• Priority is LNG project: CEB Chairman

• CEB loss of Rs. 100 b due to diesel

By Yakuta Dawood  [caption id="attachment_139223" align="alignright" width="257"] "We need to start the LNG supply project within the next six months so that the LNG supply can be completed by 2024 as scheduled" Ceylon Electricity Board (CEB) Chairman Eng. Vijitha Herath[/caption] The site work of the conversion of the Kerawalapitiya power plants, which operate on diesel and heavy fuel oil at the moment, to natural gas power plants, which was announced in the Budget 2021, is scheduled to commence this year once external barriers such as Covid-19 and other challenges minimise, The Sunday Morning Business learns.    Speaking to The Sunday Morning Business, Ceylon Electricity Board (CEB) Chairman Eng. Vijitha Herath said that the site work has not yet commenced, as there are several difficulties faced by the procurement of the project.    “We have already started the designing and the financial part of the project. Even though the groundwork is done, the work is yet to commence at the site. The pending work will start by this year as planned,” Herath said.    Announcing the Budget 2021, Premier Mahinda Rajapaksa, who is also the Finance Minister, said that to ensure the target set by the Government, measures have to be taken in order to reduce the electricity cost of the consumers and businesses and to establish a competitive electricity supply in the region by 2023, by reducing expenditure on electricity generation.    Further, Herath said that due to the prevailing Covid-19 condition, the CEB has stopped generating high-cost power to the consumers in Sri Lanka. According to him, the main power sources at the moment are hydro, fuel, and from the Thambapanni Wind Farm which is running at full capacity.    “The demand has drastically reduced, therefore, we have completely stopped giving liquid fuel such as diesel which costs Rs. 30 per unit and HF4 which is Rs. 22. Nevertheless, the revenue could be impacted due to this prevailing condition,” Herath added.    Further, commenting on the CEB’s main target for 2021, Herath said that the first priority is to get the liquid natural gas (LNG) project running and the connected pipeline from the Kerawalapitiya coastal belt to the existing and future power plants at Kelanitissa.   “We have called for tenders. It is open right now and will be closed next month. Later, we will evaluate and select an appropriate tender within a period of two months to commence the operation as scheduled. However, as per our plan, we need to start the LNG supply project within the next six months so that the LNG supply can be completed by 2024 as scheduled,” Herath said.    Herath further added that another tender is also open for the 100 MW power plant project at the Kelanitissa Power Station.    Meanwhile, Sri Lanka, being an island situated near the equator, is blessed with a significant amount of solar radiation and sunlight throughout the country and the CEB has contributed immensely to the promotion of solar power in the country.    A report forwarded by a CEB senior official to us noted: “As of the end of April 2021, Sri Lanka has 32,411 roof solar installations with a total capacity of 367 MW. Out of the above, 16,472 are installations (121 MW) which operate on a net metering scheme, 14,392 installations (113.5 MW) operate on a net accounting scheme, and another 1,547 installations (132 MW) operate on a net plus scheme.”    The CEB has constantly evolved in establishing standards, developing technical specifications, testing procedures, and human capacity building in the solar sector while more and more solar photovoltaic (PV) vendors have come into the market with a backdrop of ever-growing competition and improved technical know-how in this field.    Further, the CEB struggled with short-term borrowings from banks and other short-term liabilities to the Ceylon Petroleum Corporation (CPC) and independent power producers (IPPs) increasing to Rs. 223.2 billion by the end of 2019 from Rs. 142.2 billion at the end of 2018. The CEB’s long-term outstanding liabilities increased to Rs. 421.7 billion by the end of 2019 from Rs. 392.2 billion recorded the year before. According to the unaudited provisional financial statements, the CEB recorded a loss before tax of Rs. 85.4 billion in 2019, compared to a loss before tax of Rs. 30.5 billion in 2018.   Due to these large outstanding payments, the CEB last month raised Rs. 20 billion in debt capital via a recent debenture issue at the Colombo Stock Exchange (CSE).    According to our sources, a total of Rs. 6 billion was utilised to pay CPC for CEB’s pending fuel payments and Rs. 14 billion to IPPs.   To confirm the source, The Sunday Morning Business also spoke to CPC Deputy General Manager Varuna Weerasooriya who said that the CEB raised Rs. 20 billion, but only a minor portion was transferred to CPC from the long-outstanding bill.   “CPC imports oil and makes the payment to the suppliers in dollars, and given that the dollar rate fluctuates constantly, the Rs. 6 billion transferred is depreciated in value,” he stated.   However, while commenting in this regard, Herath pointed out to The Sunday Morning Business that in 2020, when the total outstanding debt was Rs. 90 billion, the then-Government developed a fund and transferred Rs. 48 billion to CPC.   “The main reason for the government-owned entity to incur losses is due to the subsidy given by the Government to the people. In addition, the Government imposed a policy to supply fuel at any condition,” he revealed.    According to him, the CEB has made a loss of Rs. 100 billion due to diesel; therefore, in the long run, CEB’s main target is to get rid of diesel, since it costs Rs. 30 and an additional Rs. 5 for distribution and transmission.  “The average selling price should be Rs. 35, but CEB is selling at Rs. 16, thereby incurring a loss of Rs. 5 billion per annum,” Herath expressed.