UNF power deal short-circuits CEB 

By Frederica Jansz 

ATTORNEY General K. C. Kamalasabeyson has given an opinion that a second agreement to purchase power signed by the former government with an emergency power provider has provision to place Sri Lanka under serious economic duress.

The agreement with Applied Electronics Supply (AES) Kelanittisa Pvt. Ltd., was signed by former Treasury Secretary Charitha Ratwatte, and former General Manager to the Ceylon Electricity Board (CEB) D. C. Wijeyratne on March 22, this year. Project Director for AES, David Warden signed the document on behalf of the power generating company.

The controversial signing was done despite strong protests lodged by the Engineers Union at the CEB and other senior CEB officials. At a subsequent discussion on the matter, Milinda Gunatilleke, acting on behalf of the AG has stated his own observations on the issue citing in no uncertain terms the irregularity of the agreement.

Authoritative personnel at CEB said that 12 CEB officers had met with David Warden, Charitha Ratwatte and D.C. Wijeyratne on March 22, where the Treasury Secretary and the GM insisted on signing a fresh document to purchase 108 mega watts of power from AES

The meeting was held following weeks of speculation and allgations that AES had initiated foul play at the Kelanitissa power plant in order to make an insurance claim. Furious engineers at the CEB in writing to then Power and Energy Minister Karu Jayasuriya in a letter that was also copied to Charitha Ratwatte in his capacity as Chairman of the Energy Supply Committee argued that the CEB had committed a major faux pas by unconditionally accepting a non Sri Lanka 'force majeure' claim made by AES thereby excusing the company from fulfilling its contractual agreement with the CEB. AES, the engineers charge had also rejected all requests by the CEB to inspect the damaged plant.

Mystery Fire

The controversy erupted when a fire broke out at the combined cycle power plant run by AES at Kelanitissa. The CEB engineers union have charged that the cause of the fire to date remains unknown as they were prevented from inspecting the damage to ascertain what had started the fire in the first place.

The engineers charge that even before waiting for an investigation to be completed by insurers the former management at the CEB including the Energy Supply Committee accepted a claim made by AES of non Sri Lanka force majeure.

Authoritative forces at the CEB now charge that Charitha Ratwatte fearful of possible power cuts during the run-up to the April 2 general election together with D. C. Wijeyratne signed a fresh power purchasing agreement with AES to buy a total of 108 mega watts of power. This was done despite the fact the existing agreement with AES demands that AES in its second phase make allowances for the generation of additional power at existing tariff rates.

It is now being surmised that instead of abiding by the clauses in the existing agreement AES struck a more lucrative business deal with the former government with a different tariff rating, hence the need for a separate agreement.

Senior sources at the CEB confided that at the meeting on March 22, Ratwatte when he walked into the room had defended his position to sign a fresh agreement with AES saying, "So what gentlemen, we need the power."

Former Secretary to the Power and Energy Ministry Mrs. Jegarajasingham had replied, "since it is a contractual issue let us listen to Milinda Gunatilleke." Gunatilleke was also present at the meeting representing the Attorney General.

A document outlining the offer was on the table at this meeting but no-one was given a copy or an opportunity to peruse the document. Milinda Gunatilleke had then made the point, "we don't want any other document because all this is already captured in the present power purchase agreement with AES."

Ratwatte, together with Wijeyratne and former CEB Chairman M.M. Zubair had then walked out of the room accompanied by Mrs. Jegarajasingham.

Approximately 20 minutes later only Mrs. Jegarajasingham returned to tell the other CEB officials and Gunatilleke that "they have signed the agreement."

Gunatilleke had immediately written down a record of everything that had taken place at this meeting including his point of view on the whole matter to Jayasiri Karunanayake, the chief executive officer of the Energy Supply Committee.

Later that day, it was confirmed that indeed Ratwatte together with D. C. Wijeyratne and David Warden had signed a fresh document. The matter however came to a head once more when the question of payments to AES arose and authorities at the CEB refused on principle to make the payment insisting legal clearance on the document was vital.

Cabinet in the dark

Ratwatte and D. C. Wijeyratne signed this agreement without having secured any cabinet approval. Neither was the board of directors at the CEB consulted nor any legal clearance obtained.

Angry engineers at the CEB charge that AES made a claim to have a separate agreement with the then UNF government to operate the gas turbine plant until the damaged steam turbine is restored. This, they say, is quite unnecessary as the present agreement addresses how to deal with such availability of the power plant.

AES had also made public claims that the 108 mega watt plant was available for operation, while making it unavailable under the current power purchase agreement between them and the CEB. Senior CEB officers assert that AES is not justified in making its plant purposely non available as a means to compel the government to strike another deal with unjustified benefits to AES only. On the other hand, they maintain, the CEB is required to pay for AES's availability even when the plant is not required to the CEB.

The act by the former Chairman M. M. Zubair and former General Manager, D. C. Wijeyratne they reiterated, has denied the CEB any rights it has under the Power Purchase Agreement. This is very pertinent in the backdrop of the recent operational history of the plant where many oil leaks and fire alarms were the order of the day. The engineers have pointed out that if the fire was due to the negligence of AES, the CEB will not incur any liability and will have no means to liquidate damages.

But with the acceptance of the claim of non Sri Lanka force majeure by the CEB, it will now be called upon to bear the cost of the extended term of the agreement and no means will be available to CEB to recover damages caused by AES to the power system. The acceptance of this by the CEB has in effect excused the AES from fulfilling its contractual pledges.

The engineers add they believe that AES was holding the government to ransom during this crucial time with the help of some unscrupulous elements in the former UNF government and former management at the CEB.

"By asceding to their demands, the stage has now been set for independent power producers to make the most of a crisis or how to come out of a tight situation by at least setting fire to one's own plant," they charged.

Other senior officials reiterated the crying need for every government irrespective of party colours to re-evaluate its policy decisions to leave large capacity thermal generation plants entirely in the hands of the private sector in the light of their acquiring the capability to hold the nation to ransom.

President, Engineers Union, Ananda Piyatilleke is of the opinion, "these situations have been created as a result of the power shortage in the country and the fact that over the past 10 to 15 years planned power projects have not materialised. Irrespective of which government is in office they have all failed to allow professionals to handle this situation," he said, adding "this is the root cause of all these ills."

Piyatilleke further said that one of the main contributory factors is the non implementation of the coal power plant at Norochcholai and the Upper Kotmale hydro power project.

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