PUCSL rejects CEB’s request for tariff hike
The Ceylon Electricity Board’s (CEB) request for a fresh electricity tariff hike has been rejected by the Public Utilities Commission of Sri Lanka (PUCSL).
In a letter dated July 21, the CEB’s General Manager requested approval from the PUCSL for an immediate tariff hike. The CEB sought the tariff hike on the grounds that it is estimated to lose around Rs. 33 billion by the end of this year owing to the tariff reduction approved by the PUCSL for the second half of this year.
The CEB told the PUCSL that the reduction in its revenue would hinder the possibility of meeting additional expenditures for increased thermal power generation, increased demand and other essential expenditures.The CEB said it would also impede its ability to settle the previous debt owed to renewable power producers and other suppliers.
The PUCSL, however, has rejected the CEB’s request for an immediate hike, pointing out that the CEB would actually have a surplus revenue amounting to Rs. 31.87 billion for the period from July to December this year.“It is the Commission’s duty to ensure fairness in tariff for all stakeholders, including the consumers. Therefore, excessive revenue requested by the CEB is not fair and has no justification,” the PUCSL has said in its reply.
A senior CEB official told the Sunday Times that the Board did not calculate its earlier tariff taking into account the dry spell lasting up to four months. With the Met Department predicting that there would be no significant rainfall until at least September, the situation could become dire, warned the official. At present, hydropower generation has gone down to just 16% while 64% of power generation is through costly thermal power generation, the official pointed out.
If there are no rains by mid-September and the PUCSL continues to reject a tariff hike, there might be no option but to impose island-wide power cuts to manage the situation, the official warned.
A PUCSL source, however, rejected the CEB’s arguments, pointing to the Rs. 31 billion revenue surplus which the source claimed the CEB was sitting on.
Meanwhile, 17 opposition MPs have submitted a motion requesting the appointment of a Parliamentary Select Committee (PSC) to examine the electricity tariff hike affected earlier this year.
The MPs claim that the CEB’s revision of the tariff hike is in contravention of the PUCSL’s rules.
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Another 15MW of wind power has been added to the national grid this morning in Mannar.
The Hiruras Wind Power Project consists of two phases: 10 MW and 5 MW.
Minister of Power and Energy Kanchana Wijesekara said the wind power plant by the Windforce & Hiruras Power with six wind turbines was constructed with local engineers and commissioned before the scheduled completion.
At least 20 people were killed and another 80 injured in Pakistan after a total of ten train coaches of Rawalpindi-bound Hazara Express derailed near a station located 275 kilometres from Karachi.
The accident occurred in Pakistan’s Sindh province.
Injured passengers have been taken to nearby hospital. During a press conference, federal minister for railways and aviation Khawaja Saad Rafique reportedly said someone may have ‘deliberately’ caused the accident, or it could be a mechanical fault. The actual reason of the derailment hasn’t been discovered yet.
The administration is carrying out rescue operation and an emergency has been declared in the neighbouring hospitals. Pakistan Army has also joined the relief operation and more troops have been called in from nearby bases.
Over 100 police personnel are also participating in the rescue effort. Ambulances have also reached the site. Military will reach with edibles for the rescued passengers.
The Government has decided to cancel a tender awarded to a China-Pakistan consortium to supply Liquefied Natural Gas (LNG) and lay a pipeline network after being selected through an international open competitive bidding process and instead consider an offer by an Indian company.
The China-Pakistan Engro Consortium was selected last year as part of a step towards reducing the cost of power production.
However, last Monday, Power and Energy Minister Kanchana Wijesekera submitted a Cabinet paper titled “Revisiting the National Energy Policy Related to the Development of Natural Gas Infrastructure in the Country,” to suspend the ongoing LNG procurement process.
Accordingly, the suspension covers the Development of a Floating Storage and Re-gasification Unit (FSRU) off Kerawalapitiya on a Build, Own, and Operate basis and a compatible mooring system on Build, Own, Operate and Transfer basis. It also covers the associated projects – the development of Offshore and Onshore Re-gasification Liquefied Natural Gas (RLNG) Transmission Pipeline Network with an Onshore Receiving Facility (ORF) and an associated System from the Floating Storage and Re-gasification Unit (FSRU) to existing and future Kerawalapitiya and Kelanitissa Power Plants on Build, Own, Operate and Transfer (BOOT) basis.
After following the proper tender process, the Cabinet-Appointed Negotiating Committee (CANC) in August last year granted approval to award the tender to the Engro Consortium.
Accordingly, although the Power and Energy Ministry had to submit a cabinet paper to enable the tender to be awarded thus, the ministry delayed the process, Ministry sources said.
The Sunday Times learns that the process had been delayed as the Indian government strongly objected to awarding this tender to the China-Pakistani company.
However, finally, the subject minister had requested cabinet approval to suspend this officially permitted tender, under these circumstances.
The Ministry had instead attempted to award this tender to Petronet LNG Ltd. of India, as an unsolicited procurement, but since the company did not have any experience regarding FSRU, the ministry had rejected the request and said if the Indian government supported the company, they would be able to supply LNG in containers.
“This will badly hamper the investor confidence and no genuine investor will come forward in future to this country,” the official said.
A Ceylon Electricity Board (CEB) top official said, “It will be a costly solution as there would be no competition, with prices being determined by the Indian company”. He said it could have an impact on the electricity tariff which would be increased and all costs would be passed on to the consumers.
The CEB’s Least Cost Long Term Generation and Expansion Plan (LCLTGEP) (2018-2037), which was approved by the Public Utilities Commission of Sri Lanka (PUCSL) in 2018, identifies the need for converting furnace oil and diesel power plants to LNG power plants to reduce power generation costs.
Accordingly, the CEB called for international competitive open tenders from February 18, 2021 to June 25, 2021, and two bidders came forward.
At that point, the US-based New Fortress Energy Company which gave rise to much controversy in 2021, had, without submitting an open bid for this tender, presented an unsolicited proposal to the government. The then Gotabhaya Rajapaksa government which supported this unsolicited proposal had even signed an agreement to sell 40% of the shares of the 300 MW Treasury-owned Kerawalapitiya Yugadhanavi Diesel Power Plant to the New Fortress Energy.
However, due to strong objections to the deal, the agreement had not been implemented up to now.
Against this backdrop, the CANC granted approval on August 4 last year to award the tender to the China-Pakistan Consortium, one of the two companies which had submitted proper bids for the tender.
