Whither Sri Lanka’s energy sector, lifeblood of national economy ?

By Eng Parakrama Jayasinghe
parajayasinghe@gmail.com

It was in February this year, that I pointed out that the Sri Lankan energy sector is a headless chicken.

https://www.ft.lk/columns/Sri-Lankan-electricity-sector-The-headless-chicken/4-730564

Looking at the mile long queues for all forms of energy, petrol, diesel, kerosine and LPG, where the citizens are wasting away their lives and in some cases losing their lives, it is quite clear that the situation has even worsened since then. When the above article was written there were no such queues except the LPG shortage. But the writing was on the wall , leading Sri Lanka to the present abyss hitherto never experienced by us.

The tragedy being that, even now there is absolutely no solution being proposed, by the government, except going all over the world begging for dollars and oil. Under these circumstances , it is very important to look back at the past actions, not over the years and decades , when the seed for this tragedy were laid, but the totally insane decisions in the past few months , which totally ruined the Sri Lankan economy as well as the social fabric covering the entire spectrum of the citizenry. The current actions of the government which is limited to seek means of surviving on a day to day basis, does not inspire any confidence that, Sri Lanka can emerge from this ruinous mess if ever.

What will happen tomorrow?

I raised this question in February this year.

Quote “In this back ground the people are aghast to witness the drama being enacted, with the ministers blaming each other and the Central Bank insisting there is no problem in releasing the Dollars necessary to import the oil. The fact remains that there already has been power cuts. It is a question of when rather than if, there would be more power cuts. Much hope is pinned on the recommencement of generation with the third unit at Norochcholai. There is no guarantee for how long all three units would be in operation considering the past history of this power plant, bringing us back to square one”. unquote

The reality as it turned out is much worse. Not only two of the coal power plants will be out of service one after the other for some three months, we are living on tenterhooks as to how much reliance we can place on both operating units will deliver us the electricity without breaking down , even at the present enormous cost. The arrival of the monsoons helped to alleviate the problem to some extent until the first of the units was shut down for maintenance. Till then there were some happy days in May when Sri Lanka was able to manage without any private oil based power plants and minimal usage of those owned by the CEB

Unfortunately those days were minimal and we have reverted to the disastrous oil based generation as illustrated in the two charts below , down loaded from the CEB web portal. (See Figures 1 and 2)

This brings me to the point at issue. What did cause the present impossible situation with respect to transport fuels , leaving aside for a minute the issue of LPG and Kerosene?

The primary problem is of course the blind dependence on imported fossil fuels for our energy needs. While there were no viable alternatives for transport fuels in the past, this is certainly not so in case of the power generation. However, this has been the subject of many of previous articles both mine and many other right thinking people of all levels. What is needed now is to examine the immediate ill-conceived past decisions and actions and hopefully try and avoid the continuation of such, if we are to retrieve a semblance of order in the transport energy sector , which is crippling the entire country.

Having endured repeated economic disasters caused by the CEB year after year, by manipulating the overdependence on the oil based power, in the dry months of January to April, they have brought the country to its knees literally this year. This is by siphoning off what little available oil supplies as well as the dollars spent on importing same during these months as shown below. (See Table)

*Estimated on the basis of 0.28 liters/kWh

** 6000 litre Loads

Evaluated based on CEB Statistics

The number of bowser loads of oil issued by the CPC is mentioned as about 800 per day, in various press conferences. It is seen that on some months the CEB has mopped up over 75% of this scarce resource , just to pretend that they are able to minimise the power cuts of their own making. Even though the amount of oil includes partly, furnace oil and heavy oil, they too consume dollars which could have been used for import of diesel essential particularly for transport.

While the ministers and the government in general are also to be blamed for this situation , leaving the decision making to the CEB, which has absolutely no compunction in driving the country to bankruptcy, They have already done this by running up a loss of over Rupees One Trillion over the last decade and are well on the way to adding a further trillion this year and next alone. The net effect has been the disaster we are experiencing now. Under these circumstances it is inescapable that the CEB would need immediate restructuring with strict conditions of accountability and adequate competition which has proved to be of immeasurable value in the telecom sector. The worst aspect of the current total mindless prodigal waste is that this is mostly impacting the balance of payments due to the immense amount spent on import of oil and coal for power generation. If not for this lopsided decision of trying to keep the lights burning, without any consideration of the great impact it would make on the transport sector, the present crisis would have been much milder.

This once more highlights the point I made in my last article , that Sri Lanka’s Energy sector is truly a “Headless Chicken” without any vision or direction and most damagingly no accountability. No one seems to be able to critically evaluate the sectors which must receive priority for the allocation of the dwindling foreign exchange. It takes only the minimum amount of intelligence to decide that the priority should be for those sectors which have some chance of earning back the foreign exchange spent. Obviously, even that level of intelligence cannot be expected from our leaders as seen in the handling of all other sectors as well. Under these conditions it would be too much to expect them to have even looked at the electricity consumption by the different sectors as shown below.

Fig 3. Share of Electricity Consumption Amongst Sectors ( CEB Statistics)

Only a part of the consumption by the Industrial sector and may be a fraction of the bulk sales could be expected to meet these criteria.

The Domestic + General sectors consuming over 60% of electrcity are not contirbuting directly to the economy or export earnings

But the government’s interest may have been to provide lights at any cost to the other sectors for political expediency, ignoring the havoc it would create, if they had even thought about it.

It is in this light it was a breath of fresh air to note that Sri Lanka managed even for a few days with very little oil based generation in May. However, that euphoria was short lived and as seen in the second chart , where the generation has reverted back to the unfathomably mindless behaviour with oil based generation contributing over 33 % of the total. The damage is worsened by the fact that the cost of generation using oil and coal has reached such levels , so that any right minded admiration would shut down such plants immediately and seek whatever sustainable means of bridging the gap.

Fortunately for Sri Lanka we have ample means of doing so, which does not result in continuous drain of Dollars and has the benefit of many other economic advantages. More details of these options have been submitted to the officials who hopefully would advise their political masters of the lack of any other alternative.

On the other hand depriving the transport sector of the only fuels they are 100% depended on, is totally inexcusable and has already caused irreversible damage. One would say that this lapse is the single most damaging cause for the total loss of confidence on the government by all segments of the people as evidenced by the recent survey by a research group.

The purpose of this article is to draw the attention of the new Minister of Power and Energy , who fortunately has the responsibility for power supply as well as supply of transport fuels, to critically examine the above situation and try and arrest and hopefully reverse the current disaster , as early as possible and salvage what little we can of the economy and the well being of the people.

As such the following realities which are obvious and we hope that the Minister will make the urgently choices based on them, however hard they are if we are to see a resolution of the transport fuel crisis.

The limited oil supplies should be directed to trasnport sector as prority , the lack of which has direct negative impast on production as well as transport of esential goods directly affecting social life and well being.

The use of 82% of oil by private vehicles is unsutainable

Busses and trains carrying 50% of the passengers using only 5% of oil must be kept supplied without shortage.

Clear priority needs to be given to industries and other sectors which earn foreign exchange

The CEB engineers have been so kind as to warn us that there will be more hours of power cuts if adequate diesel and furnace oil are provided so that they can add few billions more to the loss. We can only hope that they would condescend to earn their living at least now, by facilitating the fast track development of the renewable energy sources for power generation, instead of trotting out lame excuses.

May the Minister have the courage to declare that Sri Lanka would no longer operate any oil based power plants , except perhaps those which can operate on furnace oil and naphtha, produced by our own refinery , for which the supply of crude oil must be treated as a priority for many reasons.

Say no to LPG !

In the total energy scenario, or shall I say today’s ‘polim’ culture, the LPG queues take much more prominence than the relative percentage of energy mix . Naturally being so close to the day to day needs of cooking energy, the emotions are running high. Fortunately a ready alternative is available and has been addressed in a different article accessible on https://www.bioenergysrilanka.lk/an-opportunity-behind-the-lpg-crisis/ It only requires minimal intervention by the state by promoting the offered solutions as an alternative to staying in long queues without any guarantee of receipt of a cylinder of LPG.