pels the Min­is­ter of Power, En­ergy, and Busi­ness De­vel­op­ment to pur­chase emer­gency power.

‘The rel­e­vant Sec­tion of the Sri Lanka Elec­tric­ity (Amend­ment) Act No: 31 of 2013 states, ‘to meet any emer­gency sit­u­a­tion as de­ter­mined by the cab­i­net of min­is­ters dur­ing a na­tional calamity or a long term forced out­age of a ma­jor gen­er­a­tion plant where pro­tracted bid invit­ing process out­weighs the po­ten­tial ben­e­fit or procuring emer­gency ca­pac­ity re­quired to be pro­vided by any per­son at least cost’. ‘Sub­mit­ting for cov­er­ing ap­proval of the

Cab­i­net of Min­is­ters. A copy of a let­ter sent

by the Hon. Min­is­ter of Power and En­ergy through a Cab­i­net Me­moran­dum (No: 05/2019/PB), has sought cab­i­net ap­proval to pro­cure 100MW emer­gency power. By cab­i­net de­ci­sion No: 19/0173/113/001 dated Jan­uary 14, 2019 ap­proval had been granted to pro­cure the said sup­ple­men­tary elec­tric power fol­low­ing pro­cure­ment pro­ce­dure.

How­ever, Min­is­ter Ravi Karunanaya­ke on March 6, 2019 had in­formed the Cab­i­net of Min­is­ters that the Min­istry does not in­tend to pro­cure ad­di­tional power al­though cab­i­net ap­proval has been re­ceived as they were ex­pect­ing to man­age the coun­try’s power sit­u­a­tion, but had later sought per­mis­sion to re­ac­ti­vate the ten­der that was called for in Jan­uary in or­der to pro­cure elec­tric­ity due to the then pre­vail­ing power sit­u­a­tion.

PUCSL is fac­ing greater dif­fi­culty to an­a­lyse and de­ter­mine the gap be­tween the ex­act de­mand and the sup­ply

It is in this back­drop, the cab­i­net of min­is­ters has given the ap­proval to pro­cure 200MW emer­gency power based on an emer­gency sit­u­a­tion with­out fol­low­ing pro­cure­ment guide­lines from Turk­ish ship mounted power plant

Sub­se­quent to this move, by let­ter dated March 29, 2019, to the Chair­man and Gen­eral Man­ager CEB by Sec­re­tary Min­istry of Power, En­ergy and Busi­ness De­vel­op­ment Dr. B.M.S. Batagoda states that the Cab­i­net has au­tho­rised him to grant ap­proval to award the con­tract to the se­lected bid­ders sub­ject to the cov­er­ing ap­proval for the Cab­i­net of Min­is­ters.

The let­ter states: ‘Sup­ply of 100MW of Sup­ple­men­tary Elec­tri­cal Power to CEB on a short term ba­sis for 6 months to mit­i­gate the power short­age en­vis­aged due to in­suf­fi­cient power gen­er­a­tion to the sys­tem

‘This has ref­er­ence to the Cab­i­net Me­moran­dum No: 05/ 2019/ PE dated Jan­uary 11, 2019, and the Cab­i­net de­ci­sion No: 19/0173/113/001 dated Jan­uary 14, 2019, on the above pro­cure­ment.

‘The Cab­i­net has au­tho­rized the Sec­re­tary to the Min­istry to grant ap­proval to award the con­tract to the se­lected bid­ders sub­ject to the cov­er­ing ap­proval for the cab­i­net of Min­is­ters. On March 6, 2019, Hon. Min­is­ter has in­formed the Cab­i­net that the Min­istry does not in­tend to pro­cure ad­di­tional power on short term ba­sis as de­cided by the cab­i­net at its meet­ing held on Jan­uary 22, 2019, ex­pect­ing to man­age the power sit­u­a­tion with­out procuring sup­ple­men­tary power.

‘How­ever, with the ex­pe­ri­ence, we had dur­ing th­ese two weeks power sit­u­a­tion fur­ther ag­gra­vated which re­sulted in power cuts. The Gov­ern­ment pol­icy is not to al­low power cuts at any cost. The peo­ple are very un­happy about the power cuts sit­u­a­tion and crit­i­ciz­ing the gov­ern­ment, Min­istry and the CEB. This is very bad for the power sec­tor. Al­ready the im­pact of the econ­omy dur­ing the last few days of load shed­ding is very se­vere, par­tic­u­larly the loss of con­fi­dence in in­vestors. There­fore on March 26, 2019, it was de­cided at the Cab­i­net Meet­ing to take all mea­sures to avoid power cuts. The cab­i­net also ap­pointed fol­low­ing com­mit­tee- Min­is­ters Ravi Karunanaya­ke, Kabir Hashim, Daya Ga­m­age and Dr. Har­sha De Silva to pro­pose ur­gent re­me­dial mea­sures to avoid power cuts.

‘Based on th­ese de­ci­sions the Prime Min­is­ter con­vene a meet­ing with the com­mit­tee on March 27, 2019, at the par­lia­ment com­plex with the par­tic­i­pa­tion of of­fi­cials of the min­istry and CEB.

‘At this meet­ing, it was de­cided to take all pos­si­ble mea­sures as de­cided by the Cab­i­net in­clud­ing the re­ac­ti­va­tion of the sus­pended pro­cure­ment of 100MW sup­ple­men­tary power. The Min­is­ter in­structed to pro­cure this 100MW for six months even though ten­ders called for one year. Since this is na­tional im­por­tance to avoid power cuts this min­istry con­vened a meet­ing on March 28, 2019, with rec­om­mended bid­ders to sup­ply 100MW sup­ple­men­tary power.

‘All three bid­ders agreed to pro­vide sup­ple­men­tary power at their se­lected sites for six months. Ac­cord­ingly, you are hereby au­tho­rized to is­sue let­ters of in­tent and sign the power pur­chase agree­ments with the fol­low­ing in­vestors for a six month pe­riod at the terms and con­di­tions which they have agreed.

‘Since cab­i­net has orig­i­nally au­tho­rized this min­istry to award the con­tracts sub­ject to the cov­er­ing ap­provals of the Cab­i­net. This Min­istry will take ac­tion to ob­tain cov­er­ing ap­proval of the cab­i­net to award the con­tracts.

‘the cab­i­net has ap­proved to un­der­take this pro­cure­ment un­der Sec­tion 43.4 (C)(ii) of Sri Lanka Elec­tric­ity (Amended) Act No: 31 of 2013 so that there is no ne­ces­sity for call­ing ten­ders. How­ever please in­form the PUCSL on this pro­cure­ment which is made as an emer­gency power pro­cure­ment. Dr. B.M.S. Batagoda.

Mean­while the CEB is­su­ing a re­port dated April 11, 2019, sent it to the sub­ject Min­is­ter on im­me­di­ate power re­quire­ment and pos­si­ble in­ter­con­nec­tions, for nec­es­sary ac­tions to cater the sup­ply short­age for the years 2019- 2021.

It fur­ther states: ‘The ap­proved Least Cost Long Term Gen­er­a­tion Ex­pan­sion Plan (LCLTGEP) 2015-2034 has iden­ti­fied 1X300MW nat­u­ral gas op­er­ated com­bined cy­cle power plant to be com­mis­sioned by 2019. Also, the ap­proved LCLTGEP 2018-2037 has iden­ti­fied the re­quire­ment of hav­ing 1X300MW nat­u­ral gas op­er­ated com­bined cy­cle power plant to be com­mis­sioned by 2019 and 2021 re­spec­tively.

‘The ap­proved LCLTGEP 2018-2037 con­sist of 320MW re­cip­ro­cat­ing en­gines in the power sys­tem. In the same plan, con­tin­gency anal­y­sis was car­ried out con­sid­er­ing the si­mul­ta­ne­ous oc­cur­rence of risk events such as im­ple­men­ta­tion de­lays, very dry hy­dro con­di­tions, long out­age of ma­jor power plants and high de­mand. The re­sults of this anal­y­sis show that an ad­di­tional ca­pac­ity of 150MW is re­quired for the year 2019.

‘How­ever, due to the de­lays of im­ple­men­ta­tion of 300MW LNG power plant in Ker­awalapi­tiya by 2019 has cre­ated the re­quire­ment of 470MW in 2019 as an im­me­di­ate ca­pac­ity short­age.

‘As­sum­ing that 2X300MW LNG plants com­mis­sioned by 2022, a sep­a­rate con­tin­gency anal­y­sis has been con­ducted and fol­low­ing ca­pac­ity re­quire­ments are iden­ti­fied to en­able sta­ble sup­ply in the year 2020 and 2021. The re­quire­ment for 2019 is 470MW out of which 170MW al­ready ex­ist­ing while 100MW sup­ple­men­tary power un­der pro­cure­ment and bal­ance 200MW is re­quired. The year 2020 and 2021 re­quire­ments are 195MW and 105MW re­spec­tively’.

It’s learned that the CEB re­port had been sub­mit­ted to the sub­ject Min­is­ter and the Min­is­te­rial Com­mit­tee’s de­ci­sion to de­clare an emer­gency sit­u­a­tion in the coun­try had been taken fol­low­ing a pro­posal pre­sented to the Min­istry of Power and En­ergy by M/s Ka­rad­eniz Hold­ings of Turkey to sup­ply 200MW by Turk­ish ship mounted power plant (Pow­er­ship) with a let­ter of en­dorse­ment by the Turk­ish Am­bas­sador to Sri Lanka in the first week of April. Mean­while by let­ter dated April 22, 2019, Chair­man CEB, R. Jayawar­dena to Gen­eral Man­ager CEB says that after a de­tailed dis­cus­sion at the Board Meet­ing, held on same date, ap­proval had been granted to com­mence ne­go­ti­a­tions with M/s Ka­rad­eniz Hold­ings with the ob­jec­tive of en­ter­ing into a power pur­chase agree­ment en­abling CEB to pro­cure 200MW of ca­pac­ity of­fered by the said com­pany in its pro­posal dated April 11, 2019.

Ac­cord­ing to CEB Board Pa­per dated April 12, 2019 (Ref: AGM/TR/2/2), the tar­iff pro­posed by the Turk­ish com­pany is US$ 0.1388 per kwh or LKR 24.984 per kw at which rate the es­ti­mated cost of power pur­chase for a pe­riod of six months will be ap­prox­i­mately Rs.15 bil­lion. Al­though the Pub­lic Util­i­ties Com­mis­sion of Sri Lanka (PUCSL), which is the reg­u­la­tor for the elec­tric­ity in­dus­try in the coun­try has ad­vised the CEB since 2016 to im­ple­ment the ap­proved Least Cost Long Term Gen­er­a­tion Ex­pan­sion Plan (LCLTGEP) 2015-2034, the of­fi­cial doc­u­ments this news­pa­per is in pos­ses­sion shows as to how the CEB has sys­tem­at­i­cally de­layed im­ple­men­ta­tion the said plan. In 2016, the PUCSL had fore­cast a pos­si­ble power short­age in 2018/2019, as none of the ma­jor power plants iden­ti­fied in the LCLTGEP ex­cept for the Norochchol­ai, Colombo Barge and few other hy­dropower plants have not even started com­menc­ing the con­struc­tion work.

CEB’S fail­ure to abide by the PUCSL di­rec­tives, made its Chair­man Saliya Mathew to send a let­ter on Novem­ber 18, 2016, to Gen­eral Man­ager CEB, Y.M. Sa­ma­ras­inghe, to sub­mit the rea­sons for the non-com­pli­ance with the least cost long term gen­er­a­tion ex­pan­sion plan 2015-2034 and that this de­lay would re­sult in fail­ure to meet the elec­tric­ity de­mand dur­ing the 2017-2020 pe­riod.

As there was no proper re­sponse from the CEB, the PUCSL has brought this to the no­tice of the Sec­toral Over­sight Com­mit­tee of the Par­lia­ment. When the PUCSL in­formed this to the Cab­i­net Com­mit­tee on Eco­nomic Man­age­ment by let­ter dated Novem­ber 18, 2016, it had been re­ferred to the Sec­toral Over­sight Com­mit­tee. As a re­sult, line Min­istry Sec­re­tary by let­ter dated June 15, 2017, has re­quested the CEB to ap­point pro­ject man­agers in or­der to carry out the stalled work but noth­ing hap­pened there­after.

A Mem­ber of Par­lia­ment who is one of the mem­bers of the Sec­toral Over­sight Com­mit­tee of the Par­lia­ment told this news­pa­per that the rea­son for the non-com­pli­ance of the LCLTGEP is solely be­cause of a par­tic­u­lar union in the CEB. “There is a mafia in this sec­tor. This union is pow­er­ful and work hand in glove with many com­pa­nies in the power sec­tor and they want th­ese com­pa­nies to get the power plant con­tracts. If th­ese com­pa­nies do not get the ten­ders, this union takes ev­ery pos­si­ble step to hin­der the projects. In this par­tic­u­lar low-cost power plan pro­ject, the Par­lia­ment Over­sight Com­mit­tee has un­earthed the ex­act rea­sons for non-im­ple­men­ta­tion of this plan. It is high time that the Gov­ern­ment calls ex­pla­na­tion from th­ese of­fi­cers rather than al­low­ing them to ‘flour­ish’ by grant­ing the nec­es­sary ap­provals to go ahead with their goal- to pro­cure emer­gency power,” the MP said.

Mean­while, ques­tions have been raised as to why the CEB En­gi­neers Union is ac­cus­ing the PUCSL of sab­o­tag­ing their plans to build new power plants and that was the rea­son for them to re­strict power sup­ply be­fore the Sin­hala New Year.

Highly re­li­able CEB of­fi­cial un­der the strict con­di­tion of anonymity told the Daily Mir­ror that they are not sur­prised as to why the Min­is­te­rial Com­mit­tee on April 11, 2019, after grant­ing per­mis­sion to pur­chase 100MW fol­low­ing ten­der pro­ce­dure de­cided to de­ter­mine that the coun­try is in a calamity and needs to pur­chase more emer­gency power. “We are nei­ther fac­ing a na­tional calamity nor a long-term forced out­age of a ma­jor gen­er­a­tion plant. The CEB in one of its re­ports had in­formed the Min­is­ter that the im­me­di­ate ca­pac­ity re­quired to meet the coun­try’s de­mand for the com­ing six month pe­riod is 470MW and need to pro­cure this im­me­di­ately to avoid power cuts. Why couldn’t the Gov­ern­ment in Jan­uary take a de­ci­sion to pur­chase a higher ca­pac­ity emer­gency power rather than go­ing only for 100MW and a few months later 200MW with­out fol­low­ing a ten­der pro­ce­dure?

“It is a known fact that a cer­tain high pro­file group in the CEB and the Min­istry do not want to im­ple­ment the low-cost power plants though it is ben­e­fi­cial to the coun­try’s econ­omy and the elec­tric­ity con­sumers, but not ben­e­fit them ‘per­son­ally’. Even the politi­cians know this well. In such a back­ground, why can­not this min­is­te­rial com­mit­tee call ex­pla­na­tion from th­ese of­fi­cers who have failed to im­ple­ment low-cost power plants since 2016,” sources said.

Mean­while DGM Eng. N.S. Wet­tas­inghe has sent an e-mail to the Pres­i­dent CEB En­gi­neers Union on May 3, 2019 ask­ing what their stance is in procuring emer­gency power from Turk­ish ship on short term ba­sis whether the union is with­draw­ing their TU Ac­tion with PUCSL of this pro­cure­ment or ac­cept­ing a pro­cure­ment car­ried out with­out a proper com­pet­i­tive ten­der­ing pro­ce­dure to which there was no re­sponse from the EU.

High cost of emer­gency power

Cey­lon Elec­tric­ity Board’s (CEB) power pur­chase data shows clearly how costly emer­gency power is, com­pared to the prices they could have pur­chased it from least-cost power gen­er­a­tion plants.

Chair­man PUCSL Saliya Mathew’s let­ter to Gen­eral Man­ager CEB, Y.M. Sa­ma­ras­inghe fur­ther states, ‘The PUCSL ap­proved the LCLTGEP on Septem­ber 15, 2016, and it is the sole re­spon­si­bil­ity of the trans­mis­sion li­censee to ad­here to ap­proved LCLTGEP and take im­me­di­ate steps to im­ple­ment it, given the crit­i­cal­ity of the power sup­ply dur­ing 2017-2020.

‘The Com­mis­sion ob­serves, that the trans­mis­sion li­censee has de­vi­ated from the ap­proved LCLTGEP ac­cord­ing to the let­ter dated Novem­ber 11, 2016. De­lay in im­ple­men­ta­tion of the power plants from the ap­proved LCLTGEP will re­sult in fail­ure to meet the elec­tric­ity de­mand dur­ing the 2017-2020 pe­riod.

‘The Com­mis­sion wishes to draw your at­ten­tion to Sec­tion 24 of Sri Lanka Elec­tric­ity Act No: 20 of 2009 (as amended) and con­di­tion 30 of Elec­tric­ity Trans­mis­sion and Bulk Sup­ply Li­cence no: EL/T/09-002 is­sued by the Com­mis­sion, in ful­fill­ing the du­ties as the Trans­mis­sion Li­censee.

‘There­fore the Com­mis­sion di­rects Trans­mis­sion and Bulk Sup­ply Li­censee No: EL/T/09-002 to(i) Pro­vide rea­sons for the de­vi­a­tion from the ap­proved LCLTGEP for each and ev­ery power plant

(ii) Pro­vide a re­port on the im­pact of the power sit­u­a­tion dur­ing 2017-2020 due to de­vi­a­tion from the ap­proved LCLTGEP

(iii) Pro­vide solutions/ pro­pos­als in meet­ing the elec­tric­ity de­mand, in the event if there is an im­pact on con­tin­ued power sup­ply due to the de­vi­a­tion from the ap­proved LCLTGEP dur­ing 2017-2020 pe­riod

(iv) Pro­vide ev­i­dence to the Com­mis­sion that Trans­mis­sion Li­censee is not likely to con­tra­vene Sec­tion 24 of Sri Lanka Elec­tric­ity Act No: 20 of 2009 (as amended) and Con­di­tion 30 Elec­tric­ity Trans­mis­sion and Bulk Sup­ply Li­cense No: EL/ T/09-002

You are hereby re­quested to sub­mit the re­quested in­for­ma­tion on or be­fore Novem­ber 29, 2016’.

Ac­cord­ing to the PUCSL data, the de­lay in im­ple­men­ta­tion of each power plant by the CEB is as fol­low­sthe LCLTGEP 2015-2034 (Ref: PUC/LI/ TL/2016/38) has been ap­proved on Septem­ber 15, 2016, and the ma­jor power plants given be­low were to be com­mis­sioned on­the given dates. Ac­cord­ing to CEB let­ter dated Novem­ber 11, 2016 (Ref: AGM (CS)/ DGM (CSRA)/GEN/4) th­ese plants were ex­pected to be com­pleted on the given dates.

(i) 100MW fur­nace oil-fired power plant 1, was to be com­mis­sioned on Jan­uary 2017 and ex­pected to be com­pleted by De­cem­ber 2018 (yet to im­ple­ment the work).

(ii) 70MW Fur­nace oil-fired power plant 1, was to be com­mis­sioned on Jan­uary 1, 2017, and was ex­pected to be com­plete by De­cem­ber 2018 (yet to im­ple­ment the con­struc­tion work).

(iii) 35 MW Broad­lands Hy­dropower plant was to be com­mis­sioned on Jan­uary 1, 2018, and ex­pected to be com­plete by June 2019 (yet to start the work)

(v) 100MW Man­nar Wind Park Phase 1 power plant, was to be com­mis­sioned on Jan­uary 1, 2018, and ex­pected to be com­pleted by July 2019 (not yet com­menced the con­struc­tion)

(vi) 2 x 35 MW gas tur­bine power plant was to be com­mis­sioned on Jan­uary 1, 2018, and ex­pected to be com­pleted by June 2018 (yet to start the con­struc­tion work).

(vii) 1 X35MW gas tur­bine power plant, was to be com­mis­sioned on Jan­uary 1, 2019, and ex­pected to be com­pleted by June 2019 ( yet to start the work) and

(viii) 1 x 300 MW nat­u­ral gas-fired com­bined cy­cle power plant, was to be com­mis­sioned on Jan­uary 1, 2019, and ex­pected to be com­pleted by June 2020 (yet to com­mence the con­struc­tion work).

It was at this stage, Di­rec­tor Gen­eral PUCSL, Damitha Ku­maras­inghe by let­ter dated March 31, 2016 to Sec­re­tary Min­istry of Power and En­ergy, Dr. B.M.S. Batagoda, states that al­though the CEB fore­casts that the power gen­er­a­tion is ex­pected to grow at 5.5% per an­num dur­ing 2015-2022, in ad­di­tion, to ex­pect the peak de­mand to grow at 4.4% per an­num, as per the PUCSL’S anal­y­sis con­sid­er­ing the low re­li­a­bil­ity of the Norochchol­ai coal power plant, the coun­try could face en­ergy and ca­pac­ity short­ages dur­ing 2018/2019 and be­yond un­der drought con­di­tions even with the planned plant ad­di­tions.

Na­tional De­mand Side Man­age­ment Pro­gramme

It fur­ther states, ‘CEB has in­di­cated de­lays in com­mis­sion­ing Sam­pur coal power plant in 2021. Hence the Com­mis­sion wishes to em­pha­sise the need for rig­or­ous im­ple­men­ta­tion of the Na­tional De­mand Side Man­age­ment Pro­gramme, de­vel­op­ment of planned con­ven­tional power plants on time and ex­pe­dite grid in­te­gra­tion of planned re­new­able en­ergy based plants in or­der to evade the pos­si­ble short­ages in 2018/2019’.

Pres­i­dent CEB En­gi­neers Union, Saumya Ku­marawadu re­fut­ing al­le­ga­tions lev­elled against the En­gi­neers Union on its in­volve­ment in the de­lay in im­ple­ment­ing the low-cost power plants, ac­cused the PUCSL of not grant­ing the nec­es­sary ap­provals on time.

“PUCSL granted their ap­provals for the LCLTGEP 2015-2034 in 2018 al­though the CEB made sev­eral re­quests from 2016. That is the rea­son for the de­lay in im­ple­ment­ing th­ese power plants,” Ku­marawadu told the Daily Mir­ror.

When brought to his no­tice that this pa­per is in pos­ses­sion of let­ters ex­changed by the PUCSL and the CEB over the de­lay in im­ple­ment­ing the projects, and that there was no ref­er­ence by the CEB that the de­lay was due to PUCSL’S fail­ure to grant the nec­es­sary ap­provals, but had pledged to com­mis­sion the op­er­a­tions within a stip­u­lated time frame, Ku­marawadu said that the Gen­eral Man­ager’s stand can­not be con­sid­ered as the CEB’S stance. “The GM is un­der pres­sure as he has to abide by what the politi­cians want him to do. Hence what the GM writes is not the CEB’S stance. When the politi­cians, the Power and En­ergy Min­istry and the PUCSL is dis­rupt­ing the CEB, we can­not achieve our tar­gets. It was only after we in­sti­gated trade union ac­tion, that the PUCSL granted their ap­provals in 2018,” Ku­marawadu said. When told that the mem­ber of the Sec­toral

Over­sight Com­mit­tee of the Par­lia­ment al­leged that the EU is a mafia and does not al­low any pro­ject to come up if its in­ter­ested par­ties are not of­fered the ten­ders, Ku­marawadu re­fut­ing the al­le­ga­tions queried as to who was be­hind the award­ing the ten­der that was called to sup­ply 50 diesel gen­er­a­tor units, 25 step-up trans­former/ switchgear units and 25 diesel fuel tanks to a com­pany that did not com­ply ten­der clauses.

“Was it the EU in­volved in it?” Ku­marawadu queried.

He fur­ther said as to how mem­bers of two or three cab­i­net ap­pointed ten­der boards had to re­sign when ten­ders were called for the Ker­awalapi­tiya power plant as a re­sult of po­lit­i­cal in­flu­ence. “Th­ese politi­cians wanted to of­fer the ten­der to a cer­tain party. As a re­sult, a few mem­bers of th­ese ten­der boards that were ap­pointed by the cab­i­net had to re­sign. It was the same with the Sam­pur Coal plant as well. It was to be com­mis­sioned in 2020/2021 but the Power and En­ergy Min­istry and the PUCSL got an En­vi­ron­men­tal NGO to file le­gal ac­tion against the pro­ject and we had to stop it on a court or­der,” Ku­marawadu al­leged.

Mean­while, CEB Me­dia Spokesman Su­lak­shana Jayawar­dena said that the rea­son for the non­im­ple­men­ta­tion of the LCLTGEP 2015-2034 which is be­ing reviewed once in two years is be­cause of po­lit­i­cal, so­cial and en­vi­ron­men­tal is­sues but not the CEB’S fault.

“For the Sam­pur pro­ject, we were to float ten­ders in 2016 but it had to be called off due to the rea­sons I have given.

It was the same with the LNG power plant as well. For the Mor­agolla Plant, the en­vi­ron­men­tal or­ga­ni­za­tions said that there are en­dan­gered fish species and the pro­ject had to put on hold. The Man­nar wind power pro­ject had to be held due to some protests by en­vi­ron­men­tal or­ga­ni­za­tions. We are un­der tremen­dous pres­sure and that was why we could not im­ple­ment the LCLTGEP 20152034 plan,” he added.

When asked as to why the CEB is plan­ning to pro­cure emer­gency power with­out call­ing ten­ders from a Turk­ish com­pany un­der the pre­text of an emer­gency sit­u­a­tion when there is no such a cri­sis as of now, Jayawar­dena said that it was based on a cab­i­net de­ci­sion.

“If the coun­try faces a power cri­sis we have to pur­chase emer­gency power,” he said.

The pro­posed plan to pro­cure 200MW emer­gency power from Turkey for a higher rate com­par­ing to the 100MW that is to be pro­cured from UK, Dubai and Hong Kong, Jayawar­dena said that Turkey’s prices are much lesser than the prices sub­mit­ted by the UK, Dubai and Hong Kong rates.

“The Turkey prices are Rs.26.20 per unit in­clu­sive of taxes but the rates quoted by the other three com­pa­nies are much higher than the for­mer,” Jayawar­dena said.

When asked whether the prices, the UK , Dubai and Hong Kong com­pa­nies have quoted are in­clud­ing the ap­pli­ca­ble taxes, Jayawar­dena confirmed that the quoted rates in­clude the ap­pli­ca­ble taxes, but he could not an­swer whether the given Turk­ish prices are in­clud­ing or ex­clud­ing the gov­ern­ment taxes.

Mean­while, Di­rec­tor PUCSL , Jayant Herath said that the CEB as the trans­mis­sion li­censee is re­spon­si­ble for pro­cure­ment of gen­er­a­tion plants and added that al­though ap­provals have been granted for sev­eral long-term gen­er­a­tion plans, to date they have not been im­ple­mented for no rea­sons. “After 2014, we have not seen a sin­gle mega plant that has been added to the na­tional grid. Some plants have been ten­dered. But selections are not be­ing fi­nal­ized yet. Since 2016, CEB pur­chases power on a short term ba­sis which is costly. De­lay in con­struc­tion of low-cost plant pave the way for high-cost short term en­ergy pur­chases. CEB has to ex­pe­dite the con­struc­tion of plants in a timely man­ner,” Herath added.

When asked as to whether the PUCSL will grant ap­proval to pro­cure emer­gency power from Turk­ish ship, Herath said that the PUCSL need to an­a­lyze the data such as cur­rent avail­able ca­pac­ity, de­mand, etc; to as­sess the re­quire­ment of the ad­di­tional power

“Since May 2018, the Cey­lon Elec­tric­ity Board has not pro­vided any data to PUCSL. There­fore, PUCSL is fac­ing greater dif­fi­culty to an­a­lyse and de­ter­mine the gap be­tween the ex­act de­mand and the sup­ply. There were in­stances where we re­jected the emer­gency power re­quire­ment due to non-avail­abil­ity of elec­tric­ity short­age as such. One classic ex­am­ple is the emer­gency re­quest in 2016. When the CEB re­quested to pur­chase 60 MW in 2016 on a short term ba­sis, this Com­mis­sion an­a­lyzed the data and sought for clar­i­fi­ca­tion to iden­tify the real need. In that process, CEB ac­cepted that the pro­posed short­term power pur­chase is not re­quired. So, if we had re­quired data to an­a­lyse the cur­rent sit­u­a­tion we could have as­sessed and ver­i­fied the said short­age with­out any de­lay and the process also will be very trans­par­ent for any­one. CEB’S power plant pro­cure­ment is guided through a trans­par­ent process stip­u­lated in the Sri Lanka Elec­tric­ity Act. PUCSL, be­ing the reg­u­la­tor for the in­dus­try, is re­spon­si­ble for en­sur­ing that the CEB pur­chases power at the least cost be­cause the cost of power pur­chases is borne by the poor tar­iff con­sumer at the end of the day. Ac­cord­ing to Sec­tion 43 (2) and sec­tion 43 (4) of the Elec­tric­ity Act, CEB should ob­tain prior ap­proval from the reg­u­la­tor in or­der to pro­cure any power plant. As of to­day, we have not re­ceived a re­quest to pur­chase emer­gency power from Turkey,” Herath stated.

All at­tempts to con­tact Sec­re­tary Power, En­ergy and Busi­ness De­vel­op­ment Dr. B.M. S. Batagoda for a comment failed. Al­though a text mes­sage was sent seek­ing a comment the Min­istry Sec­re­tary till the pa­per went for pub­li­ca­tion.

In 2016, the PUCSL had fore­cast a pos­si­ble power short­age in 2018/2019, as none of the ma­jor power plants iden­ti­fied in the LCLTGEP ex­cept for the Norochchol­ai, Colombo Barge and few other hy­dropower plants have not even started com­menc­ing the con­struc­tion work

It is high time that the Gov­ern­ment calls ex­pla­na­tion from th­ese of­fi­cers rather than al­low­ing them to ‘flour­ish’ by grant­ing the nec­es­sary ap­provals to go ahead with their goal- to pro­cure emer­gency power

This union is pow­er­ful and work hand in glove with many com­pa­nies in the power sec­tor

and Busi­ness De­vel­op­ment in this re­gard is also at­tached here­with. Ranil Wick­remesinghe, MP, Prime Min­is­ter’. On Jan­uary 11, 2019, Min­istry of Power, En­ergy and Busi­ness De­vel­op­ment

Ranil Wick­ra­mas­ingha

CEB Chair­man Jayawar­dena

Batagoda

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