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Last Updated : 2024-04-23 11:51:00
30 September 2022 09:04 am - 17 - {{hitsCtrl.values.hits}}
From left : Federation of Renewable Energy Developers (FRED) President Thusitha Peiris, Small Hydro Power Developers Association Past President Prabath Wickramasinghe and Small Hydro Power Developers Association Secretary and Legal Advisor Warna Dahanayake. Pic by Pradeep Dilrukshana
By Nishel Fernando
Amid ill-slighted policy decisions, Sri Lanka’s privately-owned renewable energy Industry is seeing a total collapse within the next few months, as it is set to face increased losses from state-owned Ceylon Electricity Board (CEB), clearing the way for another electricity tariff hike.
Holding the maiden press conference of the newly formed Federation of Renewable Energy Developers (FRED), the association’s President Thusitha Peiris yesterday revealed that the grid-connected private sector renewable energy developers are struggling to continue operations of their power plants due to severe cash-flow shortages with the CEB failing to settle Rs.35.1 billion worth of invoices owed to them over past 10 months.
With a 1, 350MW installed capacity, private sector renewable energy players currently contribute to around 14 percent of the country’s power generation.
The payments to private sector-owned renewable power sector only amounts to 5 percent of CEB’s overall power generation cost, whereas 74 percent of the cost is incurred to import diesel and heavy fuels.
“If the current situation persists, it is most likely that there will be another power tariff increase within next six months,” Peiris said. Past President of Small Hydro Power Developers Association Prabath Wickramasinghe said
CEB’slosses are higher due to lower energy generation with renewable energy developers as they are unable to adequately maintain their plants under the strained financial conditions. He noted that renewable energy sector’s annual contribution has come down by 60GWH, which has led to Rs.5.35 billion net loss for CEB as CEB is forced to rely more on expensive imported power generation sources such as diesel to meet the shortfall.
As a result of severe cash flow issues, renewable energy developers are now struggling to service around Rs.60 billion project loans with the country’s banking sector with most of the loans classified as non-performing.
As a result, banking and other financial entitles now tend to recognise investments in renewable energy sector as high-risk, which could substantially slow down the country’s renewable energy activities in years to come.
Further, the payment delays are also creating a negative image among foreign investors resulting in lower appetite for foreign investments in renewable energy projects in the future.
Brain drain has also become another critical issue for the sector with atleast 50 experienced engineers leaving the sector as the industry continues to struggle to pay their salaries on time due to cash flow issues.
The industry has already resorted to legal actions filing an official report with Public Utilities Commission of Sri Lanka (PUCSL) for a dispute resolution process, according to Small Hydro Power Developers Association Secretary and Legal Advisor Warna Dahanayake.
However, it’s not clear how long it might take to resolve these payment issues through the legal process.
The industry says it feels certain parties are intentionally attempting to cripple the privately-owned renewable power sector.
The sector is yet to secure commercially-feasible tariffs adhering to tariff formula and realistic inputs.
With the supportive policies, FRED is optimistic of adding 1,500MW from non-conventional renewable energy (NCRE) within the 2-3 years.
BuffaloaCitizen Friday, 30 September 2022 09:25 AM
You guys deserve the present situation, because at one time all of you supported Mahinda and his thieves. Together with CEB, you guys manipulated policies and created an enclave to mint money, similar to the private power plants. The collapse was inevitable, so enjoy that too now.
S.H.Liyanage Friday, 30 September 2022 09:36 AM
The main problem is in order to give relief to low or no income people the CEB Tariff has been kept lower than what it should have been to run the CEB without a loss . One myth is if it was run by private sector they would have run at a profit even with the same same tariff . As it is seen with all private sector run services and businesses they simply increase the price to get the profit
BuffaloaCitizen Friday, 30 September 2022 10:41 AM
The CEB has massive corruption, abuse and is overstaffed. If both these are eliminated fully, the tariff rates can actually be reduced by 20%, this is a fact and truth. We are paying almost 70% for utter quantities of corruption (from Chairman to DGM Level), abuse and theft (Engineers to Worker Level) and incompetent Political appointees.
Adwani Friday, 30 September 2022 09:42 AM
When for the locally supplied power units, CEB cannot settle, it is highly questionable how the government would settle the loans and other borrowings.
Demand Friday, 30 September 2022 09:46 AM
There's no point blaming anybody now. It's the common man who is suffering and we have to somehow come out of this mess but God only knows how!
Rishan Friday, 30 September 2022 09:51 AM
At the end General Public have to absorb all the losses ...
Down the prices Friday, 30 September 2022 10:13 AM
These Private Renewable sector is as unsustainable industry. They want too much profit per unit. And they have been unethical to say the least during the previous governments, with apparently giving commissions to SLPP and also apparently having SLFP Maithripala in their pocket too. These renewable systems are affected by the weather, the time of day, and even the seasons, so they should be paid more for night time providing, but they can't. They are just fair whether types. If this marfia don't want to supply power for these so called losses they don't have to and can stop. They can close shop and go home and let's see what happens. Most likely major new power plants which can work 24 hours a day, for months on end will be built and these high cost per unit providers will be forgotten about.
sam Friday, 30 September 2022 11:53 AM
Consumers pay for electricity used and CEB has not paid renewable energy suppliers. They should stop providing power and see the consequences
Lokka Friday, 30 September 2022 02:30 PM
The CAB engineer mafia are not accountable to anyone. Their income taxes are paid by the CEB not by themselves. Besides, CEB and other utility services have been used by corrupt politicians as job banks to give jobs to their henchmen. These establishments are highly politicized. If the rampant corruption does not stop, the only remedy is to privatise these loss making entities. Our next "Aragalaya" should be aimed at eliminating corruption in the CEB, CPC, Water Board and the Ports.
Be Fair Friday, 30 September 2022 02:45 PM
Easy way out, an incentive of 1.5% to some Officials will see the payments coming faster
Why are we being fleeced? Friday, 30 September 2022 05:07 PM
Is it the wrong people at the wrong place, that cause losses in every Govt. project? How will they perform if this happened to be a private enterprise?
Food first religious place last Friday, 30 September 2022 06:27 PM
There are creditors with 100 billion loan, who are being tried to be persuaded by government to take cut on the amounts owed. CEB should make these metaphorical long-haired types take a good hair cut. Don't give a damn about businesses asking for more rupees when government can't provide for food money for the most vulnerable in our country.
Reply to S.H.Liyanage Saturday, 01 October 2022 06:20 PM
COPE Chairman (Prof) Charitha Herath has pointed out that some of the categories used for the payment of allowances at the Ceylon Electricity Board were ridiculous. For example, in addition to ‘reading the meter’, there is also an allowance for ‘reading the meter correctly’, he added. Attention was also drawn to the decision taken by the Cabinet of Ministers on 14th November 2008 and the payment of various staff allowances to the staff from time to time with the approval of the Board of Directors contrary to the provisions of the Management Services Circular No. 39 of 26th May 2009. Accordingly, it was revealed that Rs. 2,134.9 million has been provided as these allowances in the year 2021 and Rs. 1,544.4 million in the year 2020.
Reply to S.H.Liyanage Saturday, 01 October 2022 06:21 PM
Further, the decision taken by the Cabinet in December 2007 to revise the salaries and when the collective agreement was reached in May 2015, it was decided to shift the liability for PAYE and Advanced Personal Income Tax (APIT) to the employees but from 2010 onwards. It was also revealed that the Ceylon Electricity Board had paid Rs. 4.8 billion (PAYE / APIT) in taxes from its fund without deducting the salaries of the employees till 2020. Officials who were present pointed out that the payment of this tax has been stopped by now.
Reply to S.H.Liyanage Saturday, 01 October 2022 06:23 PM
Also, based on the draft collective agreement, the Ceylon Electricity Board had increased the salaries of employees by 25% in the year 2021. However, it was revealed that this was not a legal document as it was an unfinished draft agreement as the relevant parties, employers and unions had not signed the draft. Accordingly, the adverse impact on the Board due to this unauthorized payment was approximately Rs. 9.6 billion, the COPE explained. The COPE chairman pointed out that when looking at this, the institution appears to be non-state-owned.
Reply to S.H.Liyanage Saturday, 01 October 2022 06:27 PM
Would all this had happened if it was privatised without a money tree(government) paying higher salaries every time a person goes for strike if this happened at a private company guess what happens? Bankruptcy within a year CEB employees use government as a open door bank account to pay how much ever they want to themselves this is the truth you as a ignorant citizen do not take into account
Reply to S.H.Liyanage Saturday, 01 October 2022 06:40 PM
"One myth is if it was run by private sector they would have run at a profit even with the same same tariff ." Yes obviously the truth with no corruption the price would go down sin the CEB is a mafia that does what it wants it has no leash no control system no audit no management of funds no forecasting of prices "just As it is seen with all private sector run services and businesses they simply increase the price to get the profit" Increase the price demand reduces that is the thing if you can buy from either a business that pays 300 rupees or 350 rupees then then you will buy from the second one increase price lowers quantity For a communist the concept might be shocking but it is the truth Government have corruption Businesses don't have corruption
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