The Sunday Leader

All-Out War On LNG

  • Legal action if the proper legal process is not followed with regard to power sector policy and generation plan

by Ifham Nizam

Norochcholai power plant

Energy experts, the Ceylon Electricity Board Engineers Union (CEBEU), and other stakeholders have condemned the government’s move to go all-out for Liquefied Natural Gas (LNG) without adequate planning and expert opinion.

The CEBEU has stressed that they will not hesitate to take legal action if the proper legal process is not followed with regard to power sector policy and the generation plan.

The CEBEU says the government has already taken an atrocious decision to replace the option of coal with LNG and has appointed a committee as a measure of white-washing.

A senior engineer said, “In this context, as a professional trade union we do not intend to let our members’ hands be tarnished with the related heinous activities.”

The union warned Power and Renewable Energy Minister Ranjith Siyambalapitiya before they decided to go on ‘work to rule’ earlier this week. The union resorted to the action due to their demands not being met. One of those was the proper study of the consequences of moving from coal to LNG.

“What is happening is the very opposite of our demand. Therefore, we have no other option but to take trade union action,” a senior engineer said.

He told The Sunday Leader that despite their warnings the government has decided to go for a LNG plant in Kerawalapitiya, to hand over another to a Chinese company and convert the second coal-fired complex into LNG in Sampur, Trincomalee.

The government is keen to go ahead with the Chinese government recommendation that the Chinese Machinery Engineering Corporation (CMEC), the builder of the first coal-fired power plant in Norochcholai, construct a 500MW LNG plant at an industrial zone in Hambantota, he added.

The move has raised the question among energy sector officials as to why an organisation that recorded the most number of breakdowns despite their profit earning venture is once again being given a similar project.

Engineers said they were puzzled over the move by the government to endorse and carry out a feasibility study for the plant which is not even included in the long-term generation plan of the Ceylon Electricity Board.

The Sunday Leader reliably learns that an American firm has already completed a feasibility study on the project.

Experts point out that under the Electricity Act, such contracts cannot be awarded without tenders and the power sector regulator, the Public Utilities Commission of Sri Lanka (PUCSL) should be notified.

Meanwhile, they point out that electricity consumers will have to pay a higher price – at least four times more than the current cost – if the government decides to go for LNG in Sampur. It is understood that it would cost the CEB some Rs. 10 billion annually if the proposed Sampur coal power plant is converted into a LNG plant.

CEB is concerned over the move to prepare the much discussed, long-term power generation. An official questioned as to how they could do the planning when they were asked more often to stop something and incorporate another and so on. When asked for his remarks, CEB Chairman Anura Wijayapala agreed with the CEB estimate for this project. He reiterated that they carried out the instructions of the government, and it is up to them to deal with the electricity consumers and cover up the additional cost needed through other means.

The CEBEU strongly believes that the government’s ad-hoc decision to convert the fuel option of Sampur plants to LNG would end up with a combined cycle plant running on diesel.

Citing examples, they said it would be similar to running the costly 300MW Kerawalapitya Plant which was initially planned to run on LNG but actually runs on expensive diesel even after eight years after its inception.

CEBEU President Athula Wanniarachcchi told The Sunday Leader that the bottomline is, it is not prudent to replace the proposed 1700MW coal power plants (2x250MW and 4x300MW) at Sampur with LNG-fired thermal power plants in an ad-hoc manner.

The highest energy demand in the country is around Colombo, but it is not feasible to put up a coal plant in Colombo because there is no provision for coal unloading in the Colombo area and possible air pollution because of vehicle movement.

Experts point out that the best location for a coal plant is Trincomalee but a considerable investment of nearly Rs. 30 billion is required for constructing a transmission line from Trincomalee to Colombo. The construction of the transmission line with the assistance of Japan International Cooperation Agency (JICA) has already commenced, and it is too late to reverse the decision, the CEBEU chief added.

He said that cost is only justifiable for a cheap, environment-friendly coal plant at Sampur but not for LNG. Wanniarachcchi further pointed out that some so-called experts talk about LNG plants in Colombo, Hambanthota and the latest at Sampur, but the country cannot afford to build two or three LNG terminals or construct a pipe network covering all these locations within a short span of time. “We should first focus on the most suitable place for LNG around Colombo,” he added.

The CEBEU said that they would continue with trade union action till the Power and Renewable Energy Ministry puts an end to ad hoc policy decisions.

Earlier this week, CEBEU once again took up their concerns with Power and Renewable Energy Minister, stressing ad-hoc changes to policy on power generation.

“We had noticed with alarm that the government and the ministry were carrying out ad hoc changes to planned power generation projects. These changes are in violation or acting against the existing policies and therefore we assume that the government is making policy changes and new policies,” engineers told the Power and Renewable Energy Minister.

“One of our major concerns was the alleged decision to stop coal power development altogether and replace it with LNG plants. We requested that any such policy decision, which could have catastrophic consequences for the country, be taken only after a thorough study of the repercussions if it is carried out by a team of internationally recognised experts,” the CEBEU told Minister Siyambalapitiya.

The union also demanded that the CEBEU should be given the opportunity to present its views to the experts. They observed that a committee in this regard was appointed by the secretary, Ministry of Power and Renewable Energy.

“We expected that the scope of this committee would be to assess the repercussions and advantages for the economy of replacing coal with LNG and to submit them to the government for a proper analysis. But we have found out that this committee is simply analysing the alleged advantage of moving to LNG in a “post coal scenario” and that the committee does not see any requirement to focus on coal as an option. This clearly illustrates that the government has already taken this atrocious decision to replace the option of coal with LNG and has appointed the committee as a measure of white-washing.

In this context, as a professional trade union we do not intend to let our members’ hands be tarnished with the related heinous activities,” the union said. They also told the minister that they had seen in the media that a decision has been taken by someone to change the fuel from coal to LNG in the planned NTPC/CEB joint plant in Sampur and also to cancel the second coal plant in Sampur for which JICA-funded initial studies had been carried out.

In addition, there have been media reports that no more coal plants would be built in Sri Lanka.

“We wonder who has made these decisions and whether the economic cost to the country and the cost to electricity customers and technical requirements of the network have been properly evaluated by the decision-makers. We respect the right of each government to change policies in the sector,” engineers further said.

However, the union expects sensible and responsible governments to do so after careful study of repercussions. They see no such evaluation done in this regard.

“We understand that in February 2016, a decision was taken at the Cabinet Sub Committee on Economic Management to review the CEB generation plan and the policies by appropriate independent experts in relevant fields. One could have seen logic in the decisions if at least such a study was done and decisions were taken. However, no such evaluation has been done. The CEBEU vehemently oppose this exclusion of coal as a fuel for electricity generation without any proper evaluation,” engineers said.According to Energy Expert Dr. Tilak Siyambalapitiya, over the past 12 months, the government has cancelled almost all power plants that were being built, to serve the growing demand. The Sampur Power Plant, scheduled in April 2015, scheduled to be operational by end 2020, has now been effectively cancelled.

He questions how someone succeeded in getting the President to ask Indian Prime Minister Narendra Modi to change the fuel of the Sampur Power Plant from coal to LNG.

“With no analysis of the implications, with no idea of the economic loss to the country that is already in decline, with no calculation on how the electricity demand would be served until the ball game with Sampur comes to an end, with absolutely no idea of the impacts on the electricity system and the cost to the customer, the request was submitted to Prime Minister Modi, who, in his wisdom, did not make a commitment but agreed to “consider” it. Of course, India may consider the request as another extended business opportunity; nothing wrong with that,” he said.

Dr. Siyambalapitiya also points out that India has so far very clearly said that a change in fuel would cause a delay of 7-8 years. The job of providing electricity to Sri Lanka in the meantime is not India’s responsibility. So, the present power plant ball game team scored their first goal on May 15, by buckling the on-going power plant project at Sampur.

“The latest of the ball game is to build three LNG terminals in Colombo, Hambantota and Trincomalee. India, for her 1,300 million people, so far has only three LNG terminals! Sri Lanka, for her 20 million, is going to have not one but three terminals. Who says so? The politicians. Do the economists say so? No! Do engineers say so? No! The end result? Not a single LNG terminal, but a few diesel power plants.

Very soon there will be a press statement about a power plant with a ‘natural gas’ label, but we have no natural gas. So, it will run on diesel, and produce electricity at four times the fuel price at Sampur. That electricity will be sold to you, the electricity customers,”
he stressed.

The CEBEU had instructed its members to refrain from participating in the following TECs from last Thursday:

* Construction of a 300MW HFO/LNG fired Power Plant at Kerawalapitiya,* Construction of LNG Terminal with required Infrastructure, * Construction of 200MW HFO/LNG fired Power Plant at Hambanthota, * Long term procurement of LNG for Power Plant, * Ministry Consultant Procurement Committee for Consultancy procurement for LNG consultant.

Engineers stressed that the government has to take full responsibility for the consequences of their trade union action including any power shortages that could occur in coming years due to delays in proposed power plants.

“Our intervention in this matter has been done in a professional manner requesting for a committee, and we have given enough time for the committee to be given the correct scope. If any attempt is made to victimise our members who are in the TECs, due to this action, please note that we will be taking next level of trade union action to safeguard our members. We will consider the lifting of the suspension if and when the above committee is given a proper and correct scope in line with our demand or if and when the committee submits its report and if we are satisfied that the committee has done a proper analysis,” the union further stated.

They also said that they were informed that CEB has been compelled to submit a part-four of the long-term generation expansion plan to the Public Utilities Commission of Sri Lanka (PUCSL).

“This is in the context of no proper policy decision on coal being conveyed to CEB. We vehemently oppose the submission of a short-term plan in place of the proper LTGP.

We demand that the proper legal process be followed in this regard. Hence, first of all, the committee should do a proper analysis and submit a report to the government,” the union said.

The government should make a policy decision after considering the report and the decision should be approved and conveyed in the proper legal manner -proper procedures as laid down in the Electricity ACT No. 20 of 2009, PUCSL ACT No. 35 of 2002, Regulations and Rules Gazetted pursuant to above ACTS and Codes issued by PUCSL to CEB as government policy. The long-term generation plan should be prepared based on this policy and submitted to the PUCSL for approval.

Meanwhile, the CEBEU also wrote to Prof. Sirimal Abeyratne, Chairman, Committee to Review of Policy on Shifting from Coal Power Generation to LNG Power Generation.

The letter said, “We write this to bring to your attention certain views of our union in brief, including a note that we sent to the Hon. Prime Minister on the government’s decision of closing doors to coal power and forcing LNG as the fuel of choice of the present government.”

The union noted that every country should have clear, consistent, long-term national policies for key sectors of the economy including energy and every government that comes into power should work within such policies.

“If governments wish to change national policies, such changes too should be done in a proper manner and ‘wish lists’ of individuals should not be forced in outside existing policies. Sri Lanka too has a published ‘National Energy Policy’ {published in 2008} and the Sri Lanka Electricity ACT No. 20 of 2009 was enacted to give rise to this policy as clearly stated in its preamble.

“Whereas a national policy on electricity had been formulated with a view to enabling Sri Lanka to meet the increasing demands for electricity in the future and whereas it has become necessary to give effect to this policy by regulating the generation, transmission, distribution, supply and use of electricity in Sri Lanka and by providing for certain related matters” spelling out that therefore it should be enacted by parliament.

This Act may be cited as the Sri Lanka Electricity Act.  Short title. No. 20 of 2009. Additionally, pursuant to section 5 of the Sri Lanka Electricity Act, Minister has issued by way of a government gazette what is referred to in the Act as “General Policy Guidelines on the Electricity Industry” in 2009, which stipulates the applicable policy for the Power sector,” the union said.

The sector has been in operation within this policy and the electricity regulator, the PUCSL has been regulating the sector within this framework. However, ever since the present government came into power, with a pledge to uphold principles of good governance, certain individuals appear to be acting as if they have the self-appointed authority over and above the laid down legal/policy framework to decide the future generation/fuel mix of the country all on their own, the union pointed out.

“While there is a clear laid down procedure in the Electricity Act (refer section 43), to decide how new power plants should be planned, procured and added, the CEBEU see confusing and contradictory orders being given to officials completely outside existing plans to introduce technologies and fuels that they fancy.

“The future generation mix need to be decided considering various policies and strategies laid down in the National Energy Policy and after following the methodology as specified in the Electricity Act and subsequent Regulations and Rules prepared as part of the Act. (It should be the work of sector professionals and not self-proclaimed ‘Energy Experts’ who have gained knowledge from the Internet).

“However, as the government is ignoring all existing policies and methodologies and forcing LNG as the fuel of choice of the government, the CEBEU had made a request to at least appoint a committee to review/decide what should be the “national policy on coal and LNG”, even though it is inappropriate to go down to such minute levels within policy documents.”

The CEBEU said, “Your committee is the result of our request. We trust you would get all views, act unbiased and in the most professional manner in taking this vital decision, which would have economic consequences running to hundreds of billions of rupees.

“We have already instructed our members to cooperate fully with your committee,and they will provide analysis in greater detail than what is contained in the introductory note that we had attached. We also would like to express our views as a union on the subject and kindly request from you to give us an opportunity to do so.”

The union also invited Professor Abeyratne to carefully consider among other facts, the phase of development this country is in as against the fully developed nations that we try to blindly emulate, the need to have affordable electricity to propel country’s economic growth, and our already superior environmental performance as a nation compared to countries that we take as shining examples.

They also cautioned the committee chairman against undue influences that he would get from various quarters, including certain directives, guidance notes over and above, forcing him to give their wishes as his final recommendations.

“While we earnestly hope your committee has the strength and people of right calibre to withstand such forces, we also wish to remind you that the future energy generation of this country would judge the soundness of your decisions today, which would run in to billions of rupees on their day,” the CEBEU stressed.


7 Comments for “All-Out War On LNG”

  1. Trevor Jayetileke

    There were opportunities to build a fully funded LNG Power Plant in 2002 ( that delegation could not have made it without my input ) by a leading oil and gas producing Company in Australia but we missed it due to the usual bungling and now suddenly in 2016 the Govt. wants to shift to LNG fired Power Plants. We must have a proper Energy Plan which can help to get out of Debt and Deficits that we have been trapped due to lack of mainly integrity of our top Politicians and Bureaucrats who take uninformed decisions to the detriment of the people of our Country. We must not forget that without cheaper Base Load Coal Power (through the Norochcholai Plant) the consumer would not have been able to pay for oil fired electricity prices connected to our Grid from privately owned power plants.
    To this end I must pay tribute to Dr.Thilak Siyabalapitiya our only respected Coal Expert with whom I have had disagreement during the Coal vs Gas debate which was reignited in the early 21st century ( see Sunday Leader December 26,2004), who was able to get the Norochcholai Coal Fired Power Plant off the ground. My advice is not to interfere with the two Coal Powered Power Plants to be built in Sampur, and let these two go ahead with a total of 1700MW of Electricity output.
    Convert the present oil fired Kerawalapitiya Power Plant to Gas Fired Electricity as per original Planed Combined Cycle Power Plant of 150MW., and given to India to undertake the work with its recently acquired knowledge of operating Gas Plants with the help of LNG from Qatar. Also let China who are interested in developing Hambantota as Shipping Hub to build a new LNG fired power plant of 200MW capacity so that when all these locations are fully functional we will have an additional capacity of over 2000MW that could be used to have a good mix of Hydro, Coal, Gas and renewable Energy supplying our National Grid giving the Consumer a affordable unit price of Stable supply of Electricity for Domestic, Industrial and Commercial use. By then we will be familiar with LNG and may be able to convert the Norochcholia Coal Power plant to LNG which was my original idea and pushed the LNG fired Power Plant for Kerawalapitiya with the delegation which came from Australia with a Natural Gas Producing Giant who had plans to start with 300MW and go up to even 2000MW. This company is the Flagship Company of 7 major oil companies and is the operator of the Largest Energy Project in the North West Shelf Offshore in Western Australia., supplying LNG to Japan and South Korea. My contribution was known to the then Sri Lankan Govt. Consul General in Sydney and how I helped to send the delegation.
    Today also the only achievement of any worth that the Petroleum Resources Development Authority (PRDS) which came into operation in June 2005 is the Joint Studies Blocks that was introduced along with the 2nd Bid Round for Exploration block offshore was my idea and agreed with the PRDS in conjunction with the Petroleum Secretariat headed by the President’s Secretary Mr.Lalith Weeratunge. that I was assigned to work with on the instructions of the President.
    There has been no oil/gas exploration wells drilled since February 2013, except that the Govt. has signed an Agreement on the 16/2/16with Total SA of France to do 2 years of joint studies to asses the presence of Commercially available oil and gas, and not waste time and money looking for Red Herrings in the “Mannar Basin” conning to the gullible Lankans that we will have Gas in 2018 or so to fire all our present Electricity Power Plants for 15 years and convinced Energy Policy decision makers to incorporate Gas into the Energy Master Plan with two small un- PROVEN gas finds abandoned by Cairn India. No wonder another European Embassador based in SL recently said that we lack capability of getting it RIGHT.
    Give me the chance and I will find the Oil for SL which I offered to President MR and give SL a self reliant base to get over its DEBT Trap and give us some dignity.

  2. Eng.M.V.R.Perera

    I have already instituted legal action in the Supreme Court we are awaiting a date to support my petition

  3. Kaputa

    why deal with an organisation that recorded the most number of breakdowns despite their profit earning venture and once again being given a similar project.Better have a open discussion with the Unions concerned and chaired by experts on this subject matter. Don’t venture into unknown territory or get Ministers who know next to nothing and disrupt power supply Please !

    • Cyril Mudalige

      Dear all Iam not an expert on the energy sector but was keen to see introducing solar- molten salt power plants in Sri lanka. am pretty sure our Engineers union would love such a suggestion and that is the direction SL must go. For the cost discussed we can have such a plant in SL and that would be the cheapest energy source available on this earth. It is not a rocket science, our average engineers would be quite capable of running such aplant.. of course there shuold not be any saboteurs as that happend in some plants and it would be wonder full for the generations to come..
      In india they are putting up two plants and in USA in Nvaeda they have a plant that is going to be the source of power in the future.. I dont understand why we have to go for coal or LNG which is problematic and to the environment and the costs.
      Readers may misunderstand me Iam not working or expecting any perks on this suggestion, but convinced would be ideal next to Hydro power. Govt has signed an agreement with India on future nuclear power plant deals sort of an understanding! This is a laughable matter as the nuclear plants are becoming obsolete..
      It appears for another 100 years there are no prospect for strong development as power and energy costs would automatically would put us down in our exports..
      If we have an iota of love to this mother land then we must go for SOLAR-MOLTEN Salt ENERGY storage technology. it is very simple, no high pressures involved except running steam turbine.
      May all see some merits on this and change the ideas…

  4. gamarala

    Foreign companies come to make a profit rather than benefit Sri Lanka.

    India has mixed sources of energy.
    We could do the same.

    “Palm Oil” is a potent factor in Sri Lanka.

  5. Jayantha Ranatunga

    This is very clearly the action of Diesel mafia. Those who profess LNG very clearly know that it is not going to be ready for the next power shortage in 2018. They are counting days for that to happen to bring back the barge mounted Diesel plants, rasing the tariff to sky rocket.

  6. Eng.M.V.R.Perera

    the Supreme Court has postpone the decision to give leave to proceed to 23rd sept 2016

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