|
|
|
  |
| Sunday, 1 May 2005 |
 |
|
 |
Features |  |
| News Business Features Editorial
|
Tackling the power crisis : Out of the darkness by Shanika Sriyananda The power crisis that threatens to plunge the country into total 'darkness' is gathering momentum, with the Ceylon Electricity Board (CEB) weighted down by a staggering Rs. 27 billion debt running out of options to stay afloat.
Are things as bad as they seem? Not so, say many employees, especially the engineers who see the implementation of the coal power plant at Norochcholai and the Upper Kothmale hydro power projects, as the proverbial 'light' at the end of the power crisis tunnel, that could also solve some of the CEB's woes. The CEB, the prime electricity supplier of the country, is hard pressed to overcome a staggering Rs. 27 billion debt. Being an institution which happily boasted about its surplus of nearly Rs. 4 billion just four years ago, it is today staring at bankruptcy with the main money lenders refusing to extend any more short-term facilities until it improves the cash flow. And the international donor agencies have also intensified calls for a complete 'change' while assuring a helping hand to turn it into a profitable institution once again. A way out of the crisis is envisaged by breaking the institution into nine different units under the 'restructuring' tag. This has brought forth a volly of strong protests from CEB engineers, energy experts, trade unions and also a majority of its employees. The Minister of Power and Energy who had a series of discussions with authorities, donor agencies and the trade unions and who is under pressure from various quarters has decided to switch over to some other Ministry if he cannot save the CEB.
As the restructuring controversy gathers momentum, professionals, - mainly the engineers at the CEB - are of the view that the solution to a recovery lies in implementing the much delayed, Norochcholai coal power project and the Upper Kothmale hydro power projects, as soon as possible. According to CEB engineers, the high generating cost due to its dependency on oil-fired electricity generation plants and the poor selling price of Rs. 7.70 per unit since 1996, has forced the once most profitable institution to suffer a slow death. The Engineer's Union (CEBEU) deny that the CEB has become a burden to the nation and claim that it can recover on its own, if the government gives back its rights to act independently. The right was revoked in 1996. "Those who are labelling us as a burden to the country should find out the root causes for the allegation. Four major causes for this dire financial crisis are the unavoidable increase of thermal generation to meet the growing demand compelling the CEB to purchase power from the private sector at very high costs; long delay in implementing the two major power projects; and the delay in making tariff adjustments", alleges CEBEU President Ananda Piyatilake. The CEBEU with over 400 engineers claim that the then government's policy - NO POWER CUTS AT ANY COST - and the government's decision, which allowed the private sector to participate in thermal power generation made the CEB a debtor. To maintain the government's pledge to prevent power cuts during the dry seasons the CEB was and is still compelled to purchase electricity from Independent Power Producers (IPPs) at very high prices. The price of selling electricity by these IPPs's goes up with the increase in the price of diesel in the world market, but the CEB is selling a unit at four rupees less than its purchasing price to the customers. "There is no need to talk much about the situation. These three figures in a nutshell will give the whole picture. In 2004 the CEB had paid Rs. 40 billion on diesel for electricity generation. By the end of 2004 the CEB had spent Rs. 27 billion to buy energy from IPPs's. The CEB's short term debt now is Rs. 27 billion. This will clearly show where the problem lies", points out Piyatilake. The 'Think Tank' (TT) established by Minister Premajayanth last year, to study the causes for CEB's huge debts had recommended four major solutions in their findings titled ' Strategic plan to rescue the CEB'. It clearly recommended debt restructuring, implementation of the proposed power projects identified in the 'Least Cost Long Term Generation Expansion (LCLTGE) Plan', a tariff increase and a modification of the CEB's structure. According to the TT's report, the CEB's short-term debts cannot be resolved by increasing tariffs, largely due to the social and economic drawbacks of such action, and it is not appropriate to charge the consumer for the consequences of past policies. It recommended that the CEB be allowed to defer its debt service payments to the Treasury on long-term debts for the period 2004 - 2009. " This strategy will enable the CEB to continue its operation on cash-neutral basis, without being over-burdened with debt management problems, while ensuring that the institution generates sufficient cash to pay operational expenses, CEB's share of essential capital investments on projects and to re-commence settling debt service payments on long-term debts due to the Treasury from 2010 onwards", the report states. The largest portion of CEB's costs is for electricity generation and the TT has recommended the CEB take immediate steps to reduce generation costs by implementing the LCLTGE Plan, which identified the 300 mw Kerawalpitiya Combined Cycle Power Plant and the 150mw Upper Kotmale Hydropower Plant as immediate power generation plants to overcome debts. The Kerawalapitiya Power Plant is expected to be commissioned in 2007 and the Upper Kotmale Power Plant in 2009. "They need to be completed with the highest priority and the only viable way left to reduce generation costs is by commissioning a coal power plant, which is identified in the CEB's Long Term Generation Expansion Plan for nearly two decades", it states. The TT recommended a 15 per cent tariff increase from the present Rs. 7.70 to Rs. 8.86 per kwh. " This tariff can sustain the CEB through 2010 without letting it fall back into cash flow deficits. Two years after the first generator at coal power plant starts producing electricity, the government can bring the tariff level down to Rs. 7.70 per kwh in constant price terms. Further tariff reductions will be possible when coal power generation becomes the dominant source of electricity supply in the country", it adds. The CEBEU strongly stresses the need for a new look CEB. " We believe that restructuring the CEB is a vital strategy that will help it to get back to its prosperous period. But it should not be 'unbundling' or 'reforming' in a manner that would break the institution into pieces", Piyatilake stresses. According to Piyatilake, the unbundling of the CEB is 'Paya barawata pitikara badinawa wage' (The problem is on the leg but gives the treatment some where else). " There is no need to establish separate units for the main services - generation, transmission and distribution- of the CEB. We, the professionals of the CEB see this decision as a step to create more problems and the disruption of the country's power sector", he claims. "We do not say restructuring is not necessary. We also believe that the 35-years-old institution needs a change. What we ask the government is to give more power and autonomy to the CEB. The CEB also needs to be free from political interferences. Now, even the Minister of Power and Energy does not have any authority in some activities, as Committees formed in some other Ministry handles the CEB's activities", he points out. The CEBEU vehemently refutes allegations that the CEB is in the doldrums due to lethargy, corruption and inefficiency. " The CEB has been really doing well for more than 20 years and within a short period of time it became one of the major debtors in the country", he says adding that to save the CEB the government should seriously think about minimising electricity purchasing from IPPs's and implement the cheapest power generation plants. Meanwhile, the CEBEU requests the government to act with a backbone and not be misled by the so-called 'environmentalists' who oppose the coal power generation and the Upper Kothmale power project. "There are three kinds of environmentalists. Those who really love nature, those who 'demonstrate on streets mainly to earn 'dollars' from international NGOs and the third category are those who 'dance' to the tune of IPPs. The people and the government should have a clear idea about these segments and the diesel mafia which obstructs the country's opportunity to have less prices for electricity", he warns. However, the CEBEU says that electricity prices would be increased by 60 per cent to Rs. 12.30 if the CEB is restructured. The CEBEU also warns the government of a strong trade union action if the CEB is segmented into nine individual companies. "First we will launch a strike and if the government fails to respond we will extend it islandwide. But power cuts would be the last resort in our mission to save the CEB. We are not pawns of any of the political party but professionals who fight to save the CEB," he says.
|
|
| News | Business | Features
| Editorial | Security
| Produced by Lake House |
Restructuring,
with the Board to be segmented into several units is being touted as the
only way to make the company viable and keep darkness at bay. But simmering
employee discontent over such moves threatens to boil over, promising a
trade union action induced blackout. 
President
Chandrika Bandaranaike Kumaratunge has given a firm assurance that the
restructuring would be done in a democratic manner, which would not of
affect the rights of the employee. The government is firm about bringing
down the unit price of electricity after restructuring the CEB. 
