High-powered committee confident its recommendations beneficial to CEB, public

Power purchase agreements:



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Dr. Nandalal Weerasinghe

By Ifham Nizam


New agreements and extended agreements for Independent Power Producers (IPPs) should benefit the Ceylon Electricity Board (CEB) and the public unlike in the past, said Central Bank Deputy Governor Dr. Nandalal Weerasinghe, who heads the high powered five-member committee.


Dr. Weerasinghe told The Island yesterday that new proposals and recommendations were being studied.


Meanwhile, CEB Engineers told The Island that committee had decided against extending contracts for 100MW AES Embilipitiya, 50MW Colombo Power and 100MW Puttalam Heladanvi.


Engineers said that CEB would lose USD 453million minus 250MW. "By not extending the contract, we would have to purchase power at a much higher rate," he added. By April all these three contracts would expire, according to sources.


Dr. Weerasinghe said the committee had spelt out its stance to the IPPs and if they were agreeable to the recommendations there wouldn’t be further delays. Stating that discussions were still on, he declined to reveal any details about the outcome of the first meeting as regards three former agreements with IPPs. He only expressed confidence that the CEB would get a fair deal.


Going by Treasury estimates, the CEB could have saved some Rs. 50 billion by now if it had implemented the 2007 Cabinet decision to renegotiate the IPP contracts, CEB sources said.


The committee was appointed recently to look into the terms and conditions of PPAs with IPPs as they account for some Rs. 12 billion of CEB funds annually.


In 2013, Power and Energy Ministry, Secretary, M. M. C. Ferdinando took steps to appoint the committee following recommendation by CEB Chairman, W. B. Ganegala.


The decision to appoint a top committee was approved by the Attorney General and the Cabinet.


Treasury Chief Dr. P. B. Jayasundera recently stressed that if renegotiations on the existing power purchase agreements, in terms of the Cabinet decision dated November, 14, 2007 and other technical measures, had been conducted to reduce average cost per unit, the possible annual savings from that measure would have been at least Rs. 12 billion.


The Central Bank, in its 2007 report, stated that there were 10 PPAs in operation with a combined generation capacity of 550 MW, playing a major role in the power sector by contributing about nearly one-third of the total electricity generation. It added that the IPPs enjoyed the aforesaid benefits despite their equity contribution of only 30 per cent of the capital cost, while the public eventually paid for the losses incurred due to deficiencies in PPAs.


 


 
 
 
 
 
 
 
 
 
 
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