Energy expert warns CEB taking country for a ride through creative accounting

By Rathindra Kuruwita

Ensuring control over the country’s energy supply requirements was vital for its energy security and for a country like Sri Lanka that could come only by increasing the use of renewable energy, Engineer Parakrama Jayasinghe, former president of Bioenergy Association of Sri Lanka, told The Island.

Jayasinghe said that depending on coal or petroleum was not feasible for the country in the face of fluctuating prices of those commodities and the continuous devaluation of the rupee to the dollar, he said.

He said: “Unfortunately, the Ceylon Electricity Board (CEB) doesn’t take these factors into consideration when taking decisions on the energy mix. They are set on coal and use creative accounting to show that coal is a cheap source of energy. A number of CEB and Ministry officials had claimed that they could produce a unit of electricity for about Rs. 7 to 8. They had done so by keeping the exchange rate at a constant, sometimes at around Rs. 150 per USD and setting the coal prices at around USD 50 per ton, which was the price when coal hit an all-time low last year.”

Jayasinghe said that renewable power such as wind and solar were pegged to the rupee and the money generated in this sector remained within the country. It is estimated that around 380 grams of coal is needed to produce a unit of electricity. This gives the coal cost per generation at Rs 9.12. When we add the diesel cost, the fuel cost per unit alone comes to about Rs. 9.90 per unit. With other costs of the plant (except financing) the unit cost reaches about Rs. 14.50.

Jayasinghe said: “Independent energy experts claim that a unit of energy created by the proposed new coal plants will be around Rs. 20. Soar and wind power is much cheaper. So, the claim that coal is the cheapest source of energy is simply wrong.”

Recently, independent energy expert, Vidura Ralapanawe said that the recovery of coal prices in the world market coupled with the decline in the value of the rupee would result in the cost of electricity generation increasing rapidly in Sri Lanka, especially with Norochcholai coal fired power plants accounting for the bulk of power produced in the country. He added that the recovery of coal prices, as demand picked up meant that calculations made by a number of energy sector decision makers as regards the cost of electricity in the future would be incorrect. “Coal cost has risen to USD 90 + FOB. With freight, insurance, VAT and lightering, the total cost of coal received by the plant is USD 120 per ton,” Ralapanawe said.