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Power crisis: No tax cuts for fuel, but emergency measures
View(s):By Damith Wickremesekara
The use of furnace oil and diesel for power generation due to the prevailing drought will cause the Ceylon Electricity Board (CEB) a loss of Rs. 51 billion over the next six months, a senior official said yesterday. Power and Renewable Energy Ministry Secretary B.M.S. Batagoda told the Sunday Times this projection had prompted the CEB to request the Finance Ministry to remove the Value Added Tax (VAT) and the Customs duty on fuel.
The request was made formally to Finance Minister Ravi Karunanayake at the recent meeting of the Cabinet Committee on Disaster Management. This is headed by President Maithripala Sirisena.The Secretary said that at this meeting CEB officials had given a detailed briefing on the current power situation.
Dr. Batagoda said the CEB had proposed to the Finance Minister the removal of VAT and the Customs duty on furnace oil and diesel needed to operate power plants. They had had also suggested a removal of VAT and other duties on coal imports.
If concessions were not given, the CEB would have no option but to go for a substantial electricity tariff revision, he warned. Minister Karunanayake, however, told the Sunday Times he had ruled out tax concessions. Instead, he has assured to initially release Rs.30 billion to the CEB to manage its losses. Any further funds needed by the CEB, thereafter, would be closely assessed and provided by the Ministry on a monthly basis, he said.
The moves came as the rate of hydro-power generation dropped to seven percent with the decision to hold back available water resources for drinking purposes.
The Finance Minister has also ruled out an electricity tariff hike, saying the Finance Ministry had sufficient funds to offset the expected losses.The bulk of the country’s electricity needs is now being met by the 900 Megawatt (MW) Norochcholai Lakvijaya Coal Power Plant which is running at full capacity.
The plant consists of three 300MW units and its smooth functioning is essential to maintain uninterrupted power supplies. If two of these units were to fail, island-wide power cuts would be inevitable, officials say. Meanwhile, the Government is going ahead with plans to buy more power from the private sector.
Dr. Batagoda said 60 MW of emergency power was bought recently at a cost of Rs.28 a unit. While this was cheaper than what the CEB paid to private producers, it would still cost the Board Rs. 1 billion over the next six months, he said.
A tender for a 50MW diesel power plant has also been advertised and has attracted 17 bids. He said the Government was also interested in buying a 200MW barge-mounted power plant as current prices for such plants were low. Measures have also been initiated to conserve power. Accordingly, the temperature for air conditioners at state offices has been restricted to 26 degree Celsius while a programme to replace incandescent bulbs with energy saving LED bulbs is now ongoing.
Meanwhile, local government authorities have been directed to cut down street lighting by one hour a day.
The Government is also offering a discount of 10 percent for consumers who bring down their monthly electricity consumption by 10 percent.