Norochcholai Plant Dents CEB’s Income by Rs 134 B

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According to an analysis of CEB’s data up to 20 September, as per CEB’s website on Wednesday, 21 September 2022, the Ceylon Electricity Board’s (CEB’s) electricity generation income would have been dented by at least Rs 134 billion (Rs 134,326.92 million) due to the malfunctioning of Chinese-built 300 mW X 3 Norochcholai Coal Fired Power Plant (NCFPP) since its ‘full’ commissioning over eight years ago on 16 September 2014.

This sum of Rs 134 billion is equivalent to the excess (and expensive) diesel that CEB would have burnt to provide electricity to the country over and above the cheaper coal due to the malfunctioning of NCFPP. Calculations discount this year’s high fuel import bill as it’s based on last year’s costs. If this year’s rates are taken into account, then, CEB’s generation losses would have been more than the said estimated Rs 134 billion. Also, CEB’s loss of generation income would have been steeper if the current, record-high daily power cuts, a feature since last year, have not been imposed.

Further, this ‘Rs 134 billion-loss’; is more by Rs one billion compared to the “Rs 133 billion that has been allocated under the World Bank (WB) loan assistance for the implementation of programmes with the view of reducing the impact of the current economic crisis and restoring social stability,” as spelt out by President and Finance Minister Ranil Wickremesinghe when he presented the ‘Interim Budget 2022’ in Parliament on 30 August 2022.

Meanwhile, this ‘Rs 134 billion’ of additional CEB’s generation costs, is derived by the fact that in the 17 days to Tuesday (20 September), CEB’s generation income had been dented by Rs 780.17 million due the malfunctioning of NCFPP. NCFPP was ‘fully’ commissioned on 16 September 2014, which is 2,927 days ago, from Tuesday. Therefore, if these 17 days are prorated to 2,927 days, this figure of Rs 134 billion is derived.

If NCFPP was fully functional, it has the capacity to meet 40 per cent of Sri Lanka’s electricity generation needs. But because of the above malfunction, which has been the ‘bane’ of CEB at least since 27 June 2022, NCFPP provided only 30.20 per cent [12.96 Giga Watt hours (GWh)] of Sri Lanka’s total electricity requirements (42.91 GWh) on Tuesday alone for instance, with another 56.68 per cent (24.32 GWh) met by renewable energy (RE) and the balance 13.12 per cent (5.63 GWh), met by the expensive ‘CEB diesel’ and independent power producers’ (IPP)/private sector diesel together, respectively.

However, if NFCPP was fully functional, the expensive ‘diesel electricity’ requirement would have been needed only to provide a mere 3.32 per cent (1.42 GWh) of CEB’s total electricity requirement on Tuesday and not 13.18 per cent as was the case.  It’s this additional 9.8 per cent (4.21 GWh) of electricity obtained on Tuesday after burning the expensive diesel to generate electricity, instead of the cheaper ‘coal electricity’, that translates to a loss of generation profit amounting to Rs 87.87 million to the CEB on Tuesday alone and up to 17 days to Tuesday on a cumulative basis, Rs 780.17 million and from 16 September 2014 to Monday 19 September 2022, when prorated, Rs 134.3 billion.

Generation Profits

Consequently, CEB’s generation profits in the 17 consecutive days to Tuesday were reduced by Rs 780.17 million (14.76 per cent) to Rs 6,065.91 million on a cumulative basis due to the malfunctioning of NCFPP in the reference 17-day period.   

The 900 mW (3X300 mW) NCFPP was built sans ‘Call for Tender’, by the Chinese, during President Mahinda Rajapaksa’s era at a cost of US$ 1.35 billion in a mix of commercial and ‘concessional’ loans. But, more often than not, it has been malfunctioning since at least its full commissioning on 16 September 2014. The ‘Rs 134 billion’ loss of generation income is derived on the presumption that NCFPP has been malfunctioning since 16 September 2014.

Computation of CEB’s above costs and income were based on data provided by the Central Bank of Sri Lanka’s (CBSL’s) 2021 Annual Report. It discounts the 75 per cent electricity tariff hike effected from 9 August 2022 (“Ceylon Today’s” 10 August 2022 Edition) which would have enhanced CEB’s electricity generation profits and correspondingly, its generation losses as well, considering the current, high fuel prices.

CEB’s generation losses would have been more, if CEB has been supplying uninterrupted power, unlike the record daily power cuts the country is subjected to, currently, because Sri Lanka is ‘broke’, with no sufficient US dollars to import the required diesel and coal to provide uninterrupted electricity to the country.

The average CEB tariff rate last year according to the CBSL was Rs 16.37 a unit (kilo Watt hour).  Calculations discount CEB’s transmission and distribution losses estimated at 8.72 per cent last year. According to the CBSL’s 2021 Annual Report, the cheapest source of electricity to the CEB last year was ‘CEB Hydroelectricity’ at a cost of Rs 1.67 [one kilo Watt hour (kWh)] a unit followed by coal (Rs 10.68), Other renewable energy (RE) such as wind and mini-hydro electricity at Rs 16.22 a unit, Independent Power Producers’ (IPP) diesel (Rs 30.35 a unit) and ‘CEB diesel’ (Rs 32.03), respectively.

Computation of generation costs/losses also discount NCCFP’s malfunction since the commissioning of its first 300 mW Machine on 13 February 2011, to the interim period that transpired before the commissioning of its last 300 mW machine that took place on 16 September 2014, comprising another 1,310 days. 

RE meets over 50% of electricity demand for 52 days after 279 days

Cheap and clean renewable energy (RE) led by ‘Ceylon Electricity Board (CEB) Hydroelectricity’ provided over 50 per cent of Sri Lanka’s (SL’s) electricity demand for 52 consecutive days to Tuesday (20 September) after 279 days, CEB’s Wednesday’s (21 September) data showed. The last time this phenomenon took place was from 5 October to 15 December 2021, covering a period of 72 consecutive days.

Meanwhile, Tuesday’s ‘CEB Hydroelectricity percentage figure alone was equivalent to meeting 44.70 per cent (19.18 Giga Watt hours (GWh)) of the total electricity (42.91 gWh) generated on Tuesday, while RE as a whole, provided 56.68 per cent (24.32 GWh) of Sri Lanka’s total electricity needs that day, CEB statistics further showed.  RE has also provided over 50 per cent of Sri Lanka’s daily electricity needs in 71 (68.3 per cent) out of the 104 consecutive days that have transpired to Tuesday, CEB data showed. ‘CEB Hydroelectricity’ is part of RE.

Further in 32 (30.77 per cent) of the remaining 33 days to Tuesday, over 50 per cent of the island’s daily electricity needs were met by the pollutive and imported Fossil Fuels (FFs) comprising coal and diesel and in the other single day (0.96 per cent), splits were evenly (50:50) shared between FFs and RE, respectively.

However, in the 263 days that have transpired in the year to Tuesday, RE was responsible for providing 50 per cent or over of Sri Lanka’s electricity needs in only 102 (38.78 per cent) days and FFs in the balance 161 (61.22 per cent) days, respectively.

In related developments, of the total electricity supplied by the CEB to consumers in Sri Lanka on Tuesday, FFs’ share was 18.59 GWh (43.32 per cent). Tuesday’s FFs breakdown comprised CEB Coal 12.96 GWh, CEB Diesel 3.01 GWh and IPP/Private Sector (PS) Diesel 2.62 GWh, respectively.  Tuesday’s RE breakdown comprised CEB Hydro 19.18 GWh, followed by PS Mini-Hydro 1.20 GWh, CEB Wind 1.77 GWh, PS Wind 1.65 GWh, PS Solar 0.34 GWh and PS Biomass 0.18 GWh respectively.

‘CEB’s Hydro’ breakdown of Tuesday comprised Mahaweli 12.30 GWh, equivalent to 64.13 per cent of total ‘CEB Hydro’, Laxapana 5.04 GWh (26.28 per cent) and Samanalawewa (i.e., both Samanalawewa and Kukule Ganga Hydroelectric Power Plants (HEPPs) together, 1.84 Gwh (9.59 per cent), respectively.

According to the Central Bank of Sri Lanka’s 2021 Annual Report, the cheapest source of electricity generation to the CEB last year was ‘CEB Hydroelectricity’ costing a mere Rs 1.67 a unit or per one kilo Watt hour (kWh) of electricity followed by Coal (Rs 10.68); non conventional RE such as Mini-Hydro, Wind-both CEB and PS, Biomass and Solar (Rs 16.22), ‘CEB Diesel’ (Rs 32.03) and “PS Diesel” (Rs 30.35), respectively.

Mahaweli Hydro

‘Mahaweli Hydro’ comprises Victoria, Randenigala, Rantambe, Kotmale and Upper Kotmale Heavy Electrical Equipment Plant (HEEP) Projects, respectively. Victoria, Randenigala, Rantambe and Kotmale HEEPs were built during the J.R. Jayewardene era, after obtaining grant and concessional aid from the West.

Upper Kotmale, which was conceptualised during the Jayewardene era was built during the regime of Mahinda Rajapaksa after obtaining concessional Japanese aid. Samanalawewa conceptialised during the Jayewardene era was built during the Ranasinghe Premadasa era; concessional aid from Japan and Kukule Ganga conceptualised during the Premadasa era was built during the Chandrika Bandaranaike era; concessional aid from Japan. Laxapana, built during the D. S. Senanayake’s reign from Sri Lanka’s own funds was subsequently expanded for which purpose a concessional WB aid was obtained.

However, Sri Lanka’s sole coal electricity generator, the 900 mW Norochcholai Coal Power Plant, built sans ‘Call for Tender’, by the Chinese after obtaining a mix of  foreign ‘commercial and concessional’ loans during the Mahinda Rajapaksa era and incurring USD 1.35 billion of taxpayers’ money to build it, is in general, only partially operative for several days, forcing the Government of Sri Lanka/CEB to be over reliant on the expensive diesel to meet a large size of Sri Lanka’s electricity needs on most days.

But due to a US dollar shortage in the country led by corruption exemplified during Rajapaksa’s near 10-year tenure from 17 November 2005 to 8 January 2015, Sri Lanka has no US dollars to import not only the cheap coal to provide power to the country 24 hours a day, but also diesel to operate a regular public transport service. Whilst also aiding and abetting socioeconomic unrest in the country.

In Sri Lanka’s 74-year history of independence, never once did expensive Government Foreign Commercial Debt (GFCD) as a percentage of Total Government Foreign Debt (GFD) exceed seven per cent other than during the Rajapaksa era. GFCD which was a mere four per cent of GFD when Rajapaksa took office in 2005, hit a record 28 per cent in 2009, before reaching a record 51 per cent in 2012 and staying that way since. An example of GFCD is the above malfunctioning Coal Plant.

During this period, IMF’s Resident Representative to Sri Lanka Dr Koshy Mathai (2009-2013), warned the Government of excessive GFCD, but his warning fell on deaf ears.

By Paneetha Ameresekere