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35 per cent of power from coal, experts call for reduction of rates
The trouble-riddled unit 1 of the Lakvijaya coal-power station will be shut down in July for the Chinese contractor to replace its mammoth condenser which has malfunctioned multiple times since the plant was commissioned.China Machinery Engineering Corporation (CMEC) has also agreed to correct any other defects at its own cost, said Bandula S Tilakasena, the Ceylon Electricity Board’s (CEB) Additional General Manager in charge of Corporate Strategy.
The third and final unit of the Chinese-built Lakvijaya coal-power station is expected to be completed in two months. “Once the third unit comes in July, the first unit will be shut down and redone by the Chinese. They will replace the condenser altogether,” he said.Two units of the Lakvijaya plant are now operational, adding 600 megawatts of electricity to the national grid. The latest generation statistics released by the CEB show that thermal power generated from coal covers nearly 35% of the country’s energy requirements. In March, this figure was just 18%. However, the Lakvijaya unit 1 — which was the first to be built — has experienced serial breakdowns.
A crucial problem has been leaks in some of the 16,000 pipes inside the condenser transporting sea water to cool the plant. More than 100 pipes are already damaged. After having to shut down the plant repeatedly with massive losses to the CEB, the CMEC sent a high-level technical team to conduct tests. It worked alongside Indian experts who used ultrasonic equipment to check for faults in the condenser. While it had initially been thought that the tubes continuously sprung leaks due to weaknesses in the building material used, the Indian experts determined that “workmanship issues” were the likely cause. “It was subsequently found that all the leaks are at the joints,” Mr. Tilakasena said.
Meanwhile, several contracts signed between the CEB and independent power producers (IPPs) have lapsed or are drawing to a close. There is no agreement yet to extend any of the agreements. Energy sector experts pointed out that Lakvijaya is producing electricity at a significantly cheaper rate. It made economical sense to discontinue the purchase of power from IPPs, they said.
The CEB’s agreements with Ace Power Generation Horana (Pvt) Ltd and Ace Power Generation Matara (Pvt) Ltd have lapsed. Both are Aitken Spence power plants. Agreements with Lakdhanavi Ltd and Heladhanavi Ltd are due to expire. They are owned by LTL Holdings (Pvt) Ltd. “The contracts between the CEB and independent power producers are silent about any possible extensions,” said Tilak Siyambalapitiya, an energy consultant. “There is no compulsion on the CEB or the private party to continue.”
“These contracts came up because the governments of the 1990s were undecided on coal power,” he explained. “There was indecision, a crisis was approaching and demand was growing so the agreements were signed as determined by politicians. All of them produce electricity at Rs. 20 plus whereas a unit of electricity from Norochcholai is around Rs. 11. That is, Rs. 7 for fuel and Rs. 11 for loan repayment.”
With the percentage of power obtained from coal steadily increasing, the question of the fuel adjustment surcharge has again come up. In a recent interview with the Sunday Times, CEB Chairman W.B. Ganegala said it could not be removed — as promised by President Mahinda Rajapaksa in May 2013 — because the CEB had to pay back arrears to the Ceylon Petroleum Corporation for fuel supplies, loans to state banks and payments to independent power suppliers.
The last component is now steadily decreasing, energy sector experts pointed out. They said that, with two units of Lakvijaya working, the CEB should withdraw the fuel adjustment charge.