from President; rejected by CEB
Mixed signals for small power producers
By Chaturi Dissanayake
The government, faced with a power crisis, has been encouraging
the setting up of small power plants particularly with dendro (fuel-wood)
to feed the national grid and minimise the need to import fuel.
The Sunday Times FT discovered last week that there are mixed signals
and mixed priorities in the promotion of this small but key sector
leading to frustration amongst companies which require at least
three years to get approvals to complete any small power project.
company, M.P.L. Dendro Thermal Power Pvt Ltd, was even selected
under President Mahinda Rajapaksa’s 300-factories programme,
praised for going into a difficult area and asked to proceed but
came across the CEB as a stumbling block. The CEB says its capacity
is full and cannot take extra power and has refused to issue a Letter
of Intent (LOI) which assures the CEB will buy the power. That is
only the first step in the finalisation process. The company owned
by Maskeliya Plantation from the Richard Peiris group will provide
about 500 direct and indirect employment opportunities in the area.
country is facing a shortage of power at present but the CEB is
not willing to purchase the 1.5 mega watts to be generated by our
plant. Further there is the additional benefit as the project will
have a positive environmental impact on the plantation and its surroundings
by growing almost 492 hectares of Calliandra and Gliricidia where
only the branches will be harvested for the power plant,”
said D. Delvita, worried Manager of the project.
CEB says it doesn’t have the grid capacity to purchase the
power generated by MTL while the company can’t start the project
without the LOI. CEB officials say there is oversubscription to
the regional grid as there are many mini hydro generation plants
in the area. “We need to enhance the grid capacity or the
investor must bear the cost and enhance the grid. That’s the
only solution,” Ajith Fernando- DGM in charge of energy purchases
at the CEB. Dendro thermal power is going to be too expensive once
coal plants come out even with the government subsidy, he said adding
that there is only one plant at present which is also closed due
to high costs involved as the wood price has gone up.
Nishantha Nanayakkara, President of the Small Power Developers Association,
however disputed this argument saying a state subsidy would make
dendro power viable.
CEB has been giving the same excuse for the whole of last year as
well without actually providing a solution. It’s not a major
investment for the CEB to upgrade their grids but no action is being
said there are about 100 MW worth power from several dozen small
power plants are held up due to the delay of the CEB to enhance
capacity at the national grid.
Nanayakkara said mini power plants would benefit the community in
many areas; the local infrastructure would be developed, the community
would get job opportunities and the people would get the technical
know how as well.
Dr Romesh Bandaranayake, former president of the association, said
that “if the CEB had the will to do it they definitely can
absorb it. If they decide to strengthen their system even slightly
they can absorb well above the capacity they have now and even without
that with their annual upgrading of the systems they would be able
to enhance their absorption rate greatly.”
At the BOI, Mrs G. Rajapakse, Senior Manager (Investments), said
the matter (over CEB refusal) would be referred to “the highest
level”. She was very positive that the CEB would sign a LOI
in the near future.
The launch of
the Nipayum Sri Lanka (300 enterprises initiative) took place on
January 24 where President Mahinda Rajapakse gave certificates of
recognition to those selected and recognised under this project.
companies get tax holidays based on the location and exemption of
custom duties and VAT ON THE import of new plant and machinery
Yet even though
MPL is one of the first to be recognised and although the achievement
comes in the most-difficult category under the programme, the company
may have to wait for a long time until officials wake up.