Mess in energy sector

By Eng. Parakrama Jayasinghe
parajayasinghe@gmail.com

Over the years, I have published articles, originally addressing particular segments of the energy sector, in the hope of some sanity emerging in the sector in the broader interest of the consumers and Sri Lanka in general. But, of late, I have tried to focus on the entire sector, which is vital to the national interest by the very nature of the Sri Lankan energy scene and its ramifications that are unfolding. A major flaw in the thinking and actions of the energy authorities is their inability to understand that the Energy Sector is not limited to Electricity, but spans a much wider scope.  Focusing on individual segments is a recipe for disaster, which has been proven more than once and are staring in our faces right now.

A few of these articles are listed below, which is only a small fraction of all I have published:

CEB wants to be a follower of old technology – August 2018

Losses due to blockage of RE Projects

– February 2020

The Origin and Way out of the Energy Crisis

– April 2019

The Sri Lankan Energy Sector – A Mill Stone –

August 2023

The focus on particular aspects individually, which is the present practice, is not logical for a visionary and sustainable development and maintenance of this vital sector of the economy. The responsibility of the two major sectors of Electricity and Petroleum being under a single Minister has not yielded the desired outcome.

I feel obliged to provide some justification for the events that led to my conclusion and the validity of my title for this article, to pre-empt the loud objections that are bound to be levelled against me, by those whose noses would burn in recognizing their culpability of taking Sri Lanka to this abyss.

A cost reflective electricity tariff?

The massive hike in consumer tariff in February 2023 was the most socially-insensitive proposal. Fortunately, it was corrected somewhat in the July revision. But everyone is apprehensive about what will happen in January 2024.  This massive hike, touted as a cost-reflective tariff, obviously at the behest of the IMF, was supposed to be an essential adjustment to make CEB financially independent of the annual rescue moves by the Treasury (read rescue by the consumers, who have been carrying this burden indirectly year after year). But did this happen?

We see news reports on the CEB demanding further tariff hikes immediately, purportedly to avert losses for the current year, too, amounting to 50 Billion rupees or more.  So, who will be held responsible and accountable for this highway robbery?

The answer is obvious, judging by the past practices. Who should be held responsible for running up a financial deficit of near a trillion rupees over the past decade, all of which were passed on to the public with no one held accountable or made to feel any slightest pain of their own?

Continued dependence on Emergency Power

One may think the need for dependence on expensive emergency power occurs only in case of emergencies. But whoever heard of adding emergency power as a component of future energy plans?  What price the least-cost option being the primary principle of the 20-year-long-term generation plan?  If that is the only solution that can be offered by the planners or the designers, they lack competence to continue to serve in such positions. Even more damaging is the fact that those who are supposed to govern the sector, both at the CEB and at the Ministry, accept such retrogressive and damaging solutions to meet the national electricity demand, which is predicted many years in advance.  A substantial amount of emergency power, at highly enhanced cost, has been approved by the Cabinet and even by the PUCSL for the year 2024 already.  Obviously, no one is demanding nor the CEB is offering any viable alternative. The easy solution has been to pass the burden of the added cost on to the public, as has been done for years in the past. Uninterrupted supply of electricity 24/7 irrespective of cost?

The unprecedented power crisis in early 2022 made Sri Lankans realise the dangers of over dependence on imported resources for energy. The two major streams of energy demand ground to a halt for want of foreign exchange to pay for imports. In parallel, even the kitchen fires went out due to lack of LPG.  Everyone had to accept the many hours of power cuts and long queues for fuel. The efforts of the government to mitigate the crisis must be appreciated. But the consumers are burdened with tariff hikes as the price.

However, the role of any responsible government and those in authority on the entire energy sector, regardless of which Ministry they serve under, should be much more visionary and proactive, at least to minimize this danger in the short term and then eliminate it entirely in the medium term.

The developments in the energy sector, worldwide, and the much-delayed recognition of the bounty that mother nature has bestowed on Sri Lanka, should have been the greatest incentive for this process to be expedited.  The fact that on some days  Sri Lanka was powered with zero dependence on oil-based generation and much-reduced use of coal as well as the drain on exchange for import of transport fuels saw a significant reduction was the best driver for a government with the longer term interests of the country at heart to initiate and follow that path. The people would have come to terms with a two-and-a-half-hour power cut and the rationing of fuel longer if they had been convinced that there was plan to achieve energy security. (See figure 1)

However, the Ministry of Power and Energy, or the state institutions under it, does not seem to have recognised this as their responsibility or has chosen to ignore it entirely. Instead, its actions appear to be driven purely by a political agenda. The present practice of ensuring an uninterrupted electricity supply by using the most expensive option of oil-based power, and removing all controls on supply of transport fuels with no consideration of costs, both in rupees and even more prodigal expenditure of dollars that we don’t have, is deplorable.

The public is to face a heavier burden, going by the media reports appearing, which predicts a loss of over Rs 50 Billion for the CEB, in 2023, in spite of the massive hike in consumer tariff.  The increase in the country’s foreign debt due to this kind of expenditure is not yet known.

Is Sri Lanka helpless?

In spite of the many problems and difficulties, one area where Sri Lanka has been endowed with ample resources is energy.  While issues of costs and lack of funds and technologies prevented harnessing this bounty in the past, the circumstances have changed in our favour during the past decade or so. While some enterprising individuals and companies came to the forefront and practically demonstrated this viability, several state organisations with monopoly rights and the lack of governance by the Ministries and the government have landed Sri Lanka’s energy sector in the present sorry state. It is being claimed in some quarters that Sri Lanka cannot raise the funds for renewable energy projects and does not have the technical capability to develop them. But this is an untruth aimed at bringing in foreign entities to the sector. Even a 100 MW solar plant consists of about 175,000 of individual solar panels, a pair of panels with capacity 1 kW being viable as a unit. There is absolutely no reason to lump them together to capacities over say 10 MW just to shut out the local entrepreneurs and technology companies and add the long transmission lines as an added infrastructure requiring more investments by the state. In case of wind power, the unit size has grown up to about 5.0 MW only. The success of the Suryabala Sangramaya, which has already led to the development of over 700 MW of solar energy to the grid is a case in point. That source alone could provide 5,000 MW of generation capacity and 7,000 GWh of energy to the national grid, if the CEB takes it upon themselves to champion it rather than finding excuses to deter the potential “prosumers”. ([RJ4])

There is a need to attract foreign investments and tap the many green funds already available. But these must be done on our terms. Any attempt to pay dollars for the supply of electricity for our consumption cannot be accepted under any circumstances.

Are we to buy our solar energy with dollars?

It is feared that this is what may have been agreed with the Indian investor for the project in Mannar and Purnaryn, the agreements on it being totally in violation of the provisions of the Electricity Act. But all state officials are bending over backwards to help this company; they are even obstructing the processing of projects nearby by local developers.

(Sri Lankan energy sector as millstone around nation’s neck

https://island.lk/sri-lankan-energy-sector-as-millstone-around-nations-neck/)

These resources are sufficient to meet our renewable energy needs forever and earn foreign exchange. The much-talked about power link to India is technically and financially viable, provided it is designed and executed to meet Sri Lanka’s interests and not as part of the ongoing privatization programme. The government’s move to hand over large tracts of lands to foreigners cannot be accepted under any circumstances.

Under these bleak conditions the award of the 100 MW solar project in Siyambalanduwa to two local companies provides a ray of hope. As we proposed some time ago, it should have been a 4 x 25 MW system, which could have been funded locally.

It is time Sri Lankans insisted that the energy sector remain an indigenous industry geared to develop its own indigenous renewable resources so as to ensure long-term national energy security and also to be a major driver of economic growth. Our capability to do so has already been proven. (See Figure 2)

It is the duty of all chambers of commerce and industrial associations and most importantly for the media to highlight this without delay, before our resources are handed over to foreigners just for the benefit of the few individuals or companies.

The recent court ruling on the Solar Project in Vavuniya exposes the mismanagement and misuse of powers by the two state institutions mandated to develop the sector, rather than obstructing it. The company concerned deserves praise for its perseverance and eventual success of the legal battle.

One may also recall that the CEB has blocked the development of all renewable energy projects from 2016, citing a lacuna in the Electricity Act of 2009, amended in 2013.  This did not deter them from allowing the Indian company to develop 500 MW wind and solar without any tender procedures.

Let us hope that the above judgement and some favourable changes seen in the management hierarchy of the CEB would lead to the much-desired paradigm shift in the mindset and actions of those mandated to serve the country and not individual interests.

Conclusion

We have ample indigenous renewable energy resources to meet all our energy needs, and surplus can be used to earn foreign exchange.

At a recent public lecture, the newly appointed General Manager of CEB, presented the essential elements that should be observed in a proper Energy Market…

Freedom of Choice

Economic Efficiency

Social Equity

Transparency

We hope that he will have the courage and strength to ensure that these principles are adopted in the CEB that he now heads.

I have confined my comments to the electricity sector. The bigger culprit, which is the transport energy, needs a separate analysis. Meanwhile, the readers are requested to refer my previous below.

https://www.bioenergysrilanka.lk/transport-policy-and-vision-for-the-future/[RJ5]