Features
Has solar energy come of age in Sri Lanka?
Eng. Parakrama Jayasinghe
E Mail: parajayasinghe@gmail.com
There is much euphoria after opening the tenders for the 150 MW of Solar PV parks on the 22nd July 2020. This tender called for offers for setting up Solar PV parks of capacity in the range 1 -10 MW.
The significantly lower tariff levels claimed by the tenderers may have come as a surprise to many , including the CEB, which had set a ceiling of Rs 15.60 per kWh as the cut off point for acceptance. The range of offers received is reported to be in the range Rs 8.89 –Rs 11.50 varying with the targeted GSS. A range of tariff is to be expected due to the range of capacities and different locations with the variability of the expected annual energy yield at each location and other factors.
Naturally the Chairman of the CEB was ecstatic with the outcome and had expressed his satisfaction in the social media
Quote
Today is a remarkable day for Solar Energy Sector in Sri Lanka as well as CEB.
Tender bids of 150MW Solar Energy Generation ( from 1 to 10 MW solar PV plants) were opened today. There were 230 keen participants mostly local investors. Total investment would be around USD 150 million. This projects will generate direct and indirect jobs for 2000 to 3000 people.
We got very competitive bids of average 10 Rs/kWh. In comparison with previous prices and 15 Rs/kWh upper ceiling of the tender this price will be very beneficial to the country as well as CEB. Anyone should understand the significance of this 10 Rs/kWh price when considering CEB’s average generation cost of 23 Rs/kWh and average selling price of 16.50 Rs/kWh.
The credit of this successful tender must go to the new government, CEB staff and the investors.
Unquote
The citizens of Sri Lanka who whole heartedly approve the President’s and the government’s policy goal of achieving the 80% RE target by 2030 are equally encouraged by the clear signal given by the market to underscore the fact that electricity from Renewable energy sources are indeed the lowest cost option. It is also hoped that the majority of successful tenders would be from local developers, embarking Sri Lanka on the path to ensure that Energy Industry will become a local industry.
However, even the high end of the range of offers received does leave ample room to add the added storage capacities for these plant to overcome both the issue of intermittence and the lament that Sun does not shine in the night.
The Chairman has also spelled out his intentions to ensure the speedy implementation of the offered projects so that the CEB as well as the country would reap early benefits of this opportunity as well as to build on the trend of lowered prices.
There has been two previous tenders called for by the CEB for solar PV parks
The first tender was called for 1 MW x 60 in 2016. Only 35 offers were received. The average tender price was of the order of Rs 17.50 per kWh. The US Dollar parity was only Rs 150. The second tender for 1 MW x 90 was called in 2018 and attracted over 500 offers. The lowest prices for each GSS ranged from about Rs 13.00 upwards. But awards were made only in 2019 and only 30 have singed PPAs and none have been commissioned yet. By the time the awards were made the US $ has moved up from Rs 150 to Rs 185 +. So those who quoted low prices below Rs 15.00 may never sign the PPAs and implement the projects. With the depreciation of the Sri Lanka rupee, many projects may not be implemented.
After nearly four years, from the two tenders for 1 MW x 150 only 15 projected are reported as being completed. The actual status of the 30 projects reported as under construction are not clearly known.
In both cases, due to the long delays by the CEB in making awards and allowing the low prices quoted, to prevent the more serious viable tenderers being selected, the country continues to lose money.
The new tender allows for offers to be made from 1 MW to 10 MW , which is an attraction. Although there has been a down ward trend of prices of the Solar Panels, the US $ has increased significantly, compared the parity prevailing at the time of the 1 MW x 90 tender. There is also the natural increase in cost of labour and other costs. This may be reason for the drop in the number of tenders with only 230 offers, perhaps due to the loss of confidence of serious developers, due both to the delays by the CEB and the possibility of spurious low priced offers which block up the access to the GSS capacity. Much effort and expense is required to make a bid, including the bid bond which gets blocked for a long time.
Thus the very low prices quoted in the current tender is suspect and at such low prices projects may not ever be built. But unless the CEB acts speedily and reject them and make awards to the higher but more viable bidders soon, the access to the particular GSS will be blocked.
The CEB declared a ceiling tariff of Rs 15.60 for the current tender. It is therefore expected that they have done their homework and should have a clear idea of the viable price levels. Thus offer of 50% below this ceiling price are highly suspect. The possibility of using this opportunity for laundering black money is also a distinct possibility as described in an article by the Senior Asst. Director of Central Bank in the Island newspaper.
The acceptability of the quality standards guaranteed, is an important criterion to be checked.
One cannot help but wonder if this is an attempt to further delay the widespread the introduction of Solar PV parks by portraying an unviable low prices, but not proceeding with the projects. Thereby the CEB may be inclined to offer much lower caps which will not attract any serious developers for the future tenders. Such things are known to happen and the risk of losing only the Bid Bond of Rs 1,000,000 may be considered acceptable to ensure the continuation of the highly lucrative oil based power generation.
An interesting test would be to see how many of those offering such patently unviable tenders, have already received awards during the last two occasions, and how many of such projects have even commenced implementation. Shouldn’t such companies be black listed from participating in any future tenders?
A goal of making all the awards and signing the PPAs and obtaining performance bonds before end of the year is the only means by which the Chairman’s expectation noted as “Hope we will be able to achieve above targets with the firm commitment of all relevant parties to mark 2020 is the highest solar PPA signing year”
If not, the bid bond should be enchased and the tenderer and the directors should be blacklisted for trying to block the development of the Solar Energy by serious developers at viable levels of tariff.
While whole heartedly approving and sharing his ambition, we would like to point out some issues worthy of consideration before the next tender proposed by the Chairman is launched.
There were some improved conditions stipulated in the last tender in comparison with the previous tenders, particularly the increased capacity up to 10 MW. There are few more improvements that could be considered for the next tender.
1. There is a great disparity in the cost to the different developers, by the length of the transmission line, which is governed by the availability of suitable lands. While this may be considered an inherent risk to be accepted by the developers, it is suggested that the CEB should seek to locate suitable lands coupled with respective GSS and seek offers targeting such lands. This would optimize the tender process by allowing the developers to compete on a level playing field.
2. A further improvement may be to seek the assistance of the CEA and the local authorities to ensure such lands are pre-approved for the development of Solar PV Parks. This would remove the greatest obstacle faced by the genuine developers and is the cause of most delays in implementation of the projects.
3. CEB will need to have a clear idea about the commercially viable lowest tariff possible under the conditions prevailing at the time of the tender, such as the parity rate, cost of solar panels and inverters which contributes the major portion of the overall cost structure and cost of finance. This will enable early detection of any attempts to destroy the stable and sustainable development of the Solar Energy resource by whatever means.
4. The objective should be broader than the mere addition of energy to the grid. The Solar Energy opens up the potential for making the energy sector an indigenous industry. This would contribute to the national economy much more than what is given by the amount of electricity generated, by way of high level employment , development of local entrepreneurs and possibility if upstream and downstream integration not to mention the savings in foreign exchange.
We also look forward to an early publication of tenders for the 100 MW Solar projects at Siyambalanduwa and Pooneryn , which received the cabinet approval three years ago. The scale of such projects hold out the tantalizing prospect of even lower unit prices for the Solar Electricity which would indeed place Solar Power as a significant renewable energy contributor to the national energy supply.
by Dr Gotabhya Ranasinghe
Senior Consultant Cardiologist
National Hospital Sri Lanka
When we sought a meeting with Hon Dr. Ramesh Pathirana, Minister of Health, he graciously cleared his busy schedule to accommodate us. Renowned for his attentive listening and deep understanding, Minister Pathirana is dedicated to advancing the health sector. His openness and transparency exemplify the qualities of an exemplary politician and minister.
Dr. Palitha Mahipala, the current Health Secretary, demonstrates both commendable enthusiasm and unwavering support. This combination of attributes makes him a highly compatible colleague for the esteemed Minister of Health.
Our discussion centered on a project that has been in the works for the past 30 years, one that no other minister had managed to advance.
Minister Pathirana, however, recognized the project’s significance and its potential to revolutionize care for heart patients.
The project involves the construction of a state-of-the-art facility at the premises of the National Hospital Colombo. The project’s location within the premises of the National Hospital underscores its importance and relevance to the healthcare infrastructure of the nation.
This facility will include a cardiology building and a tertiary care center, equipped with the latest technology to handle and treat all types of heart-related conditions and surgeries.
Securing funding was a major milestone for this initiative. Minister Pathirana successfully obtained approval for a $40 billion loan from the Asian Development Bank. With the funding in place, the foundation stone is scheduled to be laid in September this year, and construction will begin in January 2025.
This project guarantees a consistent and uninterrupted supply of stents and related medications for heart patients. As a result, patients will have timely access to essential medical supplies during their treatment and recovery. By securing these critical resources, the project aims to enhance patient outcomes, minimize treatment delays, and maintain the highest standards of cardiac care.
Upon its fruition, this monumental building will serve as a beacon of hope and healing, symbolizing the unwavering dedication to improving patient outcomes and fostering a healthier society.We anticipate a future marked by significant progress and positive outcomes in Sri Lanka’s cardiovascular treatment landscape within the foreseeable timeframe.
by Fr. Emmanuel Fernando, OMI
Jesuit Fr. Aloysius Pieris (affectionately called Fr. Aloy) celebrated his 90th birthday on April 9, 2024 and I, as the editor of our Oblate Journal, THE MISSIONARY OBLATE had gone to press by that time. Immediately I decided to publish an article, appreciating the untiring selfless services he continues to offer for inter-Faith dialogue, the renewal of the Catholic Church, his concern for the poor and the suffering Sri Lankan masses and to me, the present writer.
It was in 1988, when I was appointed Director of the Oblate Scholastics at Ampitiya by the then Oblate Provincial Fr. Anselm Silva, that I came to know Fr. Aloy more closely. Knowing well his expertise in matters spiritual, theological, Indological and pastoral, and with the collaborative spirit of my companion-formators, our Oblate Scholastics were sent to Tulana, the Research and Encounter Centre, Kelaniya, of which he is the Founder-Director, for ‘exposure-programmes’ on matters spiritual, biblical, theological and pastoral. Some of these dimensions according to my view and that of my companion-formators, were not available at the National Seminary, Ampitiya.
Ever since that time, our Oblate formators/ accompaniers at the Oblate Scholasticate, Ampitiya , have continued to send our Oblate Scholastics to Tulana Centre for deepening their insights and convictions regarding matters needed to serve the people in today’s context. Fr. Aloy also had tried very enthusiastically with the Oblate team headed by Frs. Oswald Firth and Clement Waidyasekara to begin a Theologate, directed by the Religious Congregations in Sri Lanka, for the contextual formation/ accompaniment of their members. It should very well be a desired goal of the Leaders / Provincials of the Religious Congregations.
Besides being a formator/accompanier at the Oblate Scholasticate, I was entrusted also with the task of editing and publishing our Oblate journal, ‘The Missionary Oblate’. To maintain the quality of the journal I continue to depend on Fr. Aloy for his thought-provoking and stimulating articles on Biblical Spirituality, Biblical Theology and Ecclesiology. I am very grateful to him for his generous assistance. Of late, his writings on renewal of the Church, initiated by Pope St. John XX111 and continued by Pope Francis through the Synodal path, published in our Oblate journal, enable our readers to focus their attention also on the needed renewal in the Catholic Church in Sri Lanka. Fr. Aloy appreciated very much the Synodal path adopted by the Jesuit Pope Francis for the renewal of the Church, rooted very much on prayerful discernment. In my Religious and presbyteral life, Fr.Aloy continues to be my spiritual animator / guide and ongoing formator / acccompanier.
Fr. Aloysius Pieris, BA Hons (Lond), LPh (SHC, India), STL (PFT, Naples), PhD (SLU/VC), ThD (Tilburg), D.Ltt (KU), has been one of the eminent Asian theologians well recognized internationally and one who has lectured and held visiting chairs in many universities both in the West and in the East. Many members of Religious Congregations from Asian countries have benefited from his lectures and guidance in the East Asian Pastoral Institute (EAPI) in Manila, Philippines. He had been a Theologian consulted by the Federation of Asian Bishops’ Conferences for many years. During his professorship at the Gregorian University in Rome, he was called to be a member of a special group of advisers on other religions consulted by Pope Paul VI.
Fr. Aloy is the author of more than 30 books and well over 500 Research Papers. Some of his books and articles have been translated and published in several countries. Among those books, one can find the following: 1) The Genesis of an Asian Theology of Liberation (An Autobiographical Excursus on the Art of Theologising in Asia, 2) An Asian Theology of Liberation, 3) Providential Timeliness of Vatican 11 (a long-overdue halt to a scandalous millennium, 4) Give Vatican 11 a chance, 5) Leadership in the Church, 6) Relishing our faith in working for justice (Themes for study and discussion), 7) A Message meant mainly, not exclusively for Jesuits (Background information necessary for helping Francis renew the Church), 8) Lent in Lanka (Reflections and Resolutions, 9) Love meets wisdom (A Christian Experience of Buddhism, 10) Fire and Water 11) God’s Reign for God’s poor, 12) Our Unhiddden Agenda (How we Jesuits work, pray and form our men). He is also the Editor of two journals, Vagdevi, Journal of Religious Reflection and Dialogue, New Series.
Fr. Aloy has a BA in Pali and Sanskrit from the University of London and a Ph.D in Buddhist Philosophy from the University of Sri Lankan, Vidyodaya Campus. On Nov. 23, 2019, he was awarded the prestigious honorary Doctorate of Literature (D.Litt) by the Chancellor of the University of Kelaniya, the Most Venerable Welamitiyawe Dharmakirthi Sri Kusala Dhamma Thera.
Fr. Aloy continues to be a promoter of Gospel values and virtues. Justice as a constitutive dimension of love and social concern for the downtrodden masses are very much noted in his life and work. He had very much appreciated the commitment of the late Fr. Joseph (Joe) Fernando, the National Director of the Social and Economic Centre (SEDEC) for the poor.
In Sri Lanka, a few religious Congregations – the Good Shepherd Sisters, the Christian Brothers, the Marist Brothers and the Oblates – have invited him to animate their members especially during their Provincial Congresses, Chapters and International Conferences. The mainline Christian Churches also have sought his advice and followed his seminars. I, for one, regret very much, that the Sri Lankan authorities of the Catholic Church –today’s Hierarchy—- have not sought Fr.
Aloy’s expertise for the renewal of the Catholic Church in Sri Lanka and thus have not benefited from the immense store of wisdom and insight that he can offer to our local Church while the Sri Lankan bishops who governed the Catholic church in the immediate aftermath of the Second Vatican Council (Edmund Fernando OMI, Anthony de Saram, Leo Nanayakkara OSB, Frank Marcus Fernando, Paul Perera,) visited him and consulted him on many matters. Among the Tamil Bishops, Bishop Rayappu Joseph was keeping close contact with him and Bishop J. Deogupillai hosted him and his team visiting him after the horrible Black July massacre of Tamils.
Sri Lanka-Singapore Free Trade Agreement
By Gomi Senadhira
senadhiragomi@gmail.com
“You might tell fairy tales, but the progress of a country cannot be achieved through such narratives. A country cannot be developed by making false promises. The country moved backward because of the electoral promises made by political parties throughout time. We have witnessed that the ultimate result of this is the country becoming bankrupt. Unfortunately, many segments of the population have not come to realize this yet.” – President Ranil Wickremesinghe, 2024 Budget speech
Any Sri Lankan would agree with the above words of President Wickremesinghe on the false promises our politicians and officials make and the fairy tales they narrate which bankrupted this country. So, to understand this, let’s look at one such fairy tale with lots of false promises; Ranil Wickremesinghe’s greatest achievement in the area of international trade and investment promotion during the Yahapalana period, Sri Lanka-Singapore Free Trade Agreement (SLSFTA).
It is appropriate and timely to do it now as Finance Minister Wickremesinghe has just presented to parliament a bill on the National Policy on Economic Transformation which includes the establishment of an Office for International Trade and the Sri Lanka Institute of Economics and International Trade.
Was SLSFTA a “Cleverly negotiated Free Trade Agreement” as stated by the (former) Minister of Development Strategies and International Trade Malik Samarawickrama during the Parliamentary Debate on the SLSFTA in July 2018, or a colossal blunder covered up with lies, false promises, and fairy tales? After SLSFTA was signed there were a number of fairy tales published on this agreement by the Ministry of Development Strategies and International, Institute of Policy Studies, and others.
However, for this article, I would like to limit my comments to the speech by Minister Samarawickrama during the Parliamentary Debate, and the two most important areas in the agreement which were covered up with lies, fairy tales, and false promises, namely: revenue loss for Sri Lanka and Investment from Singapore. On the other important area, “Waste products dumping” I do not want to comment here as I have written extensively on the issue.
1. The revenue loss
During the Parliamentary Debate in July 2018, Minister Samarawickrama stated “…. let me reiterate that this FTA with Singapore has been very cleverly negotiated by us…. The liberalisation programme under this FTA has been carefully designed to have the least impact on domestic industry and revenue collection. We have included all revenue sensitive items in the negative list of items which will not be subject to removal of tariff. Therefore, 97.8% revenue from Customs duty is protected. Our tariff liberalisation will take place over a period of 12-15 years! In fact, the revenue earned through tariffs on goods imported from Singapore last year was Rs. 35 billion.
The revenue loss for over the next 15 years due to the FTA is only Rs. 733 million– which when annualised, on average, is just Rs. 51 million. That is just 0.14% per year! So anyone who claims the Singapore FTA causes revenue loss to the Government cannot do basic arithmetic! Mr. Speaker, in conclusion, I call on my fellow members of this House – don’t mislead the public with baseless criticism that is not grounded in facts. Don’t look at petty politics and use these issues for your own political survival.”
I was surprised to read the minister’s speech because an article published in January 2018 in “The Straits Times“, based on information released by the Singaporean Negotiators stated, “…. With the FTA, tariff savings for Singapore exports are estimated to hit $10 million annually“.
As the annual tariff savings (that is the revenue loss for Sri Lanka) calculated by the Singaporean Negotiators, Singaporean $ 10 million (Sri Lankan rupees 1,200 million in 2018) was way above the rupees’ 733 million revenue loss for 15 years estimated by the Sri Lankan negotiators, it was clear to any observer that one of the parties to the agreement had not done the basic arithmetic!
Six years later, according to a report published by “The Morning” newspaper, speaking at the Committee on Public Finance (COPF) on 7th May 2024, Mr Samarawickrama’s chief trade negotiator K.J. Weerasinghehad had admitted “…. that forecasted revenue loss for the Government of Sri Lanka through the Singapore FTA is Rs. 450 million in 2023 and Rs. 1.3 billion in 2024.”
If these numbers are correct, as tariff liberalisation under the SLSFTA has just started, we will pass Rs 2 billion very soon. Then, the question is how Sri Lanka’s trade negotiators made such a colossal blunder. Didn’t they do their basic arithmetic? If they didn’t know how to do basic arithmetic they should have at least done their basic readings. For example, the headline of the article published in The Straits Times in January 2018 was “Singapore, Sri Lanka sign FTA, annual savings of $10m expected”.
Anyway, as Sri Lanka’s chief negotiator reiterated at the COPF meeting that “…. since 99% of the tariffs in Singapore have zero rates of duty, Sri Lanka has agreed on 80% tariff liberalisation over a period of 15 years while expecting Singapore investments to address the imbalance in trade,” let’s turn towards investment.
Investment from Singapore
In July 2018, speaking during the Parliamentary Debate on the FTA this is what Minister Malik Samarawickrama stated on investment from Singapore, “Already, thanks to this FTA, in just the past two-and-a-half months since the agreement came into effect we have received a proposal from Singapore for investment amounting to $ 14.8 billion in an oil refinery for export of petroleum products. In addition, we have proposals for a steel manufacturing plant for exports ($ 1 billion investment), flour milling plant ($ 50 million), sugar refinery ($ 200 million). This adds up to more than $ 16.05 billion in the pipeline on these projects alone.
And all of these projects will create thousands of more jobs for our people. In principle approval has already been granted by the BOI and the investors are awaiting the release of land the environmental approvals to commence the project.
I request the Opposition and those with vested interests to change their narrow-minded thinking and join us to develop our country. We must always look at what is best for the whole community, not just the few who may oppose. We owe it to our people to courageously take decisions that will change their lives for the better.”
According to the media report I quoted earlier, speaking at the Committee on Public Finance (COPF) Chief Negotiator Weerasinghe has admitted that Sri Lanka was not happy with overall Singapore investments that have come in the past few years in return for the trade liberalisation under the Singapore-Sri Lanka Free Trade Agreement. He has added that between 2021 and 2023 the total investment from Singapore had been around $162 million!
What happened to those projects worth $16 billion negotiated, thanks to the SLSFTA, in just the two-and-a-half months after the agreement came into effect and approved by the BOI? I do not know about the steel manufacturing plant for exports ($ 1 billion investment), flour milling plant ($ 50 million) and sugar refinery ($ 200 million).
However, story of the multibillion-dollar investment in the Petroleum Refinery unfolded in a manner that would qualify it as the best fairy tale with false promises presented by our politicians and the officials, prior to 2019 elections.
Though many Sri Lankans got to know, through the media which repeatedly highlighted a plethora of issues surrounding the project and the questionable credentials of the Singaporean investor, the construction work on the Mirrijiwela Oil Refinery along with the cement factory began on the24th of March 2019 with a bang and Minister Ranil Wickremesinghe and his ministers along with the foreign and local dignitaries laid the foundation stones.
That was few months before the 2019 Presidential elections. Inaugurating the construction work Prime Minister Ranil Wickremesinghe said the projects will create thousands of job opportunities in the area and surrounding districts.
The oil refinery, which was to be built over 200 acres of land, with the capacity to refine 200,000 barrels of crude oil per day, was to generate US$7 billion of exports and create 1,500 direct and 3,000 indirect jobs. The construction of the refinery was to be completed in 44 months. Four years later, in August 2023 the Cabinet of Ministers approved the proposal presented by President Ranil Wickremesinghe to cancel the agreement with the investors of the refinery as the project has not been implemented! Can they explain to the country how much money was wasted to produce that fairy tale?
It is obvious that the President, ministers, and officials had made huge blunders and had deliberately misled the public and the parliament on the revenue loss and potential investment from SLSFTA with fairy tales and false promises.
As the president himself said, a country cannot be developed by making false promises or with fairy tales and these false promises and fairy tales had bankrupted the country. “Unfortunately, many segments of the population have not come to realize this yet”.
(The writer, a specialist and an activist on trade and development issues . )
