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CEB union pulls the plug on proposed power plants
The Ceylon Electricity Board Engineers’ Union (CEBEU) has voiced concern regarding several alleged unsolicited proposals forwarded to the Government on power plants.
The plants are being proposed on the grounds that they are needed to negate the impact from a potential 2018/19 power crisis, but the union claims they are being pushed by various parties with vested interests.
Several proposed power plants have been cited by the CEBEU as alleged unsolicited proposals. One example is a 400MW power plant in Hambantota proposed by the China Machinery Engineering Corporation (CMEC), the same company that built the Lakvijaya coal power plant in Norochcholai. The LNG plant is to be later expanded to 1000MW. The plant is due to be built inside the proposed Hambantota industrial zone that China is due to establish.
CEBEU President Athula Wanniarachchi told the Sunday Times that when they raised the matter with the Government, they had been told that it would be a ‘Merchant Plant.’ This means that the plant is constructed for the Chinese industrial zone and only additional power would be sold to the CEB under a negotiated price. For normal IPP (Independent Power Producer) plants the CEB is paying a ‘Capacity Cost’ to recover their investment which has to be paid irrespective whether the plant is running or not. In case of a ‘Merchant Plant’ the CEB does not have to pay the Capacity Cost.
“However, from what we are hearing, the CMEC has clearly told the CEB that the plant is not a merchant plant but a normal IPP, in which case the CEB would definitely have to pay the capacity cost,” he alleged.
Another Chinese investor is also reportedly floating a proposal to construct an additional 300MW power plant in Kerawalapitiya. Mr. Wanniarachchi said the union opposed this. “Under the CEB’s Long Term Generation Expansion Plan, there is already a 300MW combined cycle power plant proposed for Kerawalapitiya. There’s no need for an additional 300MW plant.”
Meanwhile, the CEBEU claims India is also pushing for a 500MW LNG plant for Kerawalapitiya after Sri Lanka decided to scrap the 500MW Indian funded coal power plant in Sampur. “As the CEB has already decided to construct two plants (300MW in Kerawalapitiya and 170MW in Hambanthota) to replace Sampur, there is no requirement for another plant at Kerawalapitiya,” he stressed.
Power and Renewable Energy Ministry secretary Dr. B.M.S. Batagoda, however, brushed aside the criticism. He said the 300MW plant in Kerawalapitiya will be using a different type of tender mechanism known as the ‘Swiss Challenge.’ Under this system, the Government can evaluate any unsolicited bid and if the quality and the price is deemed good, publicize it inviting third parties to match or exceed it. The process would be advantageous on the grounds that the Government would anyway advertise the bid only if the price was low already, he argued.
He revealed that the proposal was being considered as the Ministry of Megapolis and Western Development had observed that it would need an additional 390MW due to new developments such as the Colombo Port City.
The Hambantota plant proposed by the CMEC will be a Merchant Plant for the industrial zone, he insisted. While the Government would purchase some electricity from the plant, it would be done after negotiations and the Government was not prepared to pay exorbitant prices to buy electricity, Dr. Batagoda emphasized. “The Chinese are already investing about US$8 billion in the Hambantota industrial zone. They simply want to ensure that they can keep an uninterrupted supply of electricity.”
The Indian power plant would be coming in as an alternative to the now scrapped Sampur coal power plant, the secretary confirmed. It was a joint venture between Sri Lanka and India, in the same vein as Sampur. That contract too, will only be awarded through open tendering, he claimed.
Charging that the CEBEU had worked actively to oppose the Indian funded Sampur coal power plant, Dr. Batagoda said it was ironic that it was raising issues now.