The Sunday Leader

CEB: Fleecing The Poor To Enrich IPPs

By Camelia Nathaniel

The thermal Independent Power Producers (IPPs) of Sri Lanka has brought Ceylon Electricity Board (CEB) into mere bankruptcy, charges the Advisor to the National Electricity Consumers Movement (NECM) Bandula Chandrasekara.

He told The Sunday Leader that the CEB has paid over Rs. 60 billion to purchase power from IPPs in year 2013. The average cost of electricity from IPPs have cost over Rs. 30 per kWh, whereas CEB is selling electricity at an average price of Rs. 19 per kWh. “So it is obvious that either the CEB will have to get into bankruptcy or put the burden more on to the poor consumers. The poor consumers have to take up this burden because a few IPPs are enjoying highly lucrative electricity selling prices to CEB. To our knowledge no one at high levels in the Power & Energy Ministry are even bothered,” he charged.

The 300MW combined cycle power plant run by West Coast Power (Pvt) Ltd has cost a thumping Rs. 47 per kWh during the operational year 2013. It has sold 440 GWh of energy to CEB and made an income of over Rs 20 billion. Out of this Rs 20 billion, they have charged Rs. 750 million as start/stop charges of the machines. This is a plant where 200MW is running on low sulfur heavy fuel and the balance 100MW from waist heat of the 200MW. According to the electricity consumers movement the present cost of low sulfur HFO is around Rs. 120 per liter. So the cost of generation from this combined cycle plant cannot be any more than Rs. 28 per kWh. Still CEB is buying electricity from them at Rs. 47.30 per kWh.

The equity investment of West Coast Power (Pvt) Ltd had been Rs. 12 billion. In the year 2013 itself they have made a net profit of Rs. 8 billion, which means 67% of investment was recovered in one year. The average selling price of electricity to consumers by the CEB is around Rs. 19 per kWh. So buying electricity from West Coast has resulted in a staggering loss of over Rs. 12 billion to the CEB.

“It is shocking to see the electricity purchase prices from these IPPs by CEB. It is unbelievable to see the electricity purchase price from Northern Power at Rs. 63.80 per kWh. It is the poor citizens of this country who has to bear all these costs. I like to question the so-called energy experts who were writing to papers about high power electricity from NCRE, were you not aware of these IPP rates?,” asked Chandrasena adding that on the contrary the Non-Conventional Renewable energy (NCRE) sector has delivered over 1,000 GWh to the national grid in year 2013 at an average cost of Rs. 13.50. So when the average selling price is Rs. 19, CEB has made a Gross Profit of over Rs. 5.5 billion.

He said that having seen in papers during the last few weeks the so called energy experts writing about paying high tariff’s as Rs. 20 per kWh to renewable energy developers, it raises doubt in his mind as to whether these experts are unaware of the above extremely high payments to private sector thermal plants or are they in the pockets of oil and lubricant suppliers.

“These energy experts grumble saying that wind plants are paid Rs. 20 per kWh. But they do not disclose to the public that this Rs. 20 is paid only during the first 8 years. Then the tariff comes down to Rs. 12 per kWh from year 9-15 and to Rs. 8 per kWh from year 16-20. Can anyone imagine of having electricity at Rs. 12 per kWh 9 years from now from any thermal power plant. Even from the coal power plant for that matter,” said Chandrasena.

The only thermal plant which was running at a low cost to the CEB was the 600MW Norochcholai coal power plant. Even that costs Rs. 12 per kWh for energy only, without considering the USD 700 million capital cost on the plant and over USD 200 million spent on the 220kV Transmission Lines. Unfortunately, said Chandrasena, even this plant was de-loaded to 50% during the last few weeks due to the unavailability of coal.

Since last year many small hydro power plants have started completing their 15 years of operation under the Standard Power Purchase Agreement. The developers lobbied at many levels for a reasonable tariff for them to continue their operation of the power plants. Still what was offered to them was a mere Rs 5.50 per kWh. This amount is not even enough to pay the salaries of the staff who have been working in these power plants for 15 years.

This is an industry where more than 280MW’s of electricity is added to the National Grid. Still utilities are buying electricity at Rs. 47 per kWh from thermal plants and discouraging the small hydros by paying Rs. 5.50 per kWh to them. The small hydro plants are an industry developed by small time entrepreneurs. There are more than 5,000 families dependent on this industry at present. But they claim that no one is bothered to secure that industry, but many to support the thermal plants which are draining this country financially.

Hence Chandrasena added that he hoped that this will be an eye opener for all lobbying against renewable energy. “All the IPPs are selling electricity at much higher prices than renewables. Also these IPP prices will be ever increasing with the increasing fossil fuel prices. We therefore request the so-called energy experts at least now stop lobbying against renewable energy for the country’s sake, for our children’s sake and for the sake of the generations to come,” he said.

Meanwhile when The Sunday Leader contacted the CEB Spokesman/ DGM Business and Operational Strategy Senajith Dassanayake. He said that the high cost incurred by the CEB for IPPs is not a new phenomenon and it has been the case since the early 90’s. “These were due to the signing of long term contracts with these IPPs. However we require power from these IPPs only to meet the peak hour demand,” he said.

According to him the reservoirs are yielding only around 50% of the power requirement at present while the reservoirs in the Mahaweli zone are still not receiving adequate rainfall but the Luxapana area is receiving adequate rain and Castlereigh and Maussakele are producing power at full capacity as a result.

The average selling rate of electricity from all private sector thermal power plants during the year 2013.

IPP                                                                   Unit cost (Rs/kWh)

AES Kelanitissa                                                45.30

ACE Power Embilipitiya                               24.50

Heladhanavi                                                     23.20

Asia Power                                                        33.60

Colombo Power                                               24.10

Northern Power                                              63.80

West Coast Power (Pvt) Ltd                       47.30

GT7 of CEB                                                        45.00

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West Coast Selling Price of Electricity in 2013              Rs 47.00 per kWh

Equity Investment by West Coast                                       Rs 12.00 billion

Net Profit in 2013                                                                      Rs   8.00 billion

Return on investment in 2013 alone                                67%

Loss to CEB                                                                                 Rs 12.00 billion

—————————————–

West Coast Selling Price of Electricity in 2013                  Rs 47.00 per kWh

Equity Investment by West Coast                                           Rs 12.00 billion

Net Profit in 2013                                                                           Rs   8.00 billion

Return on investment in 2013 alone                                      67%

Loss to CEB                                                                                          Rs 12.00 billion

—————————————-

Energy sold by NCRE in 2013                                                   1,000 GWh

Average cost from NCRE to CEB                                              Rs 13.50 per kWh

Gross Profit to CEB                                                                        Rs 5.50 billion

—————————————-

“So it is obvious that either the CEB will have to get into bankruptcy or put the burden more on to the poor consumers. The poor consumers have to take up this burden because few IPPs are enjoying highly lucrative electricity selling prices to CEB. To our knowledge no one at high levels in the Power & Energy Ministry are even bothered,”

Bandula Chandrasekara

——————————————-

Experts lie on wind payments

“These energy experts grumble saying that wind plants are paid Rs. 20 per kWh. But they do not disclose to the public that this Rs. 20 is paid only during the first 8 years. Then the tariff comes down to Rs. 12 per kWh from year 9-15 and to Rs. 8 per kWh from year 16-20. Can anyone imagine of having electricity at Rs 12 per kWh 9 years from now from any thermal power plant. Even from the coal power plant for that matter.”

Advisor to the National Electricity Consumers Movement (NECM) Bandula Chandrasekara    

—————————————–

Meanwhile when The Sunday Leader contacted the CEB Spokesman/ DGM Business and Operational Strategy Senajith Dassanayake, he said that the high cost incurred by the CEB for IPPs is not a new phenomenon and it has been the case since the early 90’s. “These were due to the signing of long term contracts with these IPPs. However we require power from these IPPs only to meet the peak hour demand,” he said.

——————————————

Experts in the dark on IPP rates?

“It is shocking to see the electricity purchase prices from these IPPs by CEB. It is unbelievable to see the electricity purchase price from Northern Power at Rs. 63.80 per kWh. It is the poor citizens of this country who has to bear all these costs. I like to question the so-called energy experts who were writing to papers about high power electricity from NCRE, were you not aware of these IPP rates?”

Bandula Chandrasekara

 

———————————————-

The 300MW combined cycle power plant run by West Coast Power (Pvt) Ltd has cost a thumping Rs. 47 per kWh during the operational year 2013. It has sold 440 GWh of energy to CEB and made an income of over Rs. 20 billion. Out of this Rs. 20 billion, they have charged Rs. 750 million as start/stop charges of the machines. This is a plant where 200MW is running on low sulfur heavy fuel and the balance 100MW from waist heat of the 200MW. According to the electricity consumers movement the present cost of low sulfur HFO is around Rs. 120 per litre. So the cost of generation from this combined cycle plant cannot be any this more than Rs. 28 per kWh. Still CEB is buying electricity from them at Rs. 47.30 per kWh.

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