The much-debated Electricity Sector Reforms Bill has come under fire once again, with engineers attached to the State-run Ceylon Electricity Board (CEB) reportedly having prepared draft petitions challenging its legality.

Sources indicate that the bill, recently gazetted, has prompted concerns over its quality and technical accuracy.

The origin of the current controversy traces back to the turbulent journey of the bill through the legislative process. Initially introduced to the Cabinet and subsequently to Parliament in December last year, the first draft faced vehement criticism, leading to its withdrawal by Power and Energy Minister Kanchana Wijesekera.

The primary objections revolved around irregularities and errors found within the draft.

Despite being approved by the Cabinet, the bill underwent a revamping process necessitating public feedback. However, even after this process, the newly-gazetted version is once again facing scrutiny.

Industry experts have raised red flags regarding numerous technical errors embedded within the bill, including deficiencies in definitions and interpretations, which they argue are unacceptable for legislation of this nature.

The absence of critical aspects such as consumer protection has been particularly highlighted, indicating a lack of comprehensive understanding during the drafting process. Experts speculate that while attempts may have been made to incorporate stakeholder feedback, a deficiency in expert knowledge has led to critical oversights.

A recurring concern voiced by critics is the involvement of the same individuals in drafting both the previous failed bill and the current iteration. The result of these oversights are potentially dire, with experts warning of irreversible damage to Sri Lanka’s economy if the reform process fails to address critical issues within the electricity sector.

Lack of expert knowledge

Speaking to The Sunday Morning, Dr. Tilak Siyambalapitiya, an expert in the electricity sector, voiced concerns over the Electricity Sector Reforms Bill: “There are a number of issues with the definitions, interpretations, etc., which should not happen because even a draft must be of good quality.”

Dr. Siyambalapitiya stressed on the importance of editorial excellence, noting that despite improvements from the previous version, the current iteration still fell short of acceptable quality standards.

He also highlighted the sidelining of key stakeholders in the drafting process, stating: “There was a Cabinet-appointed committee that set out the guidelines for reforms and many of the people in that committee have been sidelined.”

He noted that the drafting process had been heavily influenced by individuals outside the electricity industry, such as a person from finance and another from the petroleum industry. This, according to him, has led to inaccuracies in technical terms and a departure from previous acts, which benefited from wider participation and thorough review by sub-committees.

Expressing his concerns about potential motives behind errors in the bill, Dr. Siyambalapitiya remarked: “Mistakes happen when you want to hide something. I don’t know what they want to hide.”

Expanding on these concerns, he elaborated: “Most of the obvious errors in the previous version have been corrected. But overall, the concept of restructuring has been marred by the appointment of the so-called National Electricity Advisory Council (NEAC), which is totally controlled by the minister.”

He emphasised that this committee, along with the minister, held unchecked authority to modify plans and introduce technologies into the long-term plan.

Pointing out the ramifications of this arrangement, he stated: “The professionalism in planning will be compromised because, thus far, whatever the shortcomings were, the CEB and the Public Utilities Commission of Sri Lanka (PUCSL) were maintaining a professionally prepared 20-year plan.”

Despite the existence of this plan, he expressed concern that the minister retained the power to make alterations at any given time, potentially undermining the integrity and stability of long-term planning within the electricity sector.

Dr. Siyambalapitiya further highlighted concerns about the policymaking process: “All policies related to pricing, etc. are prepared by the so-called advisory council and it’s unclear whether the council will take the responsibility, whether it can be sued, or whether it’s a corporate institution or a committee. That status is still unclear.”

He emphasised on the contradiction between the act’s objective of fostering competition and its provisions seemingly designed to circumvent it. “An important objective of the act is to bring in competition, but right at the beginning, it talks about various ways in which to avoid competition such as all small renewable energy power plant[s] continuing to have administered price[s] to pay for them, which means a price determined by the committee,” Dr. Siyambalapitiya stressed.

He further highlighted the importance of transitioning to a competitive process, particularly given the increasing role of small-scale power plants in meeting electricity demand. “Because the future is not a big power plant but several small power plants, right now 20% of the electricity is met by these small-scale power plants which already come on their own competitive basis, but what we want is to gradually enter into the competitive process. That has not been corrected,” he concluded.

Facing a legal battle

Speaking to The Sunday Morning, CEB Engineers’ Union (CEBEU) President Isuru Kasthurirathne revealed plans to legally challenge the new Electricity Sector Reforms Bill, with draft petitions already prepared. He emphasised on the need for careful consideration due to the significant implications of the proposed changes.

Kasthuriratne highlighted concerns about the transition of functions from the CEB to newly-formed successor companies, as mandated by the new bill, within a maximum period of six months. He outlined a series of complex tasks involved in this transition, including the preparation of detailed memorandums and articles of associations, asset and liability allocations, human resources transfers, and financial modelling for tariff formulation. He raised doubts about the feasibility of accomplishing these tasks within the proposed timeline, indicating potential challenges in implementation.

Furthermore, Kasthuriratne criticised the choice to form the successor companies under the Companies Act No.7 of 2007, rather than through the Conversion of Public Corporations or Government-Owned Business Undertakings into Public Companies Act No.23 of 1987. He argued that this decision could lead to legal ambiguities and gaps in the transition process, as Act No.23 of 1987 was specifically designed to facilitate smooth transitions during reforms of critical Government-owned enterprises.

Key concerns

The newly-proposed Electricity Sector Reforms Bill has sparked considerable controversy, with several key concerns raised about its provisions:

Firstly, there are exclusions for competitive bidding under certain circumstances, such as during national calamities or major generation plant outages. However, the bill lacks clarity on how to ensure the lowest cost without the competitive bidding process, raising questions about transparency and efficiency in procurement practices.

Additionally, the bill fails to provide clear guidelines for procurements related to transmission infrastructure, essential for adding new-generation plants. This ambiguity could lead to confusion and potential delays in infrastructure development projects.

Moreover, the bill allows for the continuation of controversial unsolicited proposals for power plants without competitive procurement processes. This provision raises concerns about fairness and accountability in the decision-making process regarding power plant projects.

Furthermore, the establishment of the NEAC has been criticised for potentially politicising the electricity industry. According to the bill, the NEAC will advise the minister on national electricity policy, but questions have been raised about its independence and transparency, particularly regarding the composition of its members and decision-making processes.

Overall, these concerns highlight the need for clarity, transparency, and accountability in the proposed reforms to ensure the long-term sustainability and efficiency of Sri Lanka’s electricity sector.

Speaking to The Sunday Morning, Power and Energy Ministry Secretary Sulakshana Jayawardena said the committee appointed to draft the bill comprised a blend of varied expertise, essential for drafting an electricity bill. 

“There is no issue regarding the expert knowledge of the committee. For concerns provided by the Constitution, any aggrieved party can go to court. We have provided ample time for all stakeholders to provide their suggestions during the past several months following the initial withdrawal in December last year and we have included the suggestions we received. But if a party is still not satisfied, they can go to court,” he explained.