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| Sunday, 19 June 2005 |
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Business |  |
| News Business Features Editorial
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Mega power
projects vital to meet escalating costs
by Gamini Warushamana The business community has reiterated the urgent need to restructure the Ceylon Electricity Board (CEB) to implement the mega power projects in the wake of the increasing fuel and energy costs in the country due to the rapid escalation of crude oil prices in the international market. The Ceylon National Chamber of Industries (CNCI) last week organised a seminar to emphasise the urgent need to restructure the CEB and implement the proposed mega power projects such as Upper Kothmale hydro-plant and Norochcholai coal plant. A day prior to the seminar the business community also held a discussion with the media in order to counter the arguments against the process and disclose the real facts behind the delay of these projects, other renewable options available as well as the economic cost of delaying the process. They expressed apprehensions about the realisation of numerous power generation plans in the list of CEB as measures to overcome the present power crisis in the foreseeable future. Shifting to low cost power generation is being delayed due to bureaucracy, inefficiency, lack of transparency and accountability of the CEB, they said. Local industries are loosing their competitiveness due to the high cost of production owing to high energy costs. According to the Central Bank report the cost of electricity in Sri Lanka is one of the highest in the world. The cheapest option available is coal power, but it takes over five years to build a coal power plant and therefore even if Sri Lanka starts to construct a coal power plant today we will have to face a crisis within the next five years. CNCI Chairman Nimal Perera called upon the government to go ahead with the planned power projects. "Local industries are facing difficulties owing to imports and low cost dumping. Higher electricity costs, increased production costs and our products cannot compete in the local and international market, he said. However, the Engineers' Union of the CEB accused the government for the crisis. The CEB faced a financial crisis due to the political decisions of successive governments, said Ananda Piyathilake, President of the Engineers' Union. A few years ago the CEB was cash rich with over Rs. 4 billion in hand. Most of the long-term debts are investment loans obtained on favourable terms. The financial crisis is a result of high production costs owing to the high dependability on thermal power and subsidised tariff below cost of production. Piyathilake also accused the government for entering into agreements with Private Power Producers (PPPs) at very high rates without consulting the CEB Engineers. All the decisions were taken by the ministries and various committees and institutions formed to take decisions and the CEB was asked only to pay the bill to those PPPs. Today the CEB purchases a unit of electricity at Rs. 9.20 from Asia Power, Rs. 8.20 from Lakdanavi, Rs. 16.35 from Kool Air, Rs. 8.36 from Colombo Power and Rs. 8.36 from ACE for emergency supplies. Going beyond the capacity of a trade union as professionals we prevented several controversial deals that the government wanted to enter into just before the last election, Piyathilake said. |
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