Thursday, March 17, 2016

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Blackouts and politics of power sector

The country has just witnessed one of the worst blackouts in its recent history. Too many islandwide power failures at unusual intervals have even aroused suspicions of sabotage. Politicians are engaged in leveling allegations against one another making political capital out of the unfortunate happenings. Country as a whole suffered a huge economic loss while the people had to undergo many hardships.

At the root of all this is the unresolved power crisis. For too long we depended on hydroelectricity and when consumption increased power shortages and power cuts became the order of the day. Major reforms in the power sector became impossible due to lack of funding and opposition from various quarters. Finally the problem became too acute compelling the government to urgently look for other sources of power and coal power plant at Norochcholai was one such solution in a hurry.
The machines at Norochcholai have stopped due to technical problems over thirty times up to now. There are allegations of corruption and use of substandard components in the commissioning of that plant and most of the blame in this regard has been heaped on the previous government.

At the same time, one should not forget that attempts by many governments to build such power plants had to be shelved in the face of mounting opposition by environmental groups and other politically motivated activist groups in the past. Despite whatever its negatives, the addition of 300Mw of power from Norochcholai averted major power cuts in the last few years.
Several privately owned diesel power plants also entered the power sector making use of the severe shortage of power. These are all temporary solutions, but there have been allegations of the Ceylon Electricity Board (CEB) purchasing power at high prices. Thus, there seem to be an electricity mafia involving politicians, CEB officials and the businessmen. At the centre of all this is the unresolved power crisis in the country and the politics behind it.

The only way proposed by economists, power sector experts and multi-lateral aid agencies such as the World Bank and the ADB to resolve this issue is to restructure the CEB which is an inefficient entity with colossal debts amounting to billions of rupees which has already become a burden on the treasury. In order to increase efficiency of the CEB and to resolve its debt issue, it has been proposed that three of its main functions – generation, transmission and distribution, should be separated.
Restructuring will also require a huge amount of capital and it goes without saying that private capital has to be infused into the system in some way. Like in many state owned loss making institutions the very word ‘private capital’ is anathema to CEB workers who have vehemently opposed these restructuring plans. All major political parties are aware of the situation, but when in opposition they also try to make political capital out of these issues by opposing the restructuring moves.

If we are to avert any future catastrophes in the power sector only way out is to seriously look at these restructuring plans and implement whatever is suitable from the country’s point of view with infusion of private sector capital where necessary. Country is already seeing the positive results of such restructuring in the once maligned telecom sector and there is no reason why same norms cannot be applied to the power sector. 




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