According to media reports, the Public Utilities Commission of Sri Lanka (PUCSL) is going to approve emergency power purchases.
It is unfortunate that the Ceylon Electricity Board is still continuing with the ad hoc emergency power purchases although the country has not experienced any emergency situation recently.
It is understood that the PUCSL is going to approve the purchase of emergency power from an entity known as Vee Power at a tariff of Rs 28 — 30 per kWh whereas three established long term power plants, whose tariffs are in the region of Rs 23- 24 per kWh, are going to have their Power Purchase Agreements expire soon.
The emergency power producers are going to use auto diesel as fuel which is the most expensive form of fuel used for power generation. However, three IPPs, whose operations will come to end soon, are using Heavy Furnace Oil as fuel.
If the CEB allows the three IPPs to stop generation, even the Ceylon Petroleum Corporation (CPC), which sells Heavy Furnace Oil to these power plants at Rs 70 per liter, will stand to lose some revenue, informed sources pointed out.
The CPC is selling Heavy Furnace Oil to IPPs at a profit and therefore, the CPC will be compelled to export High Furnace Oil at a much lesser price than the price CPC is charging now from these IPPs.
The CEB is aware of the fact that no additional generating capacities has been added to the power generating system. The CEB is also aware that three IPPs are going to have their PPAs expire soon.
Therefore, a prudent practice could have been for the CEB to negotiate with the three IPPs to extend the tenure of the existing PPAs rather than resorting to purchase of "emergency power" at a higher tariff.
Sources at the CEB said that the deterioration of the CEB's financial position started with the purchase of these so called "emergency power" two decades ago and it is a shame that the CEB is still continuing with this practice.
Meanwhile, PUCSL Chairman Janaka Ratnayake told Daily FT that the public should not be concerned about any moves to institute power cuts by the Ceylon Electricity Board (CEB), even though the regulator was moving ahead with plans to approve emergency power purchases.