- Negotiations underway with Ace Embilipitiya plant
- CEB to provide diesel, Ace to reimburse fuel cost: CEB
The Ceylon Electricity Board (CEB) is prepared to procure 120 MW of power from Ace Power Embilipitiya (100 MW) and Matara (20 MW) under an emergency power purchase approval, The Sunday Morning reliably learns.
While negotiations with Ace Power Matara for the procurement of 20 MW have been successfully concluded, talks with the Ace power plant in Embilipitiya for the purchase of 100 MW are ongoing, it is learnt.
Although the costs associated with the unit procurement from Ace Power Matara are yet to be disclosed, it is anticipated that prices will be made public once negotiations are finalised and agreements are inked between the CEB and the Private Power Plants (PPPs).
This emergency power acquisition has been greenlit by the Cabinet to ensure uninterrupted electricity supply in the Southern Province.
The immediate need arose due to the depletion of the Samanalawewa Reservoir, which sourced water from the now dried up Udawalawe Reservoir. Recent rainfall in the catchment areas of the Udawalawe Reservoir failed to make up for the hydropower generation shortfall caused by persistent dry weather conditions.
When contacted, CEB Chairman Nalinda Illangakoon stated that negotiations with Ace Power Embilipitiya were in progress and were expected to conclude in the coming week.
The total expenditure associated with emergency power procurement would be shouldered by the CEB, managed in alignment with existing commitments, he said.
Responding to a query, Illangakoon also noted that the CEB had incurred substantial losses, amounting to nearly Rs. 30 billion, from the recent price revision.
Explaining the operation of power plants from which the emergency power will be procured, the Chairman said that the CEB would provide the necessary fuel for the power plants, covering the operational costs. The power plants, in turn, would reimburse the fuel expenses, he said.
The CEB’s recent move to secure emergency power from Ace Power Embilipitiya and Matara has ignited a storm of controversy, bringing to light significant irregularities within the agreements inked between the CEB and Ace Power in the past.
In a recent audit report issued by the National Audit Office (NAO) on the power purchasing agreement with Ace Power, it is revealed that the CEB expended Rs. 59,454 million (including interest for delays) over five years from 2016 to 2021 solely for electricity procurement from Ace Power Embilipitiya.
This expenditure represented 32% of the estimated Rs. 183,642 million outlined in the CEB’s Long-Term Transmission Development Plan 2018-2027 for transmission system development between 2018 and 2026.
The NAO’s findings also unveiled that Ace Power Embilipitiya (Pvt) Ltd. had generated a net profit of Rs. 8,572 million during the initial agreement period, showcasing a remarkable 511% increase over the initial capital investment of Rs. 1,676 million made in 2003.
Even after the extension of the agreement, Ace Power Embilipitiya continued to generate substantial profits, earning Rs. 6,270 million over the subsequent five-year period, marking a 406% return on the initial investment. The cumulative net profit of Ace Power Embilipitiya (Pvt) Ltd. reached Rs. 14,841 million by 31 March 2021, translating to an 885% gain compared to the initial investment, it is stated.