Sri Lanka’s power regulator, Public Utility Commission of Sri Lanka (PUCSL) cautions that the delays in implementing the long term power projects in the next three years could result in financial losses over Rs. 50 billion and a power crisis that could seriously affect the national economy.
In a report released recently and handed over to the power supplier Ceylon Electricity Board (CEB) and to the Ministry of Power and Renewable Energy, the regulator said the total expected financial loss due to implementation delays of 2018-2020 plant schedule in the long term generation expansion plan is Rs. 50.62 Billion.
The report “Financial Impact of Delay in Implementation of Power Plants Generation Expansion Plan 2018-2037” says the financial loss due to any further delay beyond what is forecasted will cost Rs. 3.43 billion for each month.
The Commission warned that these financial loss or cost overrun figures are merely the primary outcomes of implementation delays. “Cumulative effect of implementation delays over next three year period can very likely trigger a power crisis that can seriously affect the national economy,” it said.
The PUCSL noted that the Implementation issues pertaining to power plants identified in Least Cost Long term Generation Expansion Plans (LCLTGEP) have been prevalent over the last 20 years and many of the identified power plants were delayed and some were not implemented at all.
“This has resulted in serious problems that have plagued the electricity sector over the past decade and seriously hampered its progress,” the regulator said.
Cost overruns and load shedding are the most prominent and direct consequences while the impact of these two factors on the economy of Sri Lanka and its competitiveness are secondary consequences, according to the PUCSL.
The Public Utilities Commission said it been continuously monitoring the progress of the CEB in implementing the approved plan and has observed delays in the procurement process of power plants expected to be commissioned by 2020.
Based on the information obtained from CEB the Commission expects delays in implementation of the power plants that had been approved to be implemented by 2020.
The Commission noted that even though the Kerawalapitiya 300 MW Natural Gas fired power plant is expected to be commissioned in January 2019 according to the Least Cost Long Term Generation Expansion Plan (LCLTGEP), as per the CEB implementation plan it will be commissioned only in June 2020.
Because of this commissioning delay, the expensive thermal plants which are already connected to the system has to be dispatched, and the losses due to delaying the plant for 18 months could amount to Rs. 28 billion, the PUCSL points out.
Similarly a delay in completing the Uma Oya project for one year could amount to a loss of Rs. 6.4 billion.
Given the scale of financial losses, that can be expected, and prospective impact this is going to have on the national economy, the Commission has recommended expediting the procurement of the listed power plants in accordance with the approved schedule, as a matter of national importance.
However, the Commission said it does not recommend purchasing emergency power in the future to meet any capacity or energy deficit due to implementation delays of these upcoming power plants and is of the view that such costs should not be passed through to the consumers through tariffs.
The PUCSL suggested the government to consider a change in industry structure if the generation plan implementation cannot be efficiently carried out within the current structure