Government extends agreement with Ace Power for three more years to avert power crisis

• Two back-to-back blackouts push govt. to renew agreement
• Govt. says temporary programme to get electricity needed until 2020

The government last week decided to extend the purchasing of the expensive thermal power as the country had four seasons of back-to-back dry spells, which exhausted reservoirs and the crucial catchment areas used for generating cheap energy.

The Cabinet of Ministers last week approved a proposal by Power Minister Ranjith Siyambalapitiya, as recommended by Cabinet Appointed Negotiation Committee to extend the Power Purchase Agreement (PPA) with Ace Power for three more years.

The PPA with Ace Power Embilipitiya (Pvt) Limited, which is a fully owned subsidiary of Aitken Spence group that owns a 100 megawatts thermal power plant, initially lapsed in 2015.

But the government had to rush to renew the agreement for a one more year in April, 2016, when the country ran into power crisis after two back-to-back blackouts in late 2015 and early 2016.

The Ceylon Electricity Board (CEB), the State-owned energy generator and distributor renewed the agreement with Ace Power Embilipitiya amid questions by the Public Utilities Commission for its rationale to buy high cost thermal power as contingency.

But the government said: “Since the power plants constructed presently, are due to be completed during the period between 2019 and 2022, the need has arisen to make a temporary programme to get electricity until the year 2020”.

With the extension of the agreement the government will purchase thermal power from power plants belonging to Ace Power in Matara, Embilipitiya and Sapugaskanda.

The announcement for the renewal of Ace Power came just a few weeks after the government announced that it had entered into two emergency power deals with two private sector parties to purchase another 100 megawatts of power.

In early March this year, the Cabinet awarded two tenders to Aggreko International Projects Limited and a Hayleys group energy producer when they called for international tenders to purchase power for 6 months.  The government is searching for short-term fixes for a looming energy crisis with the rising demand for energy and increasing crude prices in the global market.

No major power-plant is being built and the only one which was widely talked about—the coal-fired power plant in Sampur, a public-private partnership between India and CEB has been a non-starter due to lack of clarity from both sides as well as environmental concerns from lobby groups.

The only coal power plant, which is now in operation, is the Chinese-funded Norochcholai coal power plant, which adds 45 percent of the total energy need to the national grid.

The infighting within the government, mixing up of priorities and lack of will more than the lack of finances act as impediments for the speedy action on most crucial national infrastructure projects under the current coalition regime.