CEB extends controversial power purchase agreement


The Ceylon Electricity Board (CEB) has paid Rs. 840 million to ACE Power Embilipitiya, without approval from the Public Utilities Commission of Sri Lanka (PUCSL) to extend an agreement.

On April 05, 2018, the CEB extended its short term power purchase agreement with ACE Power Embilipitiya, originally signed in 2017, for another three years. The payment was made after Secretary to the Ministry of Power Dr. Suren Batagoda had instructed the Chairman and the General Manager of the Board to settle an outstanding payment, estimated to be Rs. 840 million to ACE Power Embilipitiya.

Batagoda sent the letter though Deputy General Manager, Energy Purchases, Sujeewa Abeywickrama pointed out that the CEB would suffer colossal losses if it kept purchasing power from ACE Power Embilipitiya at previously negotiated prices. Abeywickrama was interdicted earlier this month for ‘insubordination’.

In February this year, in a letter to the AGM transmission, Abeywickrama pointed out that the CEB had already paid the owners of ACE Power, Embilipitiya enough money to recover the capital investments. There were two main components of costs as regards electricity production––capital costs and fixed overheads with capital costs being the most substantial. If the CEB has paid the capital costs, it had to renegotiate the agreement so that the price of a unit of energy could be considerably reduced, Abeywickrema said. Instead, the CEB signed an agreement with the owners of the power plant, receiving only a five percent discount. (RK)

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