Suspension of costly private power purchase, Covid give relief to CEB

Minister Dullas Alahapperuma.

The suspension of power purchases from three Independent Power Producers (IPPs), namely Ace Power Matara (20 MW), Ace Power Embilipitiya (100 MW) and Asia Power Sapugaskanda (50 MW) had contributed to the improvement of the financial situation at the CEB, said the authoritative sources.

Sources said that the CEB had suspended the agreements on 01 March pending re-negotiation with IPPs as it was felt the annual standing charge alone for three power stations amounted to Rs. 2.8 bn. was unfair by the procurer.

The decision had been taken at the behest of the then Power Minister Dullas Alahapperuma, who relentlessly pushed for measures required to ease the burden on the cash-strapped state enterprise, sources said, adding that the increase in hydropower output that automatically lessened the country’s dependence on private diesel plants and a significant drop in the demand for electricity due to the crisis caused by the raging Covid-19 epidemic had eased pressure on the CEB.

The electricity regulator (PUCSL) is having negotiations with IPPs to finalise approval of a four-year extension of contracts.

Sources said that during Alahapperuma’s tenure as the Power Minister, the government had taken the furnace-oil fueled power plants off the national grid, thereby greatly reducing toxic fumes emitted by them.

The three IPPs had strongly pushed for extensions on the basis that being furnace-oil-fired, they were much cheaper for the CEB than auto-diesel-powered plants.

The PUCSL didn’t respond to a query regarding the status of CEB’s agreements with Asia Power and ACE Power Embilipitiya as well as Matara? The PUCSL also didn’t explain its role in the discussions with the IPPs.

Gamini Lokuge, replaced Alahapperuma as the Power Minister, in a mini-cabinet re-shuffle. Alahapperuma received the media portfolio. Sources said that in spite of the ministerial change, the Power Ministry was expected to continue with Alahapperuma’s initiatives to curb waste, corruption and other irregularities.

Sources said that two days after Alahapperuma’s exit, the ministry had launched a major building project at Narahenpita to bring all its offices located at different places under one roof. Sources said that the government spent staggering Rs 300 mn. annually on renting 37 buildings in Colombo and its suburbs.

Power Ministry spokesperson Sulakshana Jayawardana was not immediately available for comment.

Sources said that though the government had suspended major construction projects due to severe financial constraints, the then power minister Alahapperuma had received the go ahead from Cabinet for the Narahenpita project after he had explained the long-term benefits of it.

Minister Alahapperuma was shifted from the Power ministry to the Media portfolio the day before he was to complete one-year there. Several weeks before the Cabinet reshuffle, CEB Chairman Eng. Vijitha Herath was replaced by M. M. C. Ferdinando. Ferdinando served as the Secretary to the Ministry of Power and Energy during President Mahinda Rajapaksa’s tenure.

Major changes took place at the Power ministry in spite of significant improvements at the ministry with the CEB making a profit in the second quarter since 2010.