- Govt. seeks payment flexibility from suppliers
- 2 shipments cancelled, 1 postponed due to Norochcholai breakdown
- Acute power cuts possible if adequate coal not imported: PUCSL
- Warns SL may be blacklisted by coal suppliers
- Coal prices have increased, but stocks being secured: LCC Chairman
The Ceylon Electricity Board (CEB) and the Ministry of Power are pushing to source $ 32 million in funding in the next few days which is needed to open two Letters of Credit (LCs) for two coal shipments that Sri Lanka needs to unload in the next two weeks before adverse sea conditions prevent supply, The Sunday Morning learns.
Sri Lanka’s energy and power crisis continues to deepen due to the forex shortage, with a Line of Credit (LOC) of $ 500 million for fuel issued by India expected to run dry by the end of the month.
The $ 32 million will need to be sourced for LCs to be opened, enabling the shipments to unload the coal within the expected timeline.
The window of unloading coal for the troubled Norochcholai Plant is also expected to close by the last week of this month as monsoon changes trigger challenging sea conditions that prohibit coal being unloaded to shore.
According to Ministry of Power Secretary Wasantha Perera, the details of the relevant payments have been given to the Treasury and the Central Bank of Sri Lanka (CBSL) to source dollars to make the relevant payments. “We have given them the figures. They will not give us everything at one time; we will make payments in intervals,” Perera said.
“We are making 80% and 20% payments in the way that we are getting dollars. We are settling them and trying to meet the deadlines. But there have been some payments which are pending,” Perera said, stressing that the sourcing of US Dollars to import coal was extremely challenging as they were also needed to import essential food, medicine, and fuel.
According to Perera, the agreement for payment is to pay 80% and 20% of the consignment cost in intervals. “This is so that we have a breathing space. What happens is that sometimes we are not in a position to make payments on the right date. We are trying to get some flexibility from the suppliers to delay some payments. So far, we have done all that we can,” Perera explained.
Two shipments of coal on order had been cancelled and one postponed due to one of the three coal-fired generators at the Norochcholai Power Plant being offline for maintenance and repair, she said.
“I am grateful that with all the difficulties we were able to get coal stocks till August,” Perera stated.
However, a senior official at the CEB told The Sunday Morning that the CEB has failed to honour several LCs related to coal shipments on time, causing significant strain on two State banks as the LCs were issued by them. “They have been unable to pay tens of millions of dollars in payments. This is putting additional strain on the State banks that opened the LCs and may cause them to be blacklisted by other banks,” the official said.
Responding to a query, Public Utilities Commission of Sri Lanka (PUCSL) Chairman Janaka Ratnayake stressed the importance of securing all the coal Sri Lanka needed till December before the end of April.
“If adequate coal stocks are not brought in by then, we may have to face acute power cuts from August. If we run out of coal by August, we lose nearly 800 MW of power generation capacity. That capacity cannot be replaced by fuel-fired power plants; even if you import enough fuel, that won’t solve that problem,” Ratnayake said.
The Lakvijaya Norochcholai Coal Power Plant is currently one of the biggest sources of power generation as hydropower has been depleted.
The regulator also cautioned that if Sri Lanka failed to honour LCs that were opened for coal imports, suppliers may blacklist Sri Lanka, further complicating the power crisis.
When reached, the Lanka Coal Company (LCC) yesterday (9) claimed it had successfully secured the required stocks of coal for electricity generation at the Lakvijaya Coal Power Plant in Norochcholai.
Speaking to The Sunday Morning, LCC Chairman and Managing Director Jagath Perera said the last two shipments were expected soon.
“There is no issue with regard to the coal supply as we have successfully brought down the necessary stocks required for this season. The purchasing for the next season will begin in September,” Perera said.
He went on to say that the CEB had to make payments for the coal shipment and the payments were currently being made.
According to Perera, coal prices have also been revised according to the US Dollar rates. At present, the unit price of coal-powered power is at around Rs. 18. Earlier the price was Rs. 13 and following the rupee depreciation, the prices had increased by around Rs. 5.
The cost of coal and the price increase indicated by the LCC is disputed by experts, with sustainability specialist Dr Vidhura Ralapanawa pointing out that due to market price hikes and the depreciation of the Sri Lankan Rupee made the cost of generating a unit of electricity (1 Kwh) from a coal fired power plant more than Rs 40. According to Dr Ralapanawa 380g of Coal is needed to generate 1 Kilo Watt hour of electricity.
When asked about the total amount the CEB owed to the State banks for the purchasing of coal, the LCC Chairman/MD stressed that the CEB was presently making the payments, but it was incurring a massive loss as a result of not adjusting the electricity tariffs.
The Perera stated that it had managed to secure a stock of 1.7 million MT of coal out of the total 2.28 million MT requirement for the season and the company was expecting 38 shipments at present. In addition, a total of 240,000 MT of coal is expected for the season.
However, a source at the CEB disputed his claim of the number of shipments, arguing that 35 shipments were on order, with the shipment number 33 being unloaded last week.
The source claimed that 3 shipments were cancelled due to forex issues and that the total number of shipments on order is 35. Going by the Power Ministry Secretaries comments that two shipments are on order and that three (Two cancelled, one postponed) are halted, it is doubtful that Sri Lanka will receive more than 35 shipments by the end of this month.
If the CEB and LCC only receive 35 shipments of Coal, with each shipment carrying 60,000 MT of coal, Sri Lanka will only have 2,100,000 MT of Coal for the April – December generation period, not the required 2.28 million MT that is needed. The shortfall of coal would be around 180,000 MT, which is needed to power the Norochchoai plant for about three weeks, The Sunday Morning learns.
Attempts to contact the CEB Chairman for comments and clarification of coal pricing proved futile.