By E. Carlo Fernando
With regard to power development, what took place during the past several years is not the development of any suitable major power plant but only the displays of their muscles by the various lobbies. When studies were carried out to set up a coal power plant, the most widely used power source in the developed world, to follow the Sri Lankan limited hydro-power potential, surprisingly a nuclear lobby arose promoting nuclear power instead. Later that lobby in a gentlemen like manner admitted its fault, and the lobby died a natural death.

Then a strong diesel lobby took its place. This succeeded in pushing the coal power plant to the distant future of 2007, making the nation suffer high electricity costs and power shortages. We will see these power shortages in an unprecedented manner dangerously hovering over the horizon. All throughout however the foreign funded environmentalists lobby has dominated the landscape and has been very active opposing every excellent development project.

The latest to emerge is a LNG lobby, with the blessings of the Ministry of Power, misguided by the learned. However the article titled ‘The truth about the coal plant; a reply to LNG lobby’ by W. J. L. S. Fernando, Deputy General Manager, and Ajitha Ranasinghe Electrical Engineer, both in the Generation Planning of CEB is really enlightening to everyone, and reveals how ill fitting LNG is for power generation in Sri Lanka. This was in reply to the article ‘Coal Power Plant will not avert a power crisis in 2004’ by Dr. Janaka Ratnasiri in The Island of 12, 13, and 14 April 2001, keenly promoting LNG in Sri Lanka.

As pointed out by CEB, natural gas is produced in oil wells and also in natural gas fields. In practice gas is transported in pipelines in some cases hundreds of miles long. In promoting power generation with gas transported from the gas fields in the Middle East, the Enron/Dabhol Power Project in Maharashtra state of India is often referred to.

When considering LNG for power generation, it is to be noted that electricity costs have increased in this Enron project four fold - Indian Rupees 1.8 per unit agreed upon in 1995 to Rs. 7.00. As a result of these high costs a dispute between the State Government and Enron has arisen with a threat of termination of Contract. The Enron project is one of the largest private sector undertakings in India. If the latest reports are correct the contract is cancelled and the dispute is taken to courts. Here the plan was to import gas from Iran through some 1000 mile long submersible pipeline laid from Iran to India. Can we resort to a project of this magnitude?

Instead of transporting gas through pipelines, a few countries like Japan, Korea and Taiwan get gas transported in liquid form- liquid natural gas - LNG. The economies of these countries and that of Sri Lanka differ so widely that they are unsuitable for even a comparison. Japan is the second largest economic power in the World. Taiwan, just half the size of Sri Lanka, has an installed generation capacity of about 20,000 MW. Sri Lanka has only about 1500 MW with a poor energy capacity. In this article it is not possible to deal with all the economic issues involved in the LNG imports into these countries. Alaska has large resources of gas. But plans to transport gas from Alaska to California have not yet materialized for a very long time.

The following statements have been made by the CEB planners in their reply regarding the liquification of gas for transport just to show the complexity and the extreme high costs involved in the process.

"For natural gas to become a liquid it has to be chilled and maintained at 162 degrees centigrade below freezing point. Special ships are required for LNG transport. Special handling equipment for LNG unloading and special tanks for LNG storage."

‘Since these special jetties, unloading arms, and storage tanks require a huge up-front infrastructure costs, economy of scale becomes a pivotal factor. So unless there is a substantial demand the economics does not work out in favour of LNG’. In addition maintenance costs of all these are extremely high.

The following paragraph is quoted from the report of the recent Sri Lankan Study conducted by the World Bank experts. ‘It is very unlikely that LNG would be competitive with coal. Even at $ 2.5 per million BTU, the life cycle penalty for a 300 MW power plant (at 75% plant factor) is likely to be in the range of $ 100 - 150 million for a world oil price range of $ 15 - 20 per barrel’

What this means is that if we select LNG for the first 300 MW and reject coal, the country will have to pay at least $ 100 to $ 150 million extra even under the most favourable LNG price. LNG price is strongly linked to oil prices. The price of oil is now hovering around $ 30 per barrel.

In Indonesia on March 6, rebel threats forced American oil giant ‘Exxon Mobil’ to close down its vast natural gas fields which sent shock waves through the Indonesian economy, and prompted several other gas related companies to halt operations as well. Thousands of workers have lost their jobs and one Japanese company has already decided to turn to Malaysia for LNG (Sunday Island, May 13, 2001).

The above illustrate how unpredictable the LNG supplies are. Middle East supplies are no better with volatile oil price hikes. We already taste the bitter pill with the oil-fuelled power plants. With LNG it will be a case of leaping from the frying pan into the fire.

The CEB planners are perfectly correct in stressing the point that coal is the only practical reliable safe power source available to Sri Lanka to progress in the Industrialization of the nation. But this is not to be at Norachcholai, mainly due to security concerns with regard to the 4 k.m. long coal unloading jetty, the lifeline of the power plant, in the Kalpitiya Sea exposed to terrorist’s attacks and due to certain vital civil engineering problems. With a destruction of this jetty, which is a simple matter, the power plant will stand majestic without coal. Similarly a LNG plant will stand without LNG.

If there is any love for the well being of Sri Lanka, let the CEB take up Mawella in the south, the well-proven site for coal power. Better late than never.