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Expanding base power short-circuited  

24 Apr 2021

Concerns have been raised over the delay in signing the power purchasing agreement (PPA) for commencing the construction of a 300 MW liquefied natural gas (LNG) power plant at Kerawalapitiya, as the country is in a dire shortage of base electricity generation requirements.    As learnt by The Sunday Morning, the PPA should be signed between the Ceylon Electricity Board (CEB) and Lakdhanavi Ltd. prior to the commencing of the construction but due to the delay in signing the agreement, energy experts warned that meeting the required base electricity would be further delayed.  The shortage of the base electricity as estimated by the electrical engineers at the Ceylon Electricity Board (CEB) is said to be around 300 MW. But this amount is predicted to increase annually with the growing energy demand of the country. Nevertheless, as per CEB statistics, only around 200 MW of electricity is set to be added to the national grid within this year with the commissioning of the Uma Oya, Broadland, and Moragolla Hydropower Plants. In addition, another 30 MW would be added to the national grid with the completion of the wind power plant project in Mannar.  The last power plant built in Sri Lanka was the first coal-fired power plant in Puttalam, which is an investment of about $ 1.35 million financed by the Import-Export Bank of the People’s Republic of China. This is a 3x300 MW power plant named the Lakvijaya Coal Power Plant, and contributed about 35% of the total electricity generation in the country. The power plant was completed in 2014; since then, no power plant has been commissioned or commenced construction.  As mentioned in the Sri Lanka Energy Sector Assessment, Strategy, and Road Map issued by the Asian Development Bank (ADB) in December 2019, by the end of 2017, the total installed capacity in Sri Lanka was 4,180 MW including non-dispatchable power plants (small hydro, wind, solar, and biomass) of capacity 562 MW owned by the private sector, and 94 MW of rooftop solar PV.  Out of the total installed capacity of 4,180 MW, 42% (1,745 MW) was from hydro (both large hydro and small hydro); 51% (2,133 MW) from thermal; and 7% (303 MW) from other renewable sources, such as wind, solar, and biomass. Due to the growing demand and delays in other power plant projects, compounded by significantly below-average rainfall, the share of oil-fired generation increased to 34% in 2017 from 18% in 2015.  It is expected that about 247 MW of capacity will be added by 2022 with the ongoing construction of Broadlands (35 MW), Moragolla (30.2 MW), Uma Oya (122 MW), and the planned power plants: Gin Ganga (20 MW), Thalpitigala (15 MW), and Moragahakanda (25 MW). Meanwhile, the total capacity of thermal power plants owned by CEB by the end of 2017 was 1,504 MW, comprising the Lakvijaya Coal Plant (900 MW), Kelanitissa Gas Turbines (192 MW), Kelanitissa Combined Cycle Plant (165 MW), Sapugaskanda Diesel Plant (160 MW), Uthuru Janani Power Plant (26.7 MW), and Barge-Mounted Plant (60 MW).  It is estimated that the total investment required for the implementation of the base case plan 2018-2037 in the next 20 years is about $ 14.5 billion.  Even though the estimates have been prepared and generation plans have been issued by the CEB annually, none of these power plants have commenced as of now; the construction of almost all these power plants are behind schedule and faces further delays.  However, the 300 MW LNG power plant to be constructed at Kerawalapitiya and for which Cabinet approvals have been already granted, is to be the first power plant to begin construction in eight years following the commencement of the Norochcholai Power Plant in 2014.    Facing delays  The controversial project got delayed by nearly two years due to issues pertaining to the awarding of the contract. With the final Cabinet approval being received recently, the project was reviewed thrice by the Cabinet of Ministers of two governments.  In February last year, the Government awarded the contract to construct the second phase of the 300 MW LNG power plant in Kerawalapitiya to Lakdhanavi Ltd., overturning a Cabinet decision by the previous Government made just over a year prior.  Originally, Cabinet approval was granted to award the tender to set up two 300 MW LNG power plants in Kerawalapitiya, with the Procurement Appeals Board (PAB) approving the awarding of the second contract to Lakdhanavi Ltd. At the time, then-Power and Energy Minister Ravi Karunanayake said the decision to award the power plants to the first and second bidder in a single tender for an independent power producer was bipartisan.  Lakdhanavi filed a petition at the SC soon after the decision was reached in February last year, as it was the lowest bidder, while GCL China Windforce and RenewGen were the second-lowest bidders.  However, when contacted, a senior official of Lakdhanavi Ltd. told The Sunday Morning that the opening ceremony was held on a request made by the Government.  He also confirmed that the PPA was yet to be signed between the CEB and Lakdhanavi Ltd.  “The PPA is already finalised. There’s a little delay with regard to several other agreements, including the Fuel Purchasing Agreement (FPA). We have completed our part already, and the agreements should be finalised by the CEB,” he explained.  Nevertheless, the Lakdhanavi official said that they have already commenced the documentation process and began the Environmental Impact Assessment (EIA) as well. “We hope we will be able to sign the PPA within the next two weeks,” he added.  However, The Sunday Morning learnt that without signing a PPA, the company could not process any loan whatsoever with regard to the construction of the power plant; therefore, the construction would be delayed if the PPA signing was postponed further.      Meeting the demand  According to the Long-Term Generation Expansion Plan (LTGEP) for 2020-2039 of the CEB, to meet the demand from 2020 until major power plants are implemented, and out of a total of 320 MW, only 100 MW would continue beyond 2025 as backup power plants to provide the secure supply during the contingency events. As of 2019, 170 MW out of 320 MW has been added to the system as an extension of existing power plants.  The plan also noted that the anticipated capacity shortage for the period till 2022 is to be met through the development of reciprocating engine power plants. The approximate capacity addition of 1,200 MW of wind and 2,000 MW of solar power is considered during the planning horizon. Immediate action is required to develop them in locations identified in Monaragala, Pooneryn, Hambantota, Mannar, Kalpitiya, Puttalam, and Welikanda, and to identify suitable locations in northern and eastern regions as per the capacity schedule identified in the Base Case Plan.  Furthermore, 2x300 MW dual-fuel combined cycle power plants must be commissioned in the western region by 2022. The associated LNG importing infrastructure is to be developed on a fast-track process with sufficient capacity to cater for both the new power plants and the conversion of other oil-fired combined-cycle power plants in the western region.  Furthermore, an additional 3x300 MW natural gas combined cycle power plants are expected to be commissioned by 2026 in either Kerawalapitiya or Hambantota. Associated transmission facilities are also to be expedited in parallel to the power plant implementation schedule.  Also, 2x300 MW high efficient coal power plants are planned to be developed as an extension to the Lakvijaya coal complex in 2023 and 2024. Furthermore, 2x300 MW high efficient coal power plants are expected to be commissioned in 2025 and 2028 at Foul Point in Trincomalee, as per the CEB LTGEP.  In the meantime, some energy experts questioned the methodology applied by the CEB to calculate the country’s power deficit.  Speaking to The Sunday Morning, energy expert Dr. Vidura Ralapanawa said that there is no proper analysis to show how much power is needed, noting that the CEB hasn’t proven a shortage in a manner that the Cabinet can take a decision.  JVP-affiliated Lanka Viduli Sevaka Sangamaya (LVSS) General Secretary Ranjan Jayalal said the power sector issues were mainly due to the lack of proper policies within the country.  Highlighting the issues regarding the connecting of renewable energy to the national grid, he stressed that since 2016, renewable energy was produced but couldn’t be connected to the national grid due to lack of space.  He told The Sunday Morning that the country at present has enough power, including renewable energy, and what is needed at present was a method to add this power to the national grid.  When contacted by The Sunday Morning, CEB Chairman Eng. Vijitha Herath said there were a number of power projects in the pipeline, and around 200 MW would be added to the national grid within this year.  According to him, 120 MW from Uma Oya, 35 MW from Broadlands, and 30 MW from Moragolla hydropower plants would be added to the national grid within this year.  “We have already awarded tenders for several other projects, including the construction of a 300 MW LNG power plant at Kerawalapitiya, and tenders would also be awarded to construct another 300 MW LNG power plant at Kerawalapitiya, 100 MW gas turbines at Kelanitissa, and a 300 MW coal power plant as an extension to the existing Norochcholai power plants,” he said.  As he explained, only the hydropower plants would be added to the grid this year, while the rest are in the pipeline. In the meantime, there are several other renewable energy projects to be commissioned as well including solar and wind, he added.  Commenting on the delay in signing of the PPA, Eng. Herath acknowledged that the PPA for 300MW of the LNG power plant to be commissioned at Kerawalapitiya had not been signed with Lakdhanavi Ltd. as yet, but it would be signed soon.

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