Saturday, April 13, 2019

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When will the power problem be resolved forever?

Restructuring of electricity sector 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.

By Gamini Abeywardane

The country just witnessed one of the worst blackouts in the recent times. Power cuts imposed twice a day, sometimes even without prior notice left most consumers furious and frustrated. The politicians and the top officials as usual were blamed for the calamity which caused much damage to the economy. In time for the New Year problem has been temporarily fixed hiring a barge mounted power plant amidst allegations of corruption.
The minister in charge proudly announced that there will not be any power cuts hereafter. But he owes the country a full explanation on how he is going to do that when we all know that it’s not possible. Critics say that continued power supply is possible only during the New Year season because of the decreased demand and power cuts at some point afterwards will be inevitable.

This is part of a cycle of events which we Sri Lankans have been witnessing from time to time over several decades. Politicians are engaged in leveling allegations against one another making political capital out of the unfortunate situation while some of them are alleged to be profiting from sudden power purchases. Country as a whole has to suffer huge economic losses while the people have to undergo many hardships.
Long unresolved crisis

At the root of all this is the long unresolved power shortage. For too long we depended on hydroelectricity and when consumption increased power shortages and power cuts became the order of the day. There was no consistent effort to identify the correct power mix and increase the output in keeping with the increasing demand. In short, for several decades there has not been any definite plan or consensus among the political leadership for systematic development of the power sector.

The Ceylon Electricity Board (CEB) has been run as an inefficient, oversized and loss making outfit for politicians to provide employment for their supporters. Because of its monopolistic nature and the presence of strong engineering unions no politicians had the courage to reform or restructure the CEB though it has been a long felt need.

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.
In the not so distant past the machines at Norochcholai stopped for umpteen times due to technical issues. There were 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. There have also been questions about poor environment management raising huge issues about future use of coal.

However, all governments that ran this country in the past several decades are equally blameworthy for the power sector mess although both major political parties have been preaching on this topic with a lot of wisdom whenever they are in the opposition.
At the same time, one should not forget that plans 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 activists in the past.Despite whatever its negatives, the addition of 300MWof power from Norochcholai averted major power cuts in the last few years.

However, energy experts have pointed out that due to the inability to complete the proposed 500MW coal power plant in Sampur on time, country is likely to face a power crisis in 2020, similar to the situation in 2000. There has also been a long delay in implementing the 300MW power plant at Kerawalapitiya due to some controversy over awarding the tender. Sampur project had been cancelled because of the opposition for use of coal on environmental reasons. Whatever the reasons the end result is a power shortage causing hardship to people and great loss to the economy and the responsibility for any failure should lie with the government of the day.
Power mafia

In the meantime 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 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 and the politics behind it which makes it even more difficult to resolve the issue.

Then there is the other side of the issue, the high cost of electricity in Sri Lanka. Our electricity costs are probably the highest in South Asia and it is no doubt a great disincentive for foreign investors while also adding to the people’s cost of living here. Because of that, electricity is subsidized to domestic and industrial consumers. Since the electricity tariff is not cost reflective, every year the CEB makes a loss close to Rs. 50 billion. 
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.

However the reality is that no government is bold enough to take on the strong trade unions in the CEB because of its monopolistic nature. Although they know that restructuring the power sector is a necessity, no politician had the courage to face its political and electoral consequences and such moves become even suicidal especially when the elections are round the corner.
Whenever a drought continues for long and the weather gods are not in our favour, food shortages are the first thing to hit us followed by the energy shortage. Where the power issue is concerned we have been talking too long about inadvisability of continuing to depend on hydro power and the need for going into other sources of energy.

Many researchers have, with scientific data and statistics pointed out clearly and well in time, the country’s future requirements of energy as the economy grows and how to meet that. All calculations on the right mix of various energy sources such as hydro, thermal, coal and renewable energy had been done several years ago, but the question remains whether proper attention has been given to these suggestions and proposals.
Renewable energy

Hydro electricity is weather-dependent while both thermal and coal power are expensive and also not environmental friendly. And in this situation, the virtues of renewable energy are many and especially in a country where sunshine and wind are abundant, it is one of the most viable forms of energy. However, why no concerted effort has been made to use renewable energy, more specifically solar power despite sunshine throughout the year, is a question that begs an answer.
Even in countries like the US there have been arguments to say that there is a national conspiracy to prevent renewable energy from becoming the primary source of energy. In the US the conspirators are said to be the fossil fuel industry which continues to rake in exorbitant profits on oil and gas while it refuses to make any significant investment in renewable energy.

In the US main stream news media too has been accused of being subservient to the corporate interests and abstaining from doing any serious coverage on the viability of renewable energy.  The members of the Congress have been accused of being addicted to the big buck they receive from big oil and other traditional oil sources to block any worthwhile renewable energy legislation.
According to the US Department of energy, the amount of solar energy that hits the surface of the earth every hour is greater than the total amount of energy that the entire human population requires in a year. While the facts remain so, if we know that it works why don’t we use renewable energy in place of heavily polluting oil, gas or coal?

The primary reason is that the cost of renewable energy is still relatively high compared to fossil fuels although the gap is closing as the cost of natural gas and oil continue to rise. The price to install photovoltaic panels on the average home is quite high and affordable only for those who are well off.
But the common experience is when some product is mass-produced its price per unit should plummet. The one million dollar question is why solar power and wind power products are not promoted in a serious manner with appropriate duty concessions and mass produced.

With diesel mafia and connected interest groups being powerful in the energy sector the situation in Sri Lanka cannot be much different from the US and it’s time for us to have a fresh look at this energy issue  and formulate a stronger national policy on renewable energy and promote specifically solar and wind power.
On the overall energy issue the government seems to have risen from a deep slumber and appointed a cabinet committee under the chairmanship of Prime Minister Ranil Wickremesinghe to look at the short and medium term solutions to the power sector issues. Even if they do their job properly it will only be a temporary solution.

There is a strong need to have an independent body or mechanism fully empowered to handle the power sector on a long term basis in terms of the laws governing the sector while also meeting the growing demand as the country goes into its next stage of development. Such an outfit should have the authority to raise the necessary capital from whatever the legitimate sources with adequate participation of the government without having to depend on inexperienced politicians to handle this vital issue. It should also have its own mechanism to minimize room for corruption.
Though originally created for that purpose the CEB in its current form is woefully incapable of handling such a job. That is why restructuring this institution has become a vital necessity and that has to be done while the politicians in power look for temporary and short term solutions to the issue. We have been talking about it for too long and now with memories of power cuts still being fresh it’s time to concentrate on this onerous but vital task.
(The writer can be contacted on:



1 comment:

  1. This analytical comment on the power crisis deserves the immediate attention of the authorities concerned!