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Agreements with private power plants: Cabinet turns down Lokuge’s proposal

06 Feb 2022

By Asiri Fernando A competitive bidding process will be launched by the Power Ministry to select private power plants to purchase power, aimed at meeting the existing shortfall in the country’s power supply, The Sunday Morning learns. The decision to go for competitive bidding was reached after the Cabinet of Ministers last Monday (31 January) turned down a proposal presented by Power Minister Gamini Lokuge for the Ceylon Electricity Board (CEB) to purchase power, in the short term, from two private power plants. The Cabinet paper was presented seeking approval for the signing of agreements for three years with two private power plants (ACE Power Plant for 100 MW and another ACE Power Plant for 20 MW) as a solution to the shortfall in the power supply at present. However, Ministers Vasudeva Nanayakkara and Ramesh Pathirana, who were members of the Cabinet sub-committee appointed to look at extending agreements with private power plants, had raised objections to Lokuge’s proposal. Nanayakkara and Pathirana have pointed out that the sub-committee, after studying the matter as well as the previous agreements reached between the CEB and the private plants, had decided that the agreements could be extended only for a period of six months and not three years. Nanayakkara had explained that the Government would have to continue payments to the plants even if there was no requirement for power from them if the CEB signed an agreement for three years.  Last December, in an interview with The Sunday Morning, Minister Lokuge stressed the need to enter into short-term agreements as long-term agreements were not in the best interests of taxpayers. “The Cabinet last week rejected approving three-year long-term agreements for emergency power purchases. The Minister of Power was authorised to negotiate with private power suppliers for short-term purchases, perhaps six months,” Cabinet Co-Spokesman and Minister of Plantations Dr. Ramesh Pathirana told The Sunday Morning, adding that the Government preferred to seek emergency power through a competitive bidding process. Energy Minister Gammanpila has referred to the Electricity Act, noting that it has clearly stated there needed to be a competitive bidding process to purchase power from private plants if the agreement was not one between the government and another government (G2G). He noted that the failure to select plants through a competitive bidding process would hence be illegal and result in the Cabinet facing legal issues. It was finally resolved that the Power Minister should initiate a competitive bidding process to select the private power plants to purchase the power shortfall at present. Responding to a query, Minister Lokuge confirmed that the Power Ministry would be seeking to purchase power through a competitive bidding process.  “We will go for a tender process with competitive bidding. However, we will also be looking at renegotiating with companies that had entered into agreements in the past. We are looking for short-term contracts,” Lokuge said. 


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