- CPC is not a charity: MD
- CEB calls for better options
Efforts by the Ceylon Electricity Board (CEB) to introduce competitive fuel procurement have been blocked by the Ceylon Petroleum Corporation (CPC), posing a risk to sustaining fuel supply, The Sunday Morning learns.
In this backdrop, with the aim of ensuring least-cost electricity generation, protecting public finances, and working to align Sri Lanka’s energy sector with national policy and governance standards, the CEB is urgently requesting the commencement of competitive thermal fuel bidding.
However, it is learnt that this request has been strongly opposed by the CPC management during a meeting held in July at the ministry, warning the CEB of the risk of suspension of fuel supply and denial of access to pipelines and port facilities.
The CPC is of the view that if the CEB purchases from other vendors, the CPC should not be held responsible for the vendors’ actions.
Speaking to The Sunday Morning, CEB Media Spokesman Dhammike Wimalaratne confirmed the authenticity of the letter, but refused to comment further, stating that it was an internal communication.
Addressed to Ministry of Energy Secretary Prof. Udayanga Hemapala, CEB General Manager Eng. W. Edussuriya, and the Additional General Manager – Generation, a letter compiled by the engineers of the CEB’s Thermal Complex highlights the board’s urgent need for competitive international bidding to meet fuel requirements.
The letter further reveals that the lack of visible public pricing in naphtha and Heavy Fuel Oil (HFO) allows the CPC a free hand to pass inefficiencies directly to the CEB.
It reads: “The public wrongly assumes that the CEB is responsible for tariff hikes. In reality, the main cause is the CPC’s arbitrary fuel pricing. The CPC has no incentive to reduce inefficiencies. As a result, these costs are unfairly passed on to electricity consumers.”
The letter cites pricing issues and the absence of bulk discounts by the CPC of not only naphtha fuel and HFO, but also of diesel, as the CEB is supplied lower-grade diesel at the same price as higher-grade auto diesel found in filling stations.
The CPC is also documented to have increased the prices of naphtha and HFO by Rs. 10 per litre, despite the corporation’s capability of supplying naphtha at a lower domestic price given its exports, it is alleged.
A total of 13 such suggestions have been detailed in the letter, with the CEB notably urging the ministry to authorise competitive international bidding for all fuel procurement of CEB thermal power plants as well as to address the risks of monopoly control exacerbated by the CPC.
The letter has been copied to the Minister of Finance as well as his Secretary, the Minister of Energy, the Presidential Secretariat, the Central Bank Governor, and the Chairpersons of the PUCSL, CEB, and CPC.
When contacted by The Sunday Morning, CPC Managing Director Dr. Mayura Neththikumarage stated that they were not blocking the bidding process, but argued that the CEB would have to completely opt for bidding procurement and release the CPC from the responsibility of fuel supply.
“The CPC is not a charity organisation. It is basic commercial understanding that if they want to procure from other vendors, we are not responsible,” he said.
Dr. Neththikumarage added that the differences in prices were attributed to regional variations. “Just because these are the prices in the US, you cannot expect that price in Colombo. If somebody takes the prices from the newspaper, it never matches; there are tools to determine prices. That is why the industry is for the professionals.”