Mini hydro power developers complain of state inaction
The Ceylon Electricity Board ( CEB) is forecast to lose Rs 42 billion this year, up from an estimated Rs 12 billion, Small Hydro Power Developers in Sri Lanka said this week, complaining of state inaction in approving projects.
They said they produce and supply to the national grid, as high as 6.5 % of power through their mini-hydro projects.
In such a situation, Anil Makalanda, President, Small Hydro Power Developers Association (SHPDA) told Business Times ( BT) on the sidelines of a press conference held this week in Colombo that it would be unfair for anyone to brand them as ‘Mini-hydro Power Mafia’.
Like in most other new industrial and commercial ventures, the lackadaisical attitude of some state agencies and the bureaucratic red-tape has been the stumbling block, in setting up these projects to urgently supply much needed electricity for the country.
Dr Nishantha Nanayakkara, Committee Member, SHPDA said that it would take two to three years to complete the project pre- implementation requirements, obtaining the approval of around 10 state agencies, but the permits are valid only for one year.
He said that instead of the authorities not giving a clear- cut definition for the cancelled projects there appears to be sinister moves to put all these failed projects into one company by the CEB. It was pointed out that the best way forward should be to clear up the obstacles to start these new ventures, without the government taking over the rights of the private sector, using the government’s ‘ BigBrother’ attitude.
He said that on top of these major obstacles, there are also unreasonable demands by Provincial Councils and Local Government authorities such as a large component of the project revenue as royalty payments, over and above the statutory payments made to the state. Very unreasonable technical conditions have also been imposed by the Central Environmental Authority and this becomes a viability impediment of the project.
He said that an equitable tariff is not offered to the old small hydro plants that are reaching the end of the term of the first contract of 15 years and the first two plants are now without revenue since June 2011.
He said that the government has not recognized their crucial contribution, urging the government to address and settled their needs proactively so that the investors could develop the remaining projects, much before the scheduled time.
They suggested that the Sri Lanka Sustainable Energy Authority play the role of One- Stop- Shop and clear all bottlenecks to save time and money. While the tariff setting process should be transparent, an equitable tariff should be offered to projects where the off- take contracts are up for renewal.
Riyaz M Sangani, another SHPDA committee member, told the BT that the entire estimated potential of mini- hydro projects would be around 500 Mega Watts and out of which already nearly half of this quantity has been developed and the association hopes to complete the balance by 2015 to 2020. But they have their doubts in getting these projects implemented within the scheduled time frame, if the same lukewarm attitude by the respective state agencies continues with the failure of the government to put forward a clear cut, acceptable and comprehensive policy in this regard.
Today, there are 94 operational plants providing around 650 million units of energy annually through an investment of Rs 40 billion. The World Bank has identified Sri Lanka’s mini-hydro power industry as the model to other countries in sustainable development. Due to these projects there is a foreign exchange saving of around Rs 17 billion as the industry uses home grown technology, labour and material. Thus about two thirds of the capital expenditure is spent locally.
A major breakthrough of the Sri Lankan entrepreneurship in mini-hydro power has been that the technology used in these projects are significantly homegrown and some companies involved also have developed the capacity manufacture hydro- mechanical and electro- mechanical systems for small hydropower projects.