‘Until water boils in pot, the crab plays on’

by Eng Parakrama Jayasinghe
parajayasinghe@gmail.com

The title of this article is from the Loweda Sangaraawa, which I think is most appropriate to the electricity sector in Sri Lanka at the moment. During the past couple of months, thanks to heavy rains, the months of multi-hour power cuts appear to have been forgotten. A recent speech by Minister of Power and Energy Kanchana Wijesekera in Parliament while predicting the possibility of 7-8 hour power cuts as early as 15th October highlights the short-sighted decision-making by the authorities in the electricity sector. The Minister spelt out the manipulations in the coal purchases which have placed Sri Lanka in a most vulnerable position; it is heavily dependent on a resource completely outside its control and the situation has been further complicated by unbelievable behaviour by officials and lack of oversight and governance by those who are supposed to be looking after the interests of the people.

A Coal Mafia to add to Diesel Mafia

In addition to the diesel Mafia, there appears to be a coal mafia, as openly stated by the Minister.

But are we to believe that the very same people who pushed us into this corner will come up with a viable solution in the near future? History certainly does not give us that confidence. Given the high prices of coal (US $ 328 per ton as per the tender) and the need for nearly $ 100 million per month to keep Norochcholai operational, it takes a leap of faith to believe that such a solution would emerge. Certainly not in the short term! As the war in Ukraine continues , there is no guarantee that the coal prices would remain even at these levels. They reached over $ 400 in the spot market recently.

What does these prices mean by way of the cost of generation of electricity using coal? It would be Rs 50.28 per kWh. So, the final generation cost,including the plant costs and other operating costs, etc., could easily reach Rs 70.00 per kWh. This is the source touted as the cheapest source of power generation for years by those who were responsible to push this unsustainable dirty fuel down the collective throats of the unsuspecting and ever docile helpless Sri Lankans consumers.

But while it is opportune at least now to be planning ahead to rid ourselves of this mill stone as early as possible, we have a much more daunting task to try and minimise the drastic impact that the lack of coal even at these exorbitant prices would cause to the supply of electricity as early as mid-October 2022.

The only way out

While it is far too late to make a significant impact in the short time available, the only short-term means of adding the gravely needed additional power generation capacity and the energy to the shortfall created by the lack of coal, and even otherwise due to slacking of the rainfall as beginning to be evident now is a most rapid expansion of the roof top solar PV systems. There is absolutely no other means or resource capable of doing so even in the next 12 months. But are we grabbing this opportunity? Unfortunately, judging from the behaviour of the State Officials this is far from the reality. For many months the solar power industry has been appealing for a revision of the feed in tariff under the Surya Bala Sangramya. The Minster must be thanked for the early appointment of a tariff fixing committee with officials with the required knowledge. Many discussions were held with this committee and it is understood that they have arrived at a feed-in tariff level which could retain the interest of the investors, and hopefully fast track the addition of as many installations as possible in the shortest possible time. It is believed that these tariff levels are much lower than the abovementioned cost of coal power and certainly less than half that would be needed to continue using any oil for power generation.

Before the dramatic devaluation of the rupee and the unbelievable rise in the interest rates, over 625 MW of rooftop solar, providing over 800 GWh of energy annually, had been added to the system.

Several weeks have gone by with the tariff committee making its recommendations, but no tariff has been announced. It is understood that some parties are trying to offer totally unviable levels of tariff, completely ignoring the inescapable reality of the prevailing financial parameters, on a purely ad hoc basis. This along with the possibility of declared intention of scraping the two systems of Net Accounting and Net Plus schemes, which attracted the larger private sector entities to enter the industry is tailor made to ensure we will face the projected 7 – 8 hour power cuts either in October but January 2023, when the drought season begins. They are like the crabs mentioned in the title of this article. Unfortunately, the helpless consumers also will be boiled along with them.

If Sri Lanka is to have any hope of minimising, certainly not eliminating the long hours of power cuts, an attempt must be made to add at least 500 MW of roof top solar in the next six months. This will be possible with the relaxation of some regulations by the CEB permitting large roof spaces to be brought in and the corporates owning such roof areas being ready to invest, provided the feed in tariff is workable.

The performance of the sector illustrated provides some credibility for this confidence.(See graph)

Of course, there are some other barriers such as the access to the necessary foreign exchange for the import of essential components and other issues to be settled with the CEB. But the most important starting point at which the private sector investors, with absolutely no burden on the beleaguered treasury, is the most urgent declaration of the viable feed in tariff to replace the now totally outdated tariff worked out in 2016. The willing and committed assistance by all the officials of the CEB and LECO who must at least now place the interest of the country first and be ready to resolve any technical issues, which are very much in their capacity to do so would make this goal that much easier.

The fact that every MW of solar added helps to rid Sri Lanka of the burden and the shameful dependence on imported coal and oil for which now we have to go begging for dollars. The value of this nondependence and relief from the continuing burden of debt cannot be assessed in rupees or dollars

It is hoped that the minister who in no uncertain terms spelt out the trap we are in would appreciate the need to resolve this tariff issue most urgently and pave the way for our none dependence on imported fossil fuels.