The renewable energy developers shortlisted through an Expression of Interest (EOI) process in 2021 by the then Government have been presented with two options to move forward with 49 proposed projects following a review by an expert committee, The Sunday Morning learns.
The committee, appointed in January to assess the Cabinet memorandum issued on 26 December 2024, has provided these options to ensure that the projects comply with the Sri Lanka Electricity Act No.20 of 2009.
Accordingly, Option 1 includes the introduction of a standardised tariff and Standardised Power Purchase Agreement (SPPA) for renewable energy projects exceeding the threshold of 10 MW in accordance with Section 43(4)(b) of the Sri Lanka Electricity Act No.20 of 2009 (as amended) to bring the EOI projects within the statutory exemption.
This was proposed in Cabinet Memorandum No. 24/2324/825/012 dated 26 December 2024. Additionally, the preparation of a standardised tariff and SPPA was proposed in the same memorandum, which developers are required to accept.
This option may be the shortest possible solution given the time constraints and solid legal background.
Option 2 recommended by the committee is to proceed with limited competitive bidding under the National Procurement Guidelines applicable to private sector investments for infrastructure projects (Part 11, Chapter XIV, 1998) among the shortlisted/prequalified 49 proponents/developers.
This option aims to regularise the procurement process in line with the provisions of the Sri Lanka Electricity Act No.20 of 2009 (as amended) with consultation from the relevant authorities.
However, as learnt by The Sunday Morning, the expert committee has recommended Option 1 for further action on EOI projects.
The expert committee has also recommended that the standardised tariff be reviewed by a Cabinet-appointed committee and approved by the Cabinet of Ministers, as per Section 43(4)(b) of the Sri Lanka Electricity Act No.20 of 2009 (as amended), to address potential cost overruns due to the lack of competition in the process, ensuring transparency.
When recommending the tariff, the committee shall consider the tariffs of recently awarded renewable energy projects through open competitive procurement processes, economies of scale, and prevailing market conditions, given that the economy has recovered to pre-crisis levels.
The Energy Ministry has recommended allowing investors to select either Option 1 or Option 2 according to their preferences, considering the time constraints. The ministry has also recommended that the tariff for Option 1 be determined using a standardised formula updated periodically, based on geographic location, technology, and plant factors for investors choosing Option 1.
Additionally, the ministry has recommended authorising the Secretary to the Ministry of Finance, Planning, and Economic Development to appoint a Project Committee (PC) and Cabinet-Appointed Negotiating Committee (CANC) for Option 1 and a Bid Evaluation Committee (BEC), Standing High-Level Procurement Committee (SHLPC), and High-Level Procurement Committee (HLPC) for Option 2 as applicable to manage the procurement process.
In 2021, the State Ministry of Solar, Wind, and Hydro Power Generation Projects Development initiated an EOI process inviting investors to develop renewable energy projects with a capacity of 50 MW or more under a Build-Own-Operate (BOO) model.
The goal was to generate electricity from solar, wind, hydro, and biomass sources to supply the Ceylon Electricity Board (CEB). A total of 533 proposals were received, 136 of which were specific to particular locations. Out of these, 49 investors confirmed their financial capability and interest in proceeding with the projects.
Several key Cabinet decisions were made to facilitate the EOI process, including the approval of a methodology for determining renewable energy tariffs in March 2023, followed by the introduction of a new tariff calculation methodology in May 2023.
In December 2023, a 700 MW solar power project at Poonakary Tank, with battery storage in Kilinochchi, was approved. In March 2024, a 100 MW solar power project in Oddamavadi in the Batticaloa District was approved, followed by a proposal in June 2024 for implementing renewable energy projects from the EOI.