Editorial

Sri Lanka’s power sector is in an infernal, politicised mess and there is no light at the end of the tunnel for the foreseeable future. The result of this chaos is the collective public discomfort caused by hours of curtailed electricity—something that experts had repeatedly warned would happen by this year.

 

The fundamental issue appears to be the prevalence of various “mafias” pushing different power generation agendas for pecuniary benefit. Thus, there is the “coal mafia”, the “LNG mafia”, the “mini hydro mafia”, the “independent power producer (IPP) mafia”, the one-time “wind mafia”, the “solar power mafia” and just about any other “mafia” in between.

 

Attempts by one or another of these interest groups to get a power generation project going are invariably cobbled by, again, one or another of these interest groups. Either that or the tender processes are blatantly compromised.

The Ceylon Electricity Board had been in negotiations with Indian authorities over the proposed Sampur coal power plant since 2006. Nine long years of arduous discussion later, just when all aspects the joint venture agreement were settled and tenders were about to be floated, the environmental lobby got through to the political leadership which decided there would be “no more coal” in Sri Lanka.

While the CEB and some power sector experts argue vehemently that this was serious error in judgement, there is no gainsaying that coal plants are mostly on the way out globally. And that they are environmentally damaging.

A cursory appraisal of the problems arising from the Lakvijaya coal power plant in Norochcholai makes this manifestly clear. The project, being Chinese, did not engender much confidence to begin with. Then came the frequent breakdowns. Now, in both the first and second units, the flue-gas desulphurisation components that remove acid gas (sulphur dioxide) have been broken for months.

Not only have local communities been exposed to coal dust and fly ash, studies have found that the dust travels all the way to Puttalam and the fly ash to Colombo and Central highlands.
Holding no water is the CEB’s argument that the worst air quality in Sri Lanka is in Colombo and that, therefore, any demand to abandon coal power plants must necessarily be coupled with a debate on whether motor vehicle use must also be curtailed.

 

No coal is clean coal, even if Japanese technology is procured (the popular argument being that it would be better than the Chinese one). And just last month, Japan’s own Environment Minister announced that he would “in principle” oppose any new plans to build or expand coal-fired power stations.

According to Bloomberg New Energy Outlook 2018, the world energy mix in 2038 will be just 18 percent coal with the major portion going to wind, solar and hydro. The European Union will be coal-free by 2030, though Germany will reach this milestone in 2038. Even Australia, which mines coal, no longer builds new coal power plants and is replacing old ones with renewables.

 

It was President Maithripala Sirisena—on occasion, an avowed environmentalist—who decided coal was out and announced that LNG was the future. So the CEB prepared for a 300 megawatt combined cycle power plant that would be converted fully to LNG within a stipulated time period. That’s where the tender controversies started. One party, who claimed their company was the most qualified to execute the project, said their bid was disqualified merely because the authorities used a computer that did not have software to open some documents brought on their (company’s) pen drive! That is the ludicrous levels to which complex tender processes have fallen in this country.

There were other issues. And, predictably, the tender ended up in court. There is still no 300mw LNG power plant up and running in Kerawalapitiya. But allegations of bid-rigging are rife in the power sector, with many complaining that a CEB-affiliated power company is routinely favoured. Accusations against the authorities are not limited to “fixing tenders”.

The CEB engineers are purported to be supporting fossil fuels and expensive private supplies from independent power producers. And neither the political leadership of the Power and Energy Ministry nor its successive secretaries have engendered confidence among the public that they are truthfully looking after the people’s interest without personal agendas. The truth is, the Ministry corridors are teeming with lobbyists all the time.
Then there is the matter of geopolitical interests; and of government-to-government deals that just are not ideal. Because China got an LNG plant in Hambantota, Japan and India are jointly canvassing for another. And South Korea has slipped in with another unsolicited offer which the Government has decided to open up for a Swiss Challenge despite vehement opposition from even the CEB. What happened to open, transparent international tenders?

The Korean company is offering a “free” floating storage and regasification unit (FSRU) provided Sri Lanka buys gas from it for the next twenty years—and pays for the whole stock, regardless of whether or not it is used. If that doesn’t sound questionable on the mere face of it, it’s hard to say what does. LNG or FSRU procurement does not need to go to a Swiss Challenge at all.

 

Power sector machinations are bizarre — and entirely vulnerable to criticism. Everything is deeply politicized and this would explain why the industry watched with trepidation when the incumbent minister was appointed in December.

 

Complicating matters is the fractious relationship between the regulator, Public Utilities Commission of Sri Lanka, and the CEB—particularly its influential engineers. When the PUCSL went to court this week saying the ongoing power interruptions were introduced without prior notice or permission from the regulator, the complaint reached President Sirisena (who, incidentally, has now reversed his no-coal policy and has ordered the PUCSL to do as the CEB wants). He declared at the Cabinet meeting that he was angry about the regulator regulating and wanted a key official removed. As if the country does not already have enough personality clashes.
The sum of all this horseplay is that the people have no electricity. Apart from procuring emergency power — cue the “IPP mafia” and “CEB engineer mafia” — there does not seem to be sustainable action forthcoming in the immediate future.

 

The PUCSL has not approved the CEB’s long-term generation plan due to contentions over the price of coal listed in that document. It did sanction a plan which gave higher priority to gas. The utility isn’t budging on that. Neither is the PUCSL.