CEB continues to buy private sector power at high rates

4 November 2015 02:50 am - 0     - {{hitsCtrl.values.hits}}

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In a continuance of the government subsidizing private sector profits, Ceylon Electricity Board (CEB) is continuing to purchase electricity at higher rates as usual from private mini-hydro power generating companies. “The government hasn’t published the avoided cost rates for 2015, so power is purchased based on the 2014 rates,” Asia Securities Research Manager Srimal Liyanage said.

Due to this flaw in government policy, Asia Securities has inclined positively towards mini-hydro stocks for the short-term. 

The mini-hydro companies listed in the Colombo bourse are Resus Energy PLC, Panasian Power PLC, Vallibel Power Erathna PLC and Vidullanka PLC.
Liyanage noted that rates for a certain year are published in October or November of the preceding year, but due to the political instability in 2014, the 2015 rates were not published. 

This shows the need for operational independence in government agencies. “We were delayed in publishing the rates for this year, but the new rates for 2016 should be published before the end of the month,” CEB Chairman Anura Wijepala, who was appointed this January following the regime change, told Mirror Business.

According to an Asia Securities report, 31 percent of the country’s power generation in 2014 was through private companies, totalling 3,825 gigawatt hours (GWh), of which 68.2 percent was through thermal, 23.6 percent through mini-hydro and 7.1 percent through wind.

A majority of the mini-hydro power generators, who had signed their power purchase agreement before 2008, are selling their generated power to the CEB on an avoided cost tariff formula, which is derived from the cost the CEB avoids from generating from its most expensive source—fossil fuels.

The Asia Securities report stated that the power generation cost at Kelanitissa’s Naphtha turbine was Rs.25.65 per kilowatt hour (kWh) and Rs.19.51 per kWh at the Sapugaskande heavy fuel turbine in 2014.

The power generation cost of CEB’s hydro power plants is zero, however, private operators have to account for their wages, maintenance and other expenses. 

Oil prices crashed by around 40 percent in 2014, and continue to be low in 2015.

Liyanage said that according to the 2014 rates, the mini-hydro avoided cost tariff is Rs.15.9 per kWh in the dry season lasting from February to April, and Rs.14.87 per kWh for the remainder of the year.




 
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