• Health Min. to equip 700 hospitals with solar panels
• Cabinet approves tripartite 20-year project

A new player in the domestic solar energy industry has won a multi-billion rupee project, which calls for the establishment of photovoltaic solar power generation panels on the rooftops of over 700 hospitals and allied services buildings, under the purview of the Health Ministry and provincial councils, The Sunday Morning learns.

It is learnt that Power Loop (Pvt) Ltd. together with a Chinese renewable energy engineering firm had submitted an unsolicited proposal to install rooftop solar panels on 702 medical facilities around the country. The Sunday Morning reported on the matter last week.

As per the proposal, seen by The Sunday Morning, now approved by the Cabinet, the two companies will enter into a tripartite agreement with the Ceylon Electricity Board (CEB) and Health Ministry for a period of 20 years.

When contacted, the approval of the project was confirmed by Minister of Health Keheliya Rambukwella. According to him, Cabinet approval has been received to enter into a tripartite agreement between the project proponents (Power Loop, Kunming, and CEB). Last week, Minister Rambukwella told The Sunday Morning that the Health Ministry needed to reduce its Rs. 2 billion annual electricity bill as it was not sustainable.

It is understood that the Ministry of Health has detailed responsibilities, terms, and conditions for implementation. The Cabinet approval includes the authorisation of the CEB to enter into the tripartite agreement mentioned above and into any other Power Purchasing Agreement (PPA) with the said joint venture for the purposes of this project.

Further, permission has been granted to appoint project staff from the existing staff of the Ministry for Health to implement and monitor the project on a part-time basis.

The company has requested the Ministry of Health to provide 702 locations identified in the detailed list covering nine provinces. However, Provincial Councils such as North Western, Uva, Central, and Western have already started similar projects for the rooftops in hospitals under their purview. The scope of the project is to be revised accordingly, it is said.  

Company needs registration 

It is learnt that the company which proposed the project had not obtained registration under the Sustainable Energy Authority (SEA) as of November last year. However, it had agreed to the Cabinet Appointed Negotiating Committee (CANC) that it would obtain registration before signing the agreement.

It is also learnt that even though Cabinet approval has been granted for the project, neither the CANC nor the project committee had visited a completed project of the company.

This, even though the said company lacks adequate previous experience in the domestic renewable energy sector, industry sources told The Sunday Morning. However, it is learnt that in the detailed clarifications requested by a letter dated 25 November 2022 over the issues raised by the project committee as per the decision taken at the CANC meeting, the company had agreed to arrange a visit to a completed project upon receiving final approval.

Misleading numbers

The company has agreed to pay 8% of the revenue generated to the Health Ministry as roof rent. It was learnt that the CANC had previously suggested a roof rent of 17%. However, former State Minister of Solar, Wind, and Hydro Power Duminda Dissanayake told The Sunday Morning that a national policy of a minimum rate of 15% for roof rent had been established.

It is learnt that the company had proposed 3% royalty or 10% profit share. According to sources close to the matter, following a lengthy negotiation process, the CANC had emphasised that the Ministry of Health should receive a considerable percentage through the proposed investment. Finally, the proponent agreed to provide 8% of revenue to the ministry, it is learnt.

Accordingly, the company expected a turnover of over Rs. 5 billion a year with a capacity of 100 MW in the event the installations are completed. It is also expected that the project will generate an annual output of 141 million kWh, sources told The Sunday Morning.

Senior officials close to the matter also told The Sunday Morning that the company which won approval had not submitted a detailed project execution plan or consent of the proponent to provide 1% of the total investment as a performance bond as requested by the CANC. Instead, it had submitted a brief rollout plan and refused to provide a 1% performance bond, highlighting that this was an investment and the investor had the interest to complete the project.

CANC recommendations

A CANC and Project Committee (PC) were appointed per Cabinet approval in August last year to evaluate and make recommendations on the proposal submitted by Power Loop (Pvt) Ltd. It is understood that the Project Committee submitted its report early November 2022. The CANC, after having negotiated with the project proponent, had submitted its recommendations on 21 December 2022.

According to the CANC recommendations which The Sunday Morning has seen, the proponent is solely responsible for supply, delivery, installation, commissioning, and maintenance of the whole solar energy system at all the relevant locations. The proponent is solely responsible for bearing the expenditure on insurances for the roof equipment power surcharges, fire, etc. Total expenditure on the project is to be invested by the proponent on its own and the Ministry of Health will not bear any costs associated with the project.

The recommendations also state that the company should complete solar panel installations at all the selected locations within a period of 24 months upon signing the agreement and it is solely responsible for disposal of the panels at the end of the term, which shall be at the proponent’s cost.  

Minister’s view

When contacted, Minister Rambukwella said the project had been delayed for over five years and it had come to his ministry at its final stages. “The project was sent by the Power and Energy Ministry; it has recommended the project. It was at the CEB for a long time. It had come to the Health Ministry before I had been appointed as Minister. This has dragged on for years,” he said.

Minister Rambukwella further added that Cabinet approval had been received for the project and it would go ahead as per the approval.

In the meantime, when contacted, CEB Chairman Nalinda Ilangakoon said the CEB had only conducted feasibility studies on whether there was sufficient space on the grid and about power transmission.

Attempts by The Sunday Morning to contact Power Loop (Pvt) Ltd., which according to project documents is situated at Kaldemulla, Moratuwa, failed. No record of the said company could be found on open source platforms. No website for such a company was available online as of Friday (31 March).