CEB plant costs full of distortions, expert says
The Ceylon Electricity Board (CEB) power plant costs are full of distortions and this is a bitter indictment on the whole issue of electricity supply in Sri Lanka, according to Dr. Tilak Siyambalapitiya, a top Sri Lankan authority on the power and energy sector.
He was making a presentation on ‘Electricity Industry, Costs and Prices’ at a workshop that discussed a professional approach to electricity costing and tariffs held last week in Colombo, organized by the Sri Lanka Energy Managers Association (SLEMA).
Though the capacity cost of Rs 2.75 per kilowatt hour (kWh) appeared to be reasonable, he said that there is a quite a lot of distortions in CEB power plant capacity costs and suggested the need to streamline them by signing PPAs between each CEB generating plant and CEB transmission.
Dr Siyambalapitiya said that all power plants do not produce 7008 kWh per year. Some plants are for dry season backup, hydropower plants are used for peak-time duties. However, all of them have to be maintained. The total generating capacity, he said is 3400 MW (Megawatts). Energy expected generation in 2013 is equal to 11,000 GWh (million kWh) and the energy capacity of total capacity is 80 per cent or 23,800 GWh. Therefore the computation of estimated capacity cost would be Rs. 4.07 per kWh, he said.
Dwelling upon the conclusion on Generation Capacity Cost, he said that there is room for improvement. The present selling price per kWh at Rs 2.75 could be brought down to Rs. 2 per kWh provided all generation is CEB owned.
Discussing the Generation Energy (fuel) costs efficiency, he said that hydro power is 30 per cent out of the total power supply all of them are CEB owned. Small renewable power supply units are privately owned with a share of 7 per cent and the cost per unit is Rs 18. The coal power plants are CEB owned and the share component is 15 per cent priced at Rs. 8.30 per unit.
Providing the prices of fuel used to produce per kWh electricity such as coal – Rs. 8.30, residual oil – Rs. 23.50, furnace oil – Rs. 24.53, diesel – Rs. 25.94 and renewable Rs. 18, he suggested coal would be cheaper.
He said that the government could control the present costs and taxation on fuel and capital expenditure but should not resort to subsidising fuel used in power sector. A transparent fuel pricing system is essential.
About 44 per cent of electricity sold in Sri Lanka is for bulk customers, for whom the distribution and supply costs are zero or lower.
He said that costing and pricing requires professional analysis and management and licensees required to be significantly more professional in their cost assessment, pricing and adherence to regulatory procedures.
Anura Wijayapala, Senior Lecturer in Electrical Engineering, University of Moratuwa, spoke on “IPP Agreements, their pricing structure and other thermal power plants” and made an in depth analysis of the Independent Power Projects. He said that while the law provides that 50 per cent of all IPPs should be owned by the government, there are a number of IPPs not complying with this regulation and thus operates illegally.
He said that the power project agreements are very important documents with binding terms and conditions on the sale and purchase of electricity. The developer is liable for huge penalties if the agreed conditions are not fulfilled.
Several other experts on electricity also addressed the workshop.
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