Apprehension expressed over draft Electricity Bill’s impact on power sector dynamics

• Power sector stakeholders say new Electricity Act could pave way for monopolies, weaken power grid
• While agreeing on need for urgent power sector reforms, they call for genuine consultation and stakeholder engagement

By Nishal Fernando 
The electricity industry stakeholders continue to raise concerns about certain elements in the draft Electricity Bill, asserting it could potentially pave the way for creation of monopolies in power generation and energy storage while weakening the country’s power grid. 

Though the sections of the bill mention competitiveness, Minel Lanka (Pvt.) Limited Co-Founder and Nexgen Lanka Director Pubudu Niroshan asserted that the proposed separation of the Ceylon Electricity Board (CEB) into companies would make monopolies in coal, LNG (future) power generation and also in energy storage systems. 
“Privatising the CEB transmission assets up to 50 percent, then allowing separate private-owned transmission lines and substations in strategic locations, will make our power network weak,” he said, addressing a forum on ‘Reforms for a Sustainable Power Sector for the Next Generation’, held in Colombo recently. The event was co-hosted by the Electrical Engineering Society of the University of Moratuwa (EESoc) and IEEE Power and Energy Society (IEEE PES) Sri Lanka Chapter.  While the forum garnered a unanimous agreement on the necessity for power sector reforms, the participants emphasised the importance of genuine consultation and stakeholder engagement. The attendees identified that the revision of the gazetted act is crucial, ensuring its effectiveness in achieving lasting positive outcomes.  “If the proposed model is towards a competitive generation market, wholesale market and then to retail market, the key elements are the independent system operator, competitive power generation and strong backbone of transmission network,” Niroshan added.  According to him, the proposed system operator, as outlined in the draft, is not fully independent. As it would be controlled by the minister, he cautioned there is the possibility of the minister in charge obtaining arbitrary/veto power on planning, procurement, tariff and all electrical sector decisions. 
Niroshan shared that the industry shares a common view that the proposed act has failed to bring transparency in the power generation process.   Therefore, the proposed act should be equipped with measures that would strictly enforce competitive bidding for procurement of future power generation, not leaving room for monopolies and mergers of generation licensees operating large-scale coal and LNG power plants when the formation of new generation companies with private ownership. 
In terms of transmission network service providers, he noted that there’s no business model proposed or identified in privatising transmission assets in the proposed act.  Niroshan stressed the need to carry out a detailed techno-financial-commercial audit and asset valuation.
“It is worth keeping the existing transmission assets entirely with the GoSL ownership, allowing public-private ownerships and investment models with power wheeling and interconnection facilities in new transmission developments (lines/substations) where necessary,” Niroshan suggested. 
Further, he warned that establishing multiple standalone companies with government ownership could result in a loss of control and governance in the electricity sector. Accordingly, the industry stakeholders recommend the establishment of a government-owned public company, holding the shares currently held by the transmission, distribution and other electricity sector companies.