News

Transfer of Yugadanavi power plant shares: Tripped by CEB trade unions  

By Maheesha Mudugamuwa 

Trade unions (TUs) attached to the Ceylon Electricity Board (CEB) have warned of stern trade union action if the Government fails to immediately withdraw from the ongoing negotiations with New Fortress Energy Inc. to handover the Treasury’s 40% stake in the 300 MW Yugadanavi Power Plant in Kerawalapitiya to supply natural gas to Sri Lanka. 

According to the trade unions, if the Cabinet of Ministers gives the green light for the cabinet paper submitted by the Treasury, it would be the biggest betrayal of recent times, as the entire electricity sector would be mainly dependent on liquified natural gas (LNG) in the near future. 

The TUs further allege that if the Government hands over control of the LNG supply, storage, and shares of the easily convertible Yugadanavi Power Plant to US-based Fortress Energy, it would be the death of the country’s electricity independency and the country would have to face the same fate as Lebanon. 

Warning of strike action    

Speaking to The Sunday Morning, Janatha Vimukthi Peramuna (JVP)-affiliated Lanka Viduli Sevaka Sangamaya (LVSS) General Secretary Ranjan Jayalal stressed that they would not let the Government sell the country’s electricity infrastructure to cover its inabilities, which were the cause of the existing financial crisis in the country.

“We will fight for Yugadanavi and will not let the Government handover the power plant,” he said, adding that “even if they have already handed it over to the US energy company, the TUs would somehow get it back”. 

According to Jayalal, the unions have already planned a series of TU actions and if the Government failed to meet their demands, they would resort to stern action by refraining from all services. 

The CEB has not launched any stern action after the last two major incidents reported in 1969 and 1996 and if the Government drives the CEB employees to that sort of action, the impact would not be as it was on the previous occasions, as the entire country is dependent on electricity, Jayalal stressed. 

Accordingly, a sick leave campaign followed by a series of awareness campaigns together with regional strike actions have already been planned for August. In the event the Government fails to withdraw the deal with New Fortress Energy Inc., all CEB employees would resort to stern TU action by refraining from the services which would lead to a major power blackout in the country. 

“This would definitely be the biggest TU action in recent history,” Jayalal warned. 

The US deal 

New Fortress Energy Inc. recently announced that it had signed a Memorandum of Understanding (MoU) with Lakdhanavi Ltd. (LTL), a private company in Sri Lanka, to jointly develop a 350 MW gas-fired power plant in the Kerawalapitiya Power Complex located in Colombo. LTL was previously awarded a 20-year power purchase agreement (PPA) with the Government of Sri Lanka through a competitive tender to provide electricity to the national grid. 

On 8 July, New Fortress announced the signing of a framework agreement with the Government of Sri Lanka to build an offshore LNG receiving, storage, and regasification terminal off the coast of Colombo, and the rights to supply gas to the existing 300 MW Yugadanavi power plant. New Fortress will utilise this same LNG terminal to also supply natural gas to this new 350 MW power plant. 

These two power plants total approximately 650 MW within the Kerawalapitiya Power Complex.  

Despite the company’s announcement, LVSS General Secretary Jayalal alleged that the Treasury had not obtained the approval from other shareholders, the Employees’ Trust Fund (ETF), Lanka Electricity Company (LECO), and LTL, for the share transfer.

“These deals are not transparent and the fact that the public doesn’t know what the Government is doing with public properties is the biggest problem at present. They are desperately looking for dollars and selling whatever possible to earn dollars and at the same time, they have fallen into geopolitical issues among China and the US,” he stressed. 

The LVSS also demands the Government respect the existing and approved electricity policy frameworks developed by the CEB engineers who are the experts of the field and also to go ahead with the government-approved tender process for the LNG supply without going ahead with unsolicited proposals. 

Beyond expert control 

In the meantime, the CEB Engineers’ Union (CEBEU) has also opposed the deal with the US energy company for the LNG supply, as it was against the approved procurement process of the country, as the US proposal had come as an unsolicited proposal.   

Speaking to The Sunday Morning, CEBEU President Saumya Kumarawadu said: “We need to build infrastructure facilities for LNG first. We need LNG for power plants and it should be decided by the CEB. The board should decide how much LNG we need. We have conducted a feasibility study. According to that, we should build infrastructure within the country. We have called for tenders for the necessary infrastructure and the tender was to be opened on 18 June, but on 10 June, the Treasury signed a framework agreement with the New Fortress,” he added. 

“Only after signing did the framework agreement come to the CEB. We took months to study the matter and call for tenders, but the agreements were signed with the New Fortress Company. We are studying the agreement and we will see whether it is feasible or not,” Kumarawadu stressed. 

Natural gas (NG), being a low-carbon fuel alternative for thermal generation, is the next planned fuel addition to the generation mix of the country and the first NG-fired power plant was identified in the CEB’s Long-Term Energy Plan (LTGEP 2015-2034). However, in the LTGEP 2020-2039, it has adhered to the government policy on fuel diversification in installed firm capacity and added LNG-based generating capacity to meet government policy targets. The existing combined cycle plants that are operating on diesel/naphtha/furnace oil at present, are expected to be converted to natural gas once supply of LNG/NG is established. 

Accordingly, two 300 MW dual-fuel combined cycle power plants must be commissioned in the western region by 2023 while the associated LNG supply infrastructure must have sufficient capacity to be developed on a fast-track basis to cater to the two new power plants and the existing combined cycles that are to be converted to natural gas. Two additional 300 MW natural gas-fired combined cycle power plants are identified as required for 2024 and 2025. The land acquisition process and all other necessary approvals are required to be obtained immediately to commence the project procurement activities for these two power plants. Development of associated transmission facilities are also required in parallel to the power plant implementation schedule. 

However, when contacted by The Sunday Morning, Power Minister Dullas Alahapperuma said the cabinet proposal had been submitted by the Finance Ministry and his Ministry had no involvement with the Yugadanavi proposal.