Govt. to buy 100MW thermal power from private sector

The Sri Lankan government has entered into two emergency power deals with the private sector at a hefty cost to the tax payer, as the inadequate rainfall in main catchment areas has reduced the country’s hydro-power generating capacity. 

The Ceylon Electricity Board (CEB), the sole power distributor in the country, has entered into emergency power supply agreements with the private sector to purchase 100 megawatt (MW) of thermal power, to ensure uninterrupted power supply in the next six months.

To this end, the Cabinet of Ministers have decided to award tenders to Aggreko International Projects Limited and a Hayleys group energy producer to supply emergency thermal power to the national grid.

According to the cabinet decision announced last week, the government will purchase 56 MW from Aggreko International Projects Limited at the rate of Rs.28.063 per hour and 44 MW from Heyleys Avenutra (Pvt) Ltd at the rate of Rs.28.367 per hour.

Though it is often said the government will purchase energy from an independent power producer (IPP) for a specific time period, most of the times these agreements are extended as the CEB lacks generating capacity. 

At present, no major power plant is being built and the only one which was widely talked about is 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 voiced out by lobby groups. 

The only coal power plant which is now in operation is the Chinese-funded Norochcholai coal power plant, which accounts for 45 percent to the national grid. 
According to the latest generation data by the CEB, hydro generates only 15.34 percent of the power while expensive thermal power generates 38.44 percent.
Out of the total thermal power generation, the CEB purchases 16.58 percent from IPPs at extremely higher prices compared to thermal power generated by CEB’s thermal power plants.  

When the country faced back-to-back blackouts in late 2015 and early 2016, the CEB was pushed to renew the power purchase agreement it had with Ace Power Embilipitiya (Pvt) Ltd., a 100MW thermal power plant owned by the Aitken Spence group. 

Although the agreement, which originally lapsed in 2015, was renewed in April 2016 for a period of one year, it has been extended further.