CEB to purchase wind power at
world’s highest price - CEB engineers
August 5, 2010, 8:33 pm
By Ifham Nizam
The Ceylon Electricity Board engineers on Tuesday expressed concern over the CEB signing power purchase agreements (PPAs) with a few private companies to purchase 95 MW of Wind Power at Rs. 25 per unit, despite instructions to reduce the purchase price to Rs 16 per unit.
"This is a very high price compared to prices in other countries," a senior official of the CEB said. Engineers pointed out that Rs. 25.00 per unit is most probably the highest tariff paid to wind power anywhere in the world.
"In some countries, cost of wind power is as low as Rs. 4.00 per unit. The Standard Power Purchase Agreement (SPPA) allows only 10 MW to be purchased from a single private sector power producer and the Electricity Act says that for units producing above 25 MW, power could be bought only after calling for tenders," they said.
These agreements have violated the Law of the country by passing the 25MW limit and allowing producer to sell for four years contrary to the one year limit normally allowed in SPPA.
CEB senior officials say that there was a massive pressure from influential businessmen to buy wind power at this exorbitant price. In other business, entrepreneurs competes in an open market to sell their products and the price will be determined by the market forces.
"In this game, We are bound to buy the whole product and at an exorbitant predetermined price. Whatever the expenditure, it will have to be finally recovered from the poor customers," they said.
However, due to the pressure from the CEB Trade Unions, signing agreements and issuing new Letters of Intent (LoI) were stopped sometime back by the Power and Energy Ministry. On the request of unions, the Ministry appointed a committee to determine a reasonable price for Wind Power producers.
According to reliable information, the new price would be around Rs. 16.00 per unit. "However, the decision on the new tariff is purposely delayed at each step. It is now with the Public Utility Commission of Sri Lanka(PUCSL).
They said in lieu of the decision on the new tariff for the current year, the old tariff which is Rs. 25 kwh would be invariably applicable. "So the game planners would only delay the approval of new tariff to maintain the higher price," an official said.
According to sources, a powerful businessman, who had already signed an agreement for 10MW of Wind power at Rs. 25, is influencing the government to issue a new LoI for another 10MW plant. As the new price has still not been approved by PUCSL, automatically issuance of the new LoI will be at the same old exorbitant price.
The capacity of a renewable power producer -such as the Wind Plant- is restricted to a maximum of 10MW by CEB regulations. All these regulations will be grossly violated by these harmful decisions.
A majority of these Wind Power plants are to be connected to the Puttalam Grid substation which is not capable of handling such a huge capacity of wind power without upgrading. This would require a lhuge invesment of public money, CEB officials claim.
They said, "The Wind Plants already connected to this grid are creating a lot of technical problems like rapid fluctuations of voltage in some parts of the area. "Though the powerful businessmen, some corrupt politicians and supporting officers in Ministry and CEB live lavish lives with this public money, poor customers who do not have a voice, are pushed to a hell with irritatingly fluctuating electricity," they added.