- "CEB engineers have not challenged the amended report with regard to its technical details"
- "PUCSL has to be in compliance with the least cost principal laid in the Sri Lanka Electricity Act"
- The existing coal plant can anyway supply up to 20% of the electricity demand in 2030
- Norachcholai plant does not have a proper plan for ash disposal and that has caused a lot of environmental issues
- Everyone including CEB and PUCSL is bound by the policy decisions of the Government
- Cost of power generation at Lakvijaya Coal Power Plant (LCPP) at Norochcholai is Rs. 14.75/kWh per unit
- PUCSL is not against coal or favouring another fuel. It is the cost factor that PUCSL has to look into
The debate between the power regulator Public Utilities Commission of Sri Lanka (PUCSL) and the powerful Engineers Union of the power monopoly CEB on power generation and much talked about Long Term Less Cost Generation Expansion Plan (LTLCGEP) is getting intensified day by day.
The CEB engineers have resorted to trade union action putting the smooth power generation, transmission and distribution at risk. The Daily Mirror, published an interview we had with CEBEU President Saumya Manawadu on the issue on Monday (25).
In this interview, Kanchana Siriwardane, Director, Tariff and Economic Affairs puts into perspective the PUCSL’s side of the story.
Q The Engineers Union of the CEB is on a work to rule campaign demanding inter-alia the expulsion of your Director General from the PUCSL saying that you have failed to approve the Less Cost Long Term Generation Expansion Plan (LCLTGEP) and the amended LCLTGEP approved by PUCSL has vested interests. What are your comments on this?
PUCSL has the mandate to amend and approve the LCLTGEP submitted by the transmission Licensee (CEB) and it is clearly mentioned in Section 43 (8) of the Sri Lanka Electricity Act. It reads that Least Cost Long-Term Generation Expansion Plan means a plan prepared by the transmission licensee and amended and approved by the Commission.
When CEB submitted the Generation Plan, PUCSL conducted two public consultations in written and oral formats to get the stakeholder views on the plan. CEB also was presented in the oral public consultation even though they did not make a presentation.
Then PUCSL carried lengthy studies on the submitted Generation Plan and amended it based on latest fuel cost data available and to date, CEB engineers have not challenged the amended report with regard to its technical details.
PUCSL has to be in compliance with the least cost principal laid in the Sri Lanka Electricity Act which is the condition to ensure the electricity is supplied to the nation at lowest possible cost. If you select high-cost plants combination you can’t ensure low-cost electricity. What we have done in 2017 when approving the generation plan for 2018-2037 is to be in compliance with this least cost principle. In addition, we have to adhere to the government policies. So before approving, we requested the energy policy guidelines from the Ministry of Power and Renewable Energy. Since we did not receive the general policy guidelines from the Ministry of Power, we approved the plan in compliance with the least cost principle.
Everyone including CEB and PUCSL is bound by the policy decisions of the Government. The cancellation of Sampur coal plant was a government decision. In May 2018, the Government announced its policy on energy mix.
Since both the PUCSL amended plan and CEB’s submitted plan were not in accordance with the policy, PUCSL gave a conditional approval for the CEB’s generation plan subjects to the accommodation of Government to Government (Natural Gas) plants and directed CEB to submit the 2019-38 plan by next April 30 adhering to the Government Policy.
After approving the plan, CEB is responsible for implementing the plan. PUCSL is not involved with the procurement of the plants, i.e with bids, evaluation, tender calling or any of it. So. PUCSL has no power to involve with the procurement process. it is a false argument that PUCSL has vested interested when we are not involved in any part of the procurement process. Anyone can make allegations but allegations without any proofs are just words to get attention.
"Recently announced government energy mix says Sri Lanka should generate 50% of energy from renewable energy sources including major hydropower stations and non-conventional renewable energy such as solar and wind"
Q Also, there is an allegation saying that PUCSL has changed the data to get the amended plan?
The Commission initially planned to conduct a separate stakeholder consultation for Input parameters of the LCLTGEP 2018-37 and issue Commission decision prior to the preparation of the plan by the CEB. This was informed to CEB on November 30, 2016. At the discussion between the CEB generation Planning Division and PUCSL staff held on December 20, 2016, as requested by the CEB and considering the time constraint on preparation of the plan, the Commission and the CEB came to agreement that the CEB would submit the input parameters for public consultation on February 1, 2017 but would prepare the plan without waiting for the Commission decision and would incorporate any changes based on public comments after preparation of the LCLTGEP. This is indicated in the minutes of the meeting sent to CEB on January 20, 2017.
The CEB submitted the input data on February 6, 2017. The cover letter states that it is important to note that these data could be subjected to revisions/ updates in the process of formulating the Long-Term Generation Expansion Plan, and therefore this information should be considered as provisional data.
This clearly indicates that the CEB did not expect a Commission decision for the submitted input parameters and the actual data they used for the plan was available for the Commission after submission of the draft LCLTGEP.
The PUCSL-approved plan used fuel prices obtained from international fuel price indices, considering more recent fuel price trends. With this fuel price base, the cost of approved plan is lower than the cost of plants in the CEB base case plan.
It is normal to introduce forced conditions to the model to meet network requirements, environment concerns, policy requirements etc. Even CEB has limited the sub-critical coal plants to a maximum of 900 MW in their own plan. In the planning stage PUCSL has constrained sub-critical coal plants but super critical coal plants were not constrained. Use of lower quality coal and lack of ash handling solutions were other concerns that lead to restriction on low efficient coal plants. If external costs are considered this sub-critical coal plant won’t be selected at all.
All the changes that PUCSL made were clearly indicated in the Decision Document of PUCSL. CEB management had not questioned the decision to date but have only questioned our legal ability to amend the plan and we have replied to that.
"Many countries do without coal and planning to do away with coal, it is certainly possible. CEB itself has looked at such option in their draft plan."
Q CEB Engineers say the lowest cost to generate power is Coal. How do you see this?
Well, the cost submission by CEB does not say so. The actual cost submission from CEB to PUCSL for December 2017 says that the cost of power generation at the Lakvijaya Coal Power Plant (LCPP) at Norochcholai is Rs. 14.75/kWh per unit. This is not PUCSL data but CEB data. So, if the Engineers are saying the data submission by the CEB is wrong but there is a big question mark because all our reports and calculations are based on CEB’s data submissions.
Also, we have to keep in mind that LCPP was built under concessionary funding and does not include any return on equity for CEB or Government investments, which adds up at least Rs.2/kWh more. Anyhow it is more costlier than the latest tender prices for LNG (RS.14.99/kWh), wind (Rs. 10.07/kWh) and solar (Rs. 11.86/kWh). Thus, coal is no longer the cheapest option.
Q After the approval is given, how does PUCSL involve in implementing the power generation plan? One of the major allegations of CEB Engineers is that PUCSL officers are pushing for private investors’ plans for the generation. Your views on this...
The implantation of power generation plan is with the CEB. As I mentioned earlier, we do not involve buying power generation plants. There are clear provisions in the Electricity Act for procurement of a new generation plant, and the Secretary to Treasury can decide on the Government share on each power plant that is to be procured.
PUCSL has no say on the ownership structure of a power plant other than checking least cost requirements and government ownership requirements in the Act if procured as identified in the approved LCLTGEP.
" If SL would produce LNG during next decade, approximately we will be mostly based on indigenous power source which will ensure energy security."
Q Engineers and other stakeholders say that coal power generation is not risky or harmful like in the past and many ill-effects have been minimized with the application of new technology. Do you agree?
So-called clean coal technology includes carbon sequestration and that can increase the costs three-fold compared to a conventional plant. Whatever, the clean coal technology you use the production of ash is a given. Norachcholai plant does not have a proper plan for ash disposal and that has caused a lot of environmental problems.
In the same time, I must say that PUCSL has no issues with the fuel that CEB uses for the power generation plan. PUCSL is more concerned with the Economic impact through the fuel that they use. PUCSL is not against coal or favouring another fuel. It is the cost factor that PUCSL has to look into.
But when it comes to coal power, CEB needs to demonstrate their ability to manage environmental damage, otherwise, it will be impossible to find a location for a new coal plant.
Q Will Sri Lanka face a power crisis in the near future and if so what is the solution?
Under severe drought and major plant failure conditions, Sri Lanka may face energy shortages. Of course, we have costly oil power as a stop-gap measure. That solution is not encouraged due to cost implications. We have to speed up implementing approved LCLTGEP to avert any possible crisis.
Q Do you think Sri Lanka must do away with coal power generation fully in future?
If coal is cheaper than other fuels or sources, also if the Government decides, coal power plants could come into the long-term generation plans, Yes, we may have to agree with coal being in the generation. But, Sri Lanka is looking at the sustainable development which has to look into economic, environmental and social aspects of any development project, and coal power does not qualify under any of those criteria at the moment.
"When it comes to coal power, CEB needs to demonstrate their ability to manage environmental damage, otherwise, it will be impossible to find a location for a new coal plant"
The existing coal plant can anyway supply up to 20% of the electricity demand in 2030, so we diversify to other cleaner/ and flexible options like renewable and Natural Gas and revisit the policy on coal.
Also, I need to highlight the fact that we do not say a certain fuel is better than the other fuel. What we look at is the least economic cost and least harmful environmental impact on Sri Lanka.
Q Sri Lanka has fully exploited hydropower resources and as such will have to depend on thermal power and so-called alternative or renewable energy such as wind, solar and LNG etc. if we are to fully dispense with coal power generation. Is this possible?
Yes, of course, many countries are doing without coal and planning to do away with it. Hence it is certainly possible. CEB itself has looked at such option in their draft plan.
Q What are the remedial measures the PUCSL suggests to minimize environmental pollution created by the Lakvijaya Coal Power Plant in Puttalam?
There is a Committee comprising PUCSL, CEB and environmental authorities on this and they have an action plan to tackle all the issues of the plant. So, if CEB implements that plan, environmental impacts of the plant can be minimized, but it will take time and investment to produce results.
Q Are you confident that Sri Lanka would go for commercial exploitation of natural gas in the Mannar basin in the near future?
This is a question for PRDS, PRDS is confident and that is why they are calling for bid to develop sites.
Q Sri Lanka’s future power generation depends on what?
Recently announced government energy mix says Sri Lanka should generate 50% of energy from renewable energy sources including major hydro-power stations and non-conventional renewable energy such as solar and wind. If the country will produce LNG during next decade, approximately we will be mostly based on indigenous power source which will ensure energy security.