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CEB forced to lower power generation
View(s):By Damith Wickremasekara
Mounting fuel bills are forcing the Ceylon Electricity Board to lower power generation, its Chairman W.P. Ganegala revealed yesterday.
“Since last week the Kerawalapitiya power plant has remained shut. We are incurring a loss of Rs. 15 million a day,” he told the Sunday Times. The new situation, he said, had been caused by the Petroleum Industries Ministry imposing tough financial controls in the supply of fuel to the CPC.
For the moment, Mr. Ganegala ruled out power cuts. “We are drawing supplies from those generating electricity in the private sector,” he pointed out. He also said credit to the CEB was stopped by the Ceylon Petroleum Corporation although the CEB had begun paying arrears. “Last year, the CEB paid Rs. 36 billion and so far we have paid Rs. 4 billion,” he said.
His remarks came in the backdrop of the CEB submitting proposals to the Public Utilities Commission to drastically increase power tariffs. A decision on the rate of increase will be known after the National New Year.
The CEB chief’s remarks made it clear that an increase in electricity rates would not mitigate the financial woes of the CPC. Mr. Ganegala said the CEB had challenged the claim that it owed the CPC about Rs. 60 billion. “We owe it Rs. 17 billion. It is unreasonable to impose a credit crunch and thus punish the people,” he said.
CEB trade union officials said what was needed was not a tariff hike but a cut back in costs the board was incurring and the need to keep close tabs on corrupt activity. “Periodic tariff increases are not going to end the crisis of the CEB. It will only make the country’s economy worse,” a trader union leader said. The move came after the Petroleum Industries Ministry imposed tough conditions on the supply of fuel to state institutions on credit last month.
Meanwhile, the CEB chief commenting on the Kerawalapitiya plant said they had taken a loan of Rs. 2 billion from a state bank with the assurance that the money would be used only to buy fuel for this plant. This would enable the CEB to buy fuel for one month, he said.
The CEB is not the only state institution hit by CPC’s condition of not giving fuel on credit. The CPC also has sent a warning letter to SriLankan Airlines to pay Rs. 31.2 billion before the end of this month. Soon after the letter had been sent, Civil Aviation Minister Priyankara Jayaratna had made representations to President Mahinda Rajapaksa. Mr. Jayaratna told the Sunday Times he had pointed out to the President that curtailing fuel supplies would have an impact on the aviation industry and bring adverse effects.‘The President has directed the Treasury to provide a guarantee to the CPC. Accordingly the payments for the monthly fuel requirements will be made on a monthly basis and the arrears will be paid in instalments,” he said.
Petroleum Industries Minister Anura Priyadharshana Yapa said the Ministry was compelled to take drastic action to overcome losses of the CPC. The CEB and the SriLankan Airlines have arrears of more than Rs. 80 billion. “We cannot afford to supply state institutions with unlimited fuel. Accordingly, we will be continuing to curtail supplies if they fail to make payments,” he said.
The Ministry last month informed state institutions about the credit restrictions. Among the other institutions which are in arrears are the Sri Lanka Railway (Rs. 5.3 billion), Sri Lanka Navy (Rs. 6.7 billion), Army (Rs. 4.1 billion) and Air Force (Rs. 1.8 billion).
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