‘Fuel industry has to be regulated to win public’s trust’ - PUCSL Chairman Janaka Ratnayake -

• Apart from water we have sufficient stocks of coal and renewable energy in hand
• Since we don’t use fuel for electricity generation these days there is no extra expense for the CEB at present

From announcing the countrywide hourly power cuts to increasing the electricity tariffs in places of worship, from monitoring the purchasing of coal and fuel shipments through tender procedures to observing the payment of demurrages, and from checking the standards of the fuel sold at filling stations to involve in filing legal action against the political VIPs for evading their electricity bills amounting to hundreds of thousand rupees, the Public Utilities Commission of Sri Lanka (PUCSL) makes the headlines every now and then owing to the controversial yet crucial role it has to play in the country.  

Established under the Public Utilities Commission of Sri Lanka Act No.35 of 2002, the PUCSL was quite often seen engaged in a tug-of-war between its stakeholders, the Ceylon Electricity Board (CEB) and the Ministry of Power and Energy in executing duties listed under its mandate.  In an exclusive interview with the Daily Mirror PUCSL Chairman Janaka Ratnayake shed light on many areas that are being debated at present. 
Excerpts 

Q   What is the role of the PUCSL?

The PUCSL is the economic, technical and safety regulator of the electricity industry in Sri Lanka. Established under the Public Utilities Commission of Sri Lanka Act No.35 of 2002 the body also acts as the designated regulator for petroleum and water services industries. Functioning as an independent regulatory body, our objectives are to promote the interests of all consumers, to ensure that price controlling entities acting efficiently, to promote safety and service quality in public utilities industries and to create an environment for all inhabitants and contributors to have access to essential infrastructure and utility services in the most economical manner. 

Q   These days the country is experiencing a heavy downpour, which as a result could easily generate sufficient hydro-power. Any plans of reducing the ongoing power cut schedules?

Yes. We had generated 38 million units of electricity on Friday. Out of that 65% of electricity has been generated from water. And we have used only a small amount of fuel to generate power out of the total production. This means that we have received sufficient water to create up to about 36 million units from the total power generation. Because of the rain we have been able to reduce the amount of fuel we burn for the daily power generation these days. Apart from water we have sufficient stocks of coal and renewable energy in hand. Also, the demand for electricity has also significantly dropped these days owing to the prevailing cool weather and the people tend to turn off their air conditioners and fans. Therefore, although we say that a daily power cut of two hours and twenty minutes is in place, we have not enforced it for several days since last week and will not be able to enforce it for few more days. If the demand for power goes up significantly in certain areas a short power cut could be experienced only during the peak hours. 

We had generated 38 million units of electricity on Friday. Out of that 65% of electricity has been generated from water. And we have used only a small amount of fuel to generate power out of the total production. This means that we have received sufficient water to create up to about 36 million units from the total power generation

Q   You said there is ample water and coal resources at present to generate power without using fuel. How this will affect the power generation in the near future?

Since there is ample rain these days we didn’t have to burn fuel oil to generate power in the last three weeks. Also, another shipment of coal is expected on the 25th. We usually use fuel oil to generate power when a Norochcholai plant breaks down. These days we generate 70% of the electricity requirement from hydropower and another 30% from the coal. As a result a very minimal amount of fuel oil is used for power generation. As you may remember another generator in Norochcholai plant broke down about a week ago and for about six days we had to use fuel oil until its restoration. Therefore, if this rainy weather continues and if ample water is received for the hydropower generation, we can shut down one of the three generators in Norochcholai coal power plant for necessary maintenance in the beginning of the next month. 

Q   Electricity prices usually depend on the fluctuation of the fuel prices in the world market. If the oil prices in the world market go down do we still need to purchase electricity from the private sector at a higher cost?  

Well not really. There are several ways of how we produce electricity in Sri Lanka, which is through hydropower, coal and other renewable energy, and also with fuel oil. When the sufficient rain water is not received and if one of the generators of the Norochcholai power plant breaks down then we have to depend on fuel oil. But for the last three weeks we haven’t used diesel for power generation. Since we don’t use fuel for electricity generation these days there is no extra expense for the CEB at present. The cost calculation for the electricity generation is done according to a system considering the amount of water resources and coal we have in hand and how much fuel we have to use depending on the additional requirement of electricity. When there is plenty of rain, the hydropower production would be 70% of the total requirement and the rest is produced from the coal. And if really necessary the fuel will be used. Therefore, the price fluctuation of fuel in the world market has no effect on the local production of electricity. 

Q   There were allegations recently that the CEB was purchasing electricity from the private sector at higher rates?

We have the authority to grant permission to the CEB to purchase electricity from the private sector. Since 2016 up to 2020, the CEB and the political authority tried to make emergency purchasing of electricity from the private sector for about 16 times. But we never granted permission, and by doing so we have managed to save about Rs.500 billion during those five years. As I mentioned earlier when the second generator of the Norochcholai plant broke down, we authorized the emergency purchasing for six days. Likewise, except for a justifiable reason we never allow the CEB to purchase power for a higher rate. 

Although we say that a daily power cut of two hours and twenty minutes is in place, we have not enforced it for several days since last week and will not be able to enforce it for few more days. If the demand for power goes up significantly in certain areas a short power cut could be experienced only during the peak hours

Q   The Ceylon Petroleum Corporation recently purchased a substandard crude oil shipment for refining purposes. This issue was even brought up by the Central Environment Authority. What action have you taken regarding this?

The issue came up when the CPC bought this oil shipment for refining purposes to extract petrol, diesel, furnace oil, naphtha and kerosene. There was a social dialog about the quality of these products. However, the problem persisted when the extracted furnace oil contained a higher amount of sulfur and we could not approve it to be distributed to power houses for electricity generation. To reduce the higher amount of sulfur in the furnace oil another chemical has to be mixed with it at an additional expense. A litre of furnace oil that we purchase for Rs.320 had to be purchased for Rs.380 with this modification and we intervened to stop the transfer of that burden on the public. But we hope in the future that the CPC would be more careful in purchasing quality fuels to avoid unnecessary expenses. 

Q   There were serious allegations made in the recent past over the purchasing of fuel and coal shipments and whether the authorities had followed the proper tender procedure. What do you have to say?

In Sri Lanka there are many allegations involving various purchases where the correct tender procedure hasn’t been followed. It is the responsibility of the relevant authority to make sure that the correct tender procedure is followed when a purchasing is made. However, the real problem in the fuel purchasing sector is, more than following a clean tender procedure, to make sure there are sufficient stocks purchased without leaving room for any shortages. We remember how 12 hour power cuts paved way for an aragalaya in the country five months back. Therefore, the government and the competent authorities should be mindful in purchasing fuel and coal sans delay and maintain sufficient stocks to avoid difficult situations. 

Q   Many allege that we purchase fuel for higher prices, and complain that though Sri Lanka doesn’t have enough money to purchase fuel, the tankers arrive and dock outside the harbour. Also, the authorities pay demurrages for days despite being unable to clear the shipments. Why is this happening? 

We know that the Sapugaskanda oil refinery was shutdown two weeks ago as it does not possess enough crude oil stocks to continue operations. Also, we heard that a crude oil shipment has been anchored in the outer harbour for the past twenty days awaiting clearance. The authorities are saying that there aren’t sufficient funds to clear this load. Then I heard the authorities saying that they have not even paid for the last two crude oil shipments. So if they haven’t paid for the last two shipments, then how come a third shipment waiting for days demanding demurrages and not unloading? These are very conflicting and confusing statements. This is why the public is losing faith in the political authority, as the latter is issuing different statements on different times. This industry has to be regulated, thus doing so we could win the trust of the public. 

We have the authority to grant permission to the CEB to purchase electricity from the private sector. Since 2016 up to 2020, the CEB and the political authority tried to make emergency purchasing of electricity from the private sector for about 16 times. But we never granted permission, and by doing so we have managed to save about Rs.500 billion during those five years

Q   The electricity tariffs have been increased recently. Does the CEB still run at a loss? 

No, I don’t say that. There were reports in the recent past that the CEB was incurring a loss of billions of rupees. If we don’t use fuel oil for electricity generation in the coming couple of months then there will be no loss for the CEB. We have also increased the tariffs by 70% to recover this loss. However, to recover the loss which had been there before the tariffs were increased the Treasury has paid a sum of Rs.80 billion to the CEB by now. Therefore, I don’t admit that there will be a loss in the coming months except for the fact that we need to continue to buy coal, which requires about Rs.80 to 100 billion per month. The tariffs had been increased to meet this requirement and for the CEB to generate its own funds for the purchasing of coal. 

Q   You have decided to amend the increased tariffs for the places of worship. How does this work? 

Many religious leaders informed us that due to the amended tariff structure from August 10th they were getting a tariff increase of 75%, which is an exorbitant amount to pay. The tariffs for the religious places, which had been untouched for a long time, had to be amended as most of the electricity consumption was found to be due to public activities than its personal usage. In the extraordinary gazette issued in 2008 defines a place of worship as a residence of the clergy thus the usage of utilities like electricity should be for their personal use. However, it has been noticed that many of these places are involved in various public activities like letting the premises to hold tuition classes, for matrimonial purposes and etc. Therefore, it is no wonder that these places get exorbitant electricity bills. Considering all these requests we have decided to grant a concessionary rate for the tariffs up to the first 180 units, which could be considered as for the regular personal usage of electricity of any religious place and apply the earlier amended tariff rates if the usage increases 180 units. With our instructions the Lanka Electricity Company (Pvt) Ltd. (LECO) has revised their charges for the places of worship from the coming month and I hope the Ceylon Electricity Board (CEB) too will amend their tariff rates accordingly. 

Q   There are reports that a number of politicians have dodged paying electricity bills, which had accumulated up to millions of rupees. What action have you taken?

The CEB has only one set of consumers. It doesn’t matter whether they are politicians or businessmen or VIPs, if they are consuming electricity then they should pay their bills. As you know about a week ago the electricity supply of the Sri Lanka Rupavahini Corporation (SLRC) was disconnected as they had not paid the bill. This was something, which shouldn’t have happened. But when I inquired into the matter I learnt that they have been duly notified regarding this situation and even discussions had taken place between the CEB and the superiors of the SLRC. But the action had to be taken as no remedial measures have been taken by the consumer. Therefore, we have decided to execute the law regardless of one’s rank. However, we have instructed the CEB to maintain lenience on institutions with national interest. ‘Rewulai kendai dekama bera ganna oni nisa’ (giggles). 

The authorities are saying that there aren’t sufficient funds to clear this load. Then I heard the authorities saying that they have not even paid for the last two crude oil shipments. So if they haven’t paid for the last two shipments, then how come a third shipment waiting for days demanding demurrages and not unloading? These are very conflicting and confusing statements. This is why the public is losing faith in the political authority

Q   So what action have you taken against the Political VIPs so far? Names of certain powerful Ministers and MPs were mentioned in Parliament for evading their bills and what can you say about that? 

Names of certain individuals who have dodged paying their bills had been mentioned through the media, social media and perhaps in the Parliament. As a commission we don’t take action against any X, Y or Z. But if we receive any written complaints then we can act on these cases. It is the CEB who is responsible in taking action against any VIP or politician who has dodged pay their bills. And it is the CEB who has to inform us if any person or institution is evading their bills to take legal action or to involve in as commission. But so far we have not received a single complaint regarding any political VIP who has evaded paying their tariffs, thus we are unable to take action. Even if there’s a petrol station that fills fuel fraudulently there should be a complaint for us to act on. That’s how a commission’s system works. 

Q   Speaking of the filling stations with fraudulent acts you have suspended the operations of several leading petrol sheds recently. How many filling stations in the country have been suspended so far?

We have detected about 15 filling stations which had pumped fuel fraudulently; both in Colombo and outstations. Since the first detection that had a wide publicity through the media we are getting public complaints every day about suspicious filling stations. If a shed is found involved in fraudulent acts after an investigation we will definitely take action to suspend its operations or particular pumps until the matter is rectified and a punishment fine is paid. Usually these places pump fuel less than about Rs.5 per a litre. Just calculate the amount by 20 litres and with the number of vehicles that arrive at a shed per day and multiply that figure by 365 days, you will be surprised to see the amount of money they have defrauded to the public. Therefore, we encourage the public to make us aware of these fraudsters to act on them.