• Power Ministry yet to approve CEB’s proposal

The procurement of 100 MW of supplementary power has faced further delays as the Power and Energy Ministry is yet to approve the proposal submitted by the State-run Ceylon Electricity Board (CEB), as learnt by The Sunday Morning.

Last month, the CEB announced its anticipation of adding 100 MW of supplementary power to the national grid by 1 April. However, the necessary approvals for proceeding with the signing of Power Purchasing Agreements (PPAs) with Independent Power Producers (IPPs) have not yet been received by the board.

As per the proposal submitted by the CEB, the unit prices offered by the selected IPPs for procuring supplementary power are reportedly below the average costs incurred by the CEB for generating electricity from its own plants.

According to CEB statistics, as of 8 April, the contribution from CEB thermal oil power plants to the national grid stood at 12.7% of the total electricity requirement. Additionally, IPPs, specifically the West Coast Power Plant, provided another 13.3%, resulting in a total thermal oil contribution of 12.71 GWh. On the same day, contributions from hydropower and thermal coal were at 26.9% and 38.1%, respectively.

Cabinet approval to procure supplementary power was granted two years ago. However, the CEB is yet to complete the process. Nonetheless, as learnt by The Sunday Morning, there has been no request made by the CEB’s system control unit to procure supplementary/emergency power to fill any gaps in the power generation in the country.

It is learnt that the CEB has spent significant amounts reaching millions of rupees monthly for emergency power acquired last year. Despite emergency power plants generating an average of only 6.29 GWh per month, the CEB has to pay an average monthly capacity charge of Rs. 206 million for the procured plants. 

The need for additional power arose from the depletion of the Samanalawewa Reservoir, leading the CEB to secure 120 MW of emergency power from Ace Power Embilipitiya (100 MW) and Matara (20 MW).

Concerns have been raised regarding the inclusion of this emergency power in the CEB’s dispatch forecast, especially without approval from the Public Utilities Commission of Sri Lanka (PUCSL). The PUCSL has requested clarifications from the CEB about including 100 MW of emergency power in the dispatch plan and has reservations about purchasing additional emergency power in 2024. 

Previously anticipated hydropower generation for 2023, estimated at 4,500 GWh by the PUCSL and the CEB, was significantly reduced to approximately 3,750 GWh due to severe drought affecting rainfall patterns since July. Additionally, per Cabinet approval, the electricity tariff was increased by 18% from 20 October 2023, as emergency supplementary thermal power had to be procured under urgent conditions to release water from the Samanalawewa Reservoir for agricultural purposes.

As further learnt by The Sunday Morning, the Technical Evaluation Committee (TEC) responsible for assessing supplementary power proposals has successfully negotiated prices with Private Power Plants (PPP), achieving costs lower than those of CEB-owned power plants.

A senior official within the CEB management cited delays in obtaining approvals for procuring supplementary power. Instead of Requests for Proposals (RFPs), Expressions of Interest (EOIs) have been initiated this time, with prices deemed lower than current CEB costs.

A senior engineer of the CEB expressed uncertainty about the necessity for procuring emergency power, highlighting concerns over the high prices offered. 

Responding to these concerns, the senior management official emphasised that policy decisions were made by the management and the Power and Energy Ministry, not CEB engineers, and that the objective was to reduce electricity costs by acquiring supplementary power at rates lower than those of CEB-owned diesel power plants.

Last month, the PUCSL raised concerns over the inclusion of the 100 MW of emergency power in the CEB’s dispatch forecast. Despite the extremely low utilisation of emergency power plants procured in 2023, as revealed by the PUCSL, the CEB has included 100 MW of emergency power in the dispatch plan without any approval from the commission.

When contacted, CEB Chairman Nalinda Ilangakoon noted that there was no power deficit in the grid and the board was looking for supplementary power to reduce the cost of electricity generation through CEB-owned thermal oil power plants.