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Problems at design stage, technological and administrative issues causes of Unit 1 failure
View(s):The agreements that the Ceylon Electricity Board (CEB) entered into with China Machinery Engineering Corporation (CMEC) as well as Swiss project consultants, Poyry, “were weak in the extreme and detrimental to the country,” says Champika Ranawaka, former Energy Minister, in his book ‘Power and Power’. “We later became aware that there had been gross violation of due process in Phase I of the exercise in plan approval, product quality and standard tests and payments,” he alleges. “Therefore, almost all legal avenues for obtaining compensation from CMEC were essentially unavailable to us.”
Mr. Ranawaka was Power and Energy Minister from 2010-2013 after which he was given the portfolio of Technology, Research and Atomic Energy. He writes that, under his purview, most of these problems were rectified in Phase II with the addition of a new project director. But some design problems remain. The book refers to the contract cost escalation of Unit I. When the Memorandum of Understanding for the coal power plant was first signed in August 2005, the 300 megawatt plant was to have been US$ 300 million.
By March 2006, this rose to US$ 445 million with the extra US$ 155 million being loaned on commercial (not concessional) terms. The cost of constructing all three units of Lakvijaya is now placed at US$ 1.35 billion. Due to repeated breakdowns at the plant in 2010-2012, it was said that Chinese technology is substandard. Minister Ranawaka says it was the CEB’s responsibility to check the quality of the product it was signing up for.
“…if there are accusations that Chinese goods are substandard, then the CEB project team and the project consultants (Proyry) are responsible for this since they were the parties who intervened in project design, approval of plans, approved the machinery, assessed the production process, examined and approved the finished products, installed them and powered them up…” he writes.
Between September 2010 (when the Unit I boiler was first fired) and April 2011, the machine was shut down six times. The machine was not in operation for 34% of that period. “This was the situation throughout the year 2011,” the Minister says. “There were several reasons why the plant failed periodically,” he assesses. “The first were the oversights at the design stage in determining the size of the plant, limitations of the transmission system and coal offloading. In 2011, as a direct result of the inability to offload coal in time, the plant had to be shut down for several days.”
“The others were technological and administrative problems,” he analyses. “The technological problem was that although the plant caught fire on several occasions there wasn’t a sufficiently robust firefighting system installed. Components also degenerated within a short period of time due to rust accumulation.”
“Although the initial components were of good quality, the Chinese contractor subsequently purchased substandard components from third parties,” the Minister states. “The Chinese contractor adhered in large part to deadlines and did not charge additional fees either. This is a good example for Sri Lankan projects which are constantly behind schedule.”
“However, as a result, the quality of the machines seems to have suffered,” he says. From an administrative perspective, the language barrier was a big obstacle. “All planning computer systems were in Chinese and the only engineer who was conversant in the language was not made part of the team…” the Minister points out.
“The fact that the CEB had no experience in running a coal power plant was its chief obstacle,” he adds. “The fact that the CEB could not generate even half the anticipated electricity demand in 2011, the massive media coverage of the issue and reviling of all Chinese technologies created a condition where the problem ended up becoming a national governance and diplomatic issue.”