The Ceylon Electricity Board (CEB) is looking to expand the use of naphtha-fired thermal power as a cost-saving measure, The Sunday Morning learns.
Officials say that using naphtha, a byproduct of local petroleum refining, will reduce the need for foreign currency expenditure on fuel imports.
Ministry of Energy Secretary Prof. Udayanga Hemapala explained that naphtha was sourced from the Ceylon Petroleum Corporation (CPC) as a byproduct of Sri Lanka’s oil refinery. “If we use naphtha, we do not need to spend our dollars as it is our own byproduct,” he noted.
He further revealed that steps had been taken in an attempt to remove the Value-Added Tax (VAT) on naphtha, a move aimed at further reducing electricity costs.
“A Cabinet paper has been submitted to remove the VAT component on naphtha. It is not a large amount, but even a small reduction will help consumers,” he stated, adding that the Government’s broader target was to reduce power generation costs.
CEB Spokesperson Dhammike Wimalaratne confirmed that there were sufficient naphtha stocks available with the CEB and CPC for long-term power generation. However, he clarified that there was no surplus beyond the required supply.
“Naphtha is produced at Sri Lanka’s refinery, specifically to be used in power plants,” he explained.
When asked about the expected cost savings from increased naphtha usage, Wimalaratne stated that the exact financial impact needed to be calculated. “We need time to gather the relevant data from the appropriate departments before determining the extent of savings,” he added.
Commenting on the rationale behind this shift, CEB Chairman Dr. Tilak Siyambalapitiya noted that all petroleum-fuelled power plants, including naphtha-based ones, had been brought into operation following the shutdown of the Norochcholai Coal Power Plant due to a system failure on 9 February.
“Once Norochcholai, also known as Lakvijaya, is back online, petroleum-burning power plants will be scaled down, with the most expensive sources being reduced first,” he said.
Dr. Siyambalapitiya added that the future use of naphtha for power generation would depend on consumer demand, the overall requirements for petroleum-based electricity generation, and fuel price comparisons.
Additionally, when contacted, CPC Chairman D.J.A.S. De S. Rajakaruna said that the CPC had excess stocks of naphtha, had been requested to reduce the VAT, and was considering the request at present.