Auditor General highlights delay in CEB paying renewable energy producers

By Saman Indrajith

The CEB must pay renewable energy producers within 30 days from the date of meter readings at the power houses as per the standard electricity purchase agreement, but payment for the invoices submitted in July 2021 had not been settled even as of December 2021, the Auditor General said in a report on renewable energy production.

Due to the late payments investors are facing difficulties in repaying loan installments and are also at risk of paying rising interest rates on loans from financial institutions. At the same time, financial risk can discourage new investments and push up demand prices.

“The risk of having to pay a prime rate for late payments was observed because the standard electricity purchase agreement states that an interest amount has to be paid to the suppliers for the payments made after the due date,” the report said.

The AG has stated that promoting renewable energy is also vital for the economic recovery in the post COVID period. The country is facing foreign exchange shortages, and this is an obstacle to importing fuel for power generation. The Ceylon Electricity Board is increasingly finding it hard to obtain fuel from the Ceylon Petroleum Corporation, the report read.

A community power generation programme called ‘Surya Bala Sangramaya’ was launched on 04 August 2016 with the approval of the Cabinet of Ministers to generate renewable electricity for the country’s electricity consumers. The government aimed to generate 1,000 MW using 1,000,000 rooftops by 2025, however, only 24,696 customers had connected 269 MW to the national grid at the end of 2020.

Sri Lanka signed an agreement in 2016, at the United Nations Headquarters, to minimise greenhouse gases such as Carbon Dioxide (CO2), Methane (CH4) and Nitrous Oxide (NO2) emitted by power generation, transportation industries, waste and forest resources.

“Sri Lanka plans, by 2030, to reduce greenhouse gas emissions in the energy sector by 20 percent. This goal could be fulfilled by fully transitioning to clean energies. It was observed that such a situation would not be easy to achieve in the future in the present circumstances. It was decided to introduce Liquefied Natural Gas (LNG) power plants instead of thermal power plants to reduce carbon emissions in the power sector by Nationally Determined Contributions (NDCs7), however no LNG power plant had been commissioned so far,” the report said.

The AG added that according to the current state policy, it is expected to increase total renewable energy generation up to 70 percent by 2030. The solar and wind power capacity should be increased to 8,000 MW to achieve this.

“The reasons for the failure of solar power to reach effective levels can be attributed to the high cost and lack of profitable financing methods. Loan and incentive schemes should be introduced for that. The required energy should be provided through development projects to generate solar power together with the private and public sector,” the report recommended.