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Energy crisis: CPC and CEB at loggerheads amidst crisis

15 Jan 2022

By Asiri Fernando  The Ceylon Petroleum Corporation (CPC) and the Ceylon Electricity Board (CEB) are at loggerheads over issues related to fuel purchases and power generation, with the CEB blaming the CPC for the uncertainties in the country’s power supply. The CEB last Thursday (13) claimed that power generation at the Kelanitissa Power Plant had come to a standstill due to a shortage of diesel, which was to be supplied by the CPC. However, a senior Government official explaining the latest issue in power generation noted that the CEB had not informed the CPC of its diesel requirements even after the previous week’s power crisis over the lack of furnace oil. On Friday (14), the CEB had managed to make payments for a shipment of diesel which was finally unloaded at Colombo Port following payment. Responding to a query, CEB Additional General Manager (AGM) – Power Generation Andrew Nawamani said that although the CEB facilitated the procurement of the required US Dollars for the Letter of Credit (LC), the CEB had purchased the fuel from the CPC at a rate of Rs. 121 per litre. The CPC and CEB have held several rounds of discussions on fuel purchases for the power sector since October 2021, when the CPC requested the CEB to make payments for its fuel purchases in US Dollars. The CEB had initially expressed difficulties in meeting this requirement, claiming it only earned in Sri Lankan Rupees. The CPC had also explained that it too earned in Sri Lankan Rupees and was finding it difficult to make the required fuel purchases due to the massive shortage of US Dollars in the country. “The CEB finally agreed to make payments in US Dollars for its fuel requirements,” the official told The Sunday Morning, adding that the CEB had not stated its fuel requirements until Friday (7), when it claimed a furnace oil shortage, which resulted in island-wide power cuts. The CEB stated then that it required 2,500 MT of furnace oil per day for power generation. The CPC took steps to release a stock of 10,000 MT of furnace oil that was being stored for the use of the industries sector. “The CEB initially stated that it could manage with its existing fuel stocks till the end of this month. It also did not even state if it required diesel for power generation at the meeting presided over by President Gotabaya Rajapaksa last Monday (10), where the ongoing power crisis and fuel shortages were taken up for discussion,” the official claimed. When asked about the fuel requirement of the CEB, Energy Minister Udaya Gammanpila told The Sunday Morning that the CPC would require at least seven weeks to import the fuel as well as US Dollars from the CEB to make the payments. He explained that the CPC was unable to release diesel from its stocks as it would have an adverse impact on the country’s overall transportation services, causing fuel shortages. “We (the CPC) already bear a 50% loss in fuel sales to the CEB. What we purchase at Rs. 140 per litre is sold at Rs. 70 per litre to the CPC. We are facing issues with the lack of time and dollars at the moment,” Gammanpila said, adding that the CEB currently owes Rs. 91 billion to the CPC. However, Power Minister Gamini Lokuge last week said that the dysfunctional generation unit at the Norochcholai Coal Power Plant will be made operational and added to the grid by next Monday (24), easing pressure on power generation. Seeking credit lines from India, Qatar, Nigeria and the UAE The Energy Ministry is currently in negotiations with India, Qatar, Nigeria, and the UAE to secure credit lines for fuel. Discussions with India on a $ 500 million credit line for fuel that commenced in August 2021 are currently in the final stages. The Energy Ministry is awaiting the relevant documents to be sent by the Indian Government to the External Resources Department (ERD) of the Finance Ministry, it is learnt. Finance Minister Basil Rajapaksa yesterday (15) held a virtual discussion with Indian Foreign Minister Dr. S. Jaishankar to expedite the process on the $ 500 million Indian credit line for oil, among others.  Energy Minister Udaya Gammanpila said that discussions were proceeding with Qatar, Nigeria, and the UAE on credit lines for oil, but nothing concrete had been reached yet. Meanwhile, it is learnt that Nigerian crude oil could be used in the Sapugaskanda refinery, which is currently shut down due to difficulties in procuring crude oil. When asked whether the refinery could recommence operations by the end of this month as initially stated, Gammanpila was unable to give a definite answer. “It depends on the ability to purchase crude oil,” he said.    


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