Experts offer plan to solve CEB’s problems

A team of national experts on the power and energy sector have recommended to the government that reform in the field be depoliticised, that tariffs be introduced which are economically viable as much as they are socially acceptable and that the current policy of exclusive dependence on private investment for thermal power generation be amended.

They also suggest that the setting up of an independent energy regulator which has powers, among other things, to review and approve all energy investment plans and that a plan be developed urgently to solve the Ceylon Electricity Board’s (CEB) present financial crisis within two years.

The eleven experts are part of a working group set up by the National Development Council, headed by Lakshman Jayakody, a former minister and deputy NDC chairman. The suggestions of the team, which includes members from the fields of energy, electrical engineering, renewable energy and energy economics, has been identified as policy and strategy recommendations pertaining to the power and energy sector, focusing on demand management and supply development aspects.

Their final report was submitted to President Chandrika Kumaratunga and relevant agencies for consideration and necessary action. The presidential secretariat has been requested to submit a report to cabinet.

"The mistake of relying exclusively on private power should not be repeated," the experts stress in their report. "The CEB should offer sufficient encouragement for self-generation by industries."

With regards to power generation policy, the experts have called for a change in the exclusive dependence on private investment for thermal power generation and suggested a policy which envisages the generation of electricity at the lowest socio-economic cost.

Meanwhile, tariffs should be authorised which are economically viable as much as they are socially acceptable. The CEB, the state power utility, has often complained that they are sustaining huge loses due to low, unaffordable tariffs.

The experts suggest that if ever there is a "justifiable" call for tariffs lower than viable tariffs, a matching grant be given to the utility. They also recommend that no private power be contracted at costs above the best alternative available to the CEB.

Referring to policy on power sector restructuring, the NDC says that the power sector reform process be stopped immediately until an objective and widely participated stakeholder review justifies its agenda, direction and conformity to set objectives.

"Reform process should be transparent and aim at effective resource utilisation by agencies, their decision-making devoid of political interference and establishing energy markets," their report states. "Creating multiple monopolies, increasing cost of energy delivery to consumers and cost of transaction/diseconomies of scale should be avoided."

The experts have also asked the government to establish a national energy commission with pre-defined membership to be responsible and accountable for efficient and independent running of state agencies in the sector.

The government has been advised to formulate a strong and effective energy demand management and conservation policy; to urgently overcome the electricity meter shortage by clearing the obstacles to purchasing meters (the report does not specify the obstacles); to re-assess and reduce system losses to optimum levels within five years and to replace incandescent bulbs with CFLs where such is nationally economical.

Referring to actual power generation projects, the experts call on the government to immediately decide to commence work on the Norochcholai coal-fired power plant, to have the first 300 megawatts not later than January 2006 to avoid a worse power crisis than is being experienced at present. The report also says the Kerawalapitiya combined-cycle plant be built as planned to avoid a forecast crisis by 2004.

"Immediately proceed with feasibility studies on a second coal power plant to become operational by 2010," it advises.

The working group consisted Dr. Saman Kelegama of the Institute of Policy Studies, Dr. Ray Wijewardena, Dr. Tilak Siyambalapitiya, energy consultant, Dr. Bandula Perera, former chairman of the Ceylon National Chamber of Industries, Chandra Jayaratne, chairman of the Ceylon Chamber of Commerce, Bandula Tilaksena, deputy general manager of the CEB, P.G Joseph, director at the ministry of science and technology, Menike Chandrasiri, director at the ministry of industrial development and Dr. T.L. Gunaruwan, senior lecturer at the university of Colombo and a NDC advisor.