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LNG Scam is a Hangman’s Noose

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by Kumar David

There has been a news blackout on the liquid natural gas (LNG) deal that Basil Rajapaksa’s Ministry has entered into with the American company New Fortress Energy (NFE). The Sunday Island Editorial last week 26 September expressed concern about lack of transparency of facts and secrecy in negotiations. The deal is a response to an “unsolicited bid” is the official line but how much soliciting and wheeler-dealing went on no one will never know. The negotiations though commenced when Prime Minister Mahinda Rajapaksa was Finance Minister. I am not picking on the deal because it’s an American company, not at all. I am expressing disquiet about negotiating conduct, technical issues and potential long-term implications.

Before pitching into the topic I will define that ugly acronym FSRu&P (Floating Storage and Regasification unit & Pipelines). Natural gas globally is the fossil fuel of choice to replace King Coal. There is much disputation about whether one or two final coal-fired power stations will be built in Lanka in the next 15 years, but natural gas will be the eventual successor. Once released from the bowels of the earth, gas can be piped across continents. When chilled to very low temperatures it liquefies, ready for confinement in strong containers that can be brought into your kitchen or transported thousands of miles in huge tankers.

When a tanker arrives the FSRu&P game starts. Tankers can dock at a harbour designed for the purpose if you have one; if not a floating terminal is launched about five miles out at sea where LNG is stored. It can when needed be regasified – as in your kitchen gas cooker – and sent ashore via undersea pipelines. That’s the FSRU&P storyline and one of these is coming on the west coast, north of Colombo. The gas can be used in power-stations, industries and homes.

The plan is to convert the currently coal-fired 310MW West Coast Power Station (WCPS), Yugadhanavi, to gas, and to make the proposed Sobadhanavi 350MW station also gas fired. The gas-fired capacity will then be 660MW, but this is only the start. The CEB and the CPC (Petroleum Corporation) have reached an advanced stage in preparation and issue of documents calling for international bids for an FRSU and Pipelines, but not yet for the supply of LNG. Then suddenly and out of the blue the process was scuttled – it was infected by a bacillus. The Finance Ministry signed a Framework Agreement to proceed with the unsolicited or privately canvassed bid from NFE. A so-called Framework Agreement was inked in September in secrecy.

There are three harmful aspects. The first is unnecessary secrecy and unseemly sabotage of ongoing tender procedures. The second is a likely financial rip-off that may raise electricity prices and the third is a trap that will endanger Lanka’s long-term energy security and put the country’s neck into a hangman’s noose.

First things first. It is a violation of good practice to make an award to an unsolicited bid when tenders have been called; it rings alarm bells whether someone took 10%. International Competitive Tenders were called by GoSL for an FSRu&P and bid documents were issued but the Finance Ministry inked a secret deal to sell 40% of WCPS to NFE in the midst of this. The deal was reported in New Fortress’s website but not in local media. When Sirasa TV asked Power & Energy Minister Dulles Alahapperuma, he denied any agreement. Something is fishy.

https://www.newfortressenergy.com/stories/New-Fortress-Energy-finalizes-contract-with-government-of-Sri-Lanka

Basil’s defenders and the CEB Engineers Union have locked horns. A Sinhala video by CEBEU President Saumya Kumaravadu provides an excellent summary: https://www.youtube.com/watch?v=VjWQ9tvIz1k

An English statement is at:

https://economynext.com/sri-lankas-could-lose-billions-through-unsolicited-new-fortress-energy-deal-cebeu-86396/

The second shock is that in terms of the Framework Agreement the government has entered into a Take-or- Pay (ToP) deal for LNG. ToP is a bad idea if the amount contracted is large or if the donkeys writing the contracts have little understanding of electricity generation or the complexities of manoeuvring in global LNG markets. Under the tender care of these goofs Lanka will be played for a sucker – recall the oil hedging fiasco a few years ago. Suppose a petrol company offers you a fleet of taxis free (the BAIT), but on condition you buy your petrol exclusively from it for five years (the TRAP). Suppose the value of the fleet is Rs 25 million but the cost of the petrol to be consumed in the five year period is Rs 500 million. Whether you need it or not you must buy an agreed quantum from the petrol company. The BAIT in LNG story is that NFE will buy 40% of WCPS for $250 million (investment) and the TRAP is compulsory purchase of LNG for both power stations and any others subsequently taking gas from this facility.

Pricing could also be a problem. LNG prices are volatile and swings have become mercurial in the aftermath of recent supply chain disruptions. Spot-prices vary widely between Henry Hub, Japan-Korea and the Netherlands TTF spot-markets. Bangladesh bought a cargo for delivery last month at $29.9 per million-Btu, the highest the country has paid for super-chilled fuel. The average LNG price for November 2021 delivery to Northeast Asia is $27 per million-Btu. A wise man surely will keep purchasing manoeuvrability in his own hands.

Say the CEB incurs fuel supply expenditure of $500 million per annum – I am pricing natural gas at $14.5 per million-Btu; see Technical Note below for quantity estimate. If NFE makes, say 10% to 15% on the sale it will make a profit of $50 million to $75 million per year (example only). You might say “What’s the problem we have to buy LNG from somewhere?” But if in any year (lots of rainfall say) the CEB does not need that much, too bad; it will have to Take-or-Pay even if it does not use it, like alimony to an estranged wife. There will also be a fixed charge spread over the period by means of which NFE will recover its entire investment costs.

Finally the hangman’s noose. Sri Lanka has been trapped; it is infeasible to build a second FRSU and pipelines in a relatively small country since the investment is large. Once Lanka builds one, that’s it for a decade or more. We will neither need, nor be able to afford a second for a long time. India has only six terminals in operation. In the meantime the CEB long-term generation expansion plan envisages the addition of about 3GW (3000 MW) of gas-fired generation in the period from now to 2037. LNG will become the bedrock of electricity production in the period to 2040, displacing coal. The implication of the deal with NFE is that country will be in the pocket of a foreign company for energy security for the foreseeable future. The government is doing more to jeopardise natural security than any youthful, slogan-intoning, racist or religious hothead!

Renewable energy will and should be encouraged though it’s not going to provide 70% of primary energy for electricity by 2030 except in Aesop’s Fables. The cynic will read a dangerous trick written into a shady contract. Remember how in the 1990s corrupt presidents, politicos and businessmen made a killing from oil-fired private power-plant construction and operation while the CEB, grossly unfairly, carried the flak? Something reminiscent is possible if corrupt politicos and greedy renewable energy (RE) investors act in consort. Today RE investors demand that they be paid at a rate corresponding to avoided-cost. Since one unit of RE electricity can displace one unit of fossil-fuel electricity they demand to be paid the avoided cost, which is the cost of the most expensive unit then on grid. But what if you play the following game: First jack up the price of fossil energy, then enact the drama of the brave saviour lopping off a bit at the top? It could be the game of unscrupulous politicians and RE investors to jack up the price of ‘going-to-be-avoided’ electricity first and after that play the drama of avoided-cost. I don’t need to explain; you can work out what the cynic is saying. And let’s not forget that corrupt politicos and market players impede, not assist, ecological goodness.

Technical Note

If 0.66 GW (660MW) were to run flat out, non-stop, every hour of the year the electrical energy output will be 0.66x24x365 = 5,782 GWh. Since plant cannot run without maintenance and since full output is not maintained all the time the actual plant-factor is, say, 70%. The output is then reduced to 5782×0.7 = 4,047 GWh. If the efficiency of generation is 40%, then the primary-source energy need at the input is 4047/0.4 = 10,118 GWh-equivalent of LNG energy. Now 1 GWh is the same as 3412×106 Btu (British thermal unit). Therefore the input LNG energy that is needed for both power-stations is 10,118 x 3412×106.which works out at 34.5 million-million-Btu per year, or dividing by 365 we get an average of 94,520 million-Btu per day (44,420 for Yugadhanavi and 50,100 for Sobadhanavi). Someone younger than age-80 kindly check these sums.

However the New Fortress Website declares: “New Fortress will initially provide the equivalent of an estimated 1.2 million gallons of LNG (~35,000 MMBtu) per day to GOSL, with the expectation of significant growth as new power-plant become operational.” There seems to be a cockup in NFE’s numbers, or maybe it’s meant to obfuscate Ministers and Administrators.

https://economynext.com/us-based-new-fortress-energy-says-strikes-lng-supply-deal-with-sri-lanka-86367/

[MM stands for Metric-Million. The initial “Metric” is redundant and will be thrown out of the window in self-respecting scientific discourse. So MM simply stands for million].



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Features

The Rohingya question and states’ international obligations

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A boat load of Rohingyas rescued off MullaitIvu

The presence of Rohingya refugees in Sri Lanka has prompted sections in the South of the country to raise some concerns in connection with it but The Human Rights Commission of Sri Lanka’s (THRCSL) recent report on the issue, if received and read in a spirit of reconciliation and humanity, should put their minds at ease.

To be sure, there is considerable substance in the objections and worries of the relevant Southern quarters but the majority of the refugees in question need to be seen as victims of complex political circumstances in their countries of origin over which they do not have any control.

Those Rohingyas who are now literally adrift in the seas of South Asia and beyond, are strictly speaking stateless. Most of them are escaping endemic political turmoil and runaway lawlessness in the Rakhine state of Mynamar and the spillover of such tensions into the Myanmar-Bangladesh border and beyond.

There has been playing out in the Rakhine region over the decades a Rohingya armed struggle for autonomy but the majority of the Rohingyas are not in any way supportive of this armed struggle which is an expression of the Rohingyas’ awareness of their separate identity as a community, although they possess a wider Muslim identity as well.

But there has been an influx of Rohingya refugees to several neighbouring countries from this conflict, including very significantly Bangladesh, and this has been triggering concerns among the wider publics in those states which are compelled to manage the Rohingya refugee presence amid economic pressures of their own.

The problems arising from the Rohingya refugee presence have been compounded by the rise of Islamic militancy in South Asia and the tendency among some of these militant groups to exploit this presence for the propagation of their causes.

However, this does not take away from the fact that the majority of Rohingyas are helpless victims of circumstance. They are caught up in the metaphorical ‘exchange of fire’ between mutually suspicious states that are compelled to contend with issues growing out of the rise of Islamic militancy. But for the majority of Rohingyas such endemic conflicts among states translate into displacement, statelessness and growing powerlessness.

For an enlightened understanding of what states need to do in connection with the refugee crisis and connected questions it would be necessary to read the THRCSL report above mentioned. States that are members of the UN family are obliged to ratify and implement a number of conventions related to refugees and the THRCSL mentions some of these. They are: The 1951 Convention on Refugees; 1954 Convention Relating to the Status of Stateless Persons; 1961 Convention on the Reduction of the Stateless and the Rights of Refugees and Stateless Persons within Sri Lanka.

If Sri Lanka and other countries facing a refugee influx have not adopted these laws they would need to do so without further delay if they are opting to remain within the UN fold. In this connection, the Universal Declaration of Human Rights should be seen to be of fundamental importance. The Declaration is the fountainhead, so to speak, of international humanitarian law and UN members states have no choice but to adhere to it.

Contentious issues are likely to grow out of the implementation part of the mentioned conventions but it is best that signatory states take up these matters with the relevant key agencies of the UN rather than grouch over matters that surface from their inalienable obligations towards the stateless and homeless.

It was encouraging to note a Southern group in Sri Lanka mentioning that the Lankan government should draw the attention of the UNHRC to the fact that the state is not a signatory to some of the mentioned refugee conventions. This is the way to go. A dialogue process with the UNHRC, which does not happen to be very popular in Sri Lanka, on such issues would perhaps throw up fresh insights on Sri Lanka’s obligations on refugee issues that may then convince the state to sign and ratify the conventions concerned.

There needs to be a flourishing of such positive approaches to meeting Sri Lanka’s obligations as a UN member state. The present most unhappy existence of being a UN member state and not implementing attendant obligations needs to end if Sri Lanka is not to be accused of ‘double speak’ and ‘double think’.

Meanwhile, identity politics and connected problems are bound to remain in South Asia and bedevil all efforts by states of the region to see eye-to-eye on issues such as the stateless. The yawning ‘democratic deficit’ in South Asia continues to be a formidable challenge.

But all efforts should be made to reduce this deficit through collaborative efforts among the concerned states. This is so because increasing democratization of states remains the most effective means of making identity politics irrelevant and the latter is a primary cause for the break-up of states, which process throws-up troubling consequences, such as statelessness and refugees.

Fresh initiatives need to be undertaken by the ‘South Asian Eight’ to end the continuing ‘Cold War’-type situation between India and Pakistan, since they hold the key to re-activating SAARC and making it workable once again. It ought to be plain to see that it is only the SAARC spirit that could help in ushering a degree of solidarity in South Asia which could go some distance in resolving issues growing out of nation-breaking.

Once again, South-South cooperation should be seen as a compelling necessity. If vital sections of the South come to this realization and recognize the need for such intra-regional cooperation, the coming back to power of Donald Trump could be considered as having yielded some good, though in a highly negative way. Because Trump has made it all too plain that he would not be considering it obligatory on the part of the US to help ease the lot of the South any more.

The South would have no choice but to fall back on strategies of self-reliance. No doubt, this situation would accrue to the benefit of the world’s powerless. Self-reliance is the best option and the only key to unravelling external shackles that bind the South to the North.

Meanwhile, those sections of Southern Sri Lanka that are tending to cheer Trump on need to put the brakes on any such idle distractions. The message that Trump has for the world is one of division and strife. By rolling back almost all the progressive ventures that have come out of Washington over the years, Trump is plunging the world into further ‘disorder’. The international community needs to brace for stepped-up nation-breaking.

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Effective and non-effective methods for mitigating human-elephant conflict

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Villagers living in fear of wild elephants. (File photo)

by Tharindu Muthukumarana
tharinduele@gmail.com

(Author of the award-winning book “The Life of Last Proboscideans: Elephants”)

“We cannot solve our problems with the same thinking we used when we created them”.

-Albert Einstein

When we examine the records of funds spent in the years beforehand to mitigate human-elephant conflict (HEC), it is evident that the expenditure has been growing. For example, in 2010, USD $505,001 was spent, but in 2018, USD $1,068,021 was spent. So, this shows that expenditure had been over double within a period of less than one decade. But in the same way, the HEC had always been rising throughout the years. So, what went wrong? The answer is that the funds were expended mostly on ineffective mitigating strategies rather than effective mitigating approaches. Henceforth, let’s look at a glimpse of what are the non-effective methods and effective methods.

Non-effective methods Translocation

Elephant translocation involves capturing elephants from one place and moving them to a safer environment. Sri Lanka had done this for many decades. One of the earliest translocations occurred in 1979, when 10 elephants were relocated from Deduru Oya to Wilpattu National Park (NP). So, it was a new experience for the Department of Wildlife Conservation (DWC), and they even had to get a foreign veterinary surgeon named Dr. Ian Hoffmeyr from Etosha NP in Namibia to sedate the elephants.

Unfortunately, radio tracking collars were not put on those elephants to monitor updates of those elephants. So, ultimately what happened was that those translocated elephants’ status never got documented. However, in recent translocations, the GPS tracking collars were fixed on them and have given accurate updates on their whereabouts. According to those data, 3 conclusions are probable: (i) The translocated elephant got killed in the new home. (ii) Left the new home and returned to the initial home. (iii) created conflict with neighbouring villagers in the new home.

As for example, in 2007, a tusker named Ravana that was crop raiding in Anuradhapura got translocated to Udawalawe NP. He then got into conflict with neighbouring villages of Handapanagala, Aluthwewa, and Buttala. Due to this, Ravana got shot in the leg, and as a result, Ravana got re-translocated to Lunugamvehera NP. Again, Ravana raided crops on leased land in the park, and a few months later, Ravana got shot in the jaw and had an agonising death after suffering for a few days.

Another tragic event happened when a young bull elephant named Homey that frequently foraged at a garbage dump in Hambantota got translocated to Yala NP Block II, which took a journey of 75 km. Within a few days, Homey was back at the garbage dump. Astonishingly, when data from the collar was downloaded, it was shown that the route Homey took to return contrasted with the route Homey was taken. For the second time, Homey was translocated to Udawalawe NP, but as time passed by, he created conflict with neighbouring villages. Subsequently, Homey left the park and again returned to the garbage dump. For the third time, Homey got translocated to Maduruoya NP, almost 300 km away from Hambantota. At times, Homey tried to come back to the garbage dump but was unsuccessful due to compact human settlements. So, he continued to stay at Maduruoya but started to create conflict with neighbouring villages. This resulted in him getting shot frequently. One day he got shot in the head and died in a paddy field.

Elephant Drives

Elephant drives involve chasing elephants from one area to another area, and for this, firecrackers or thunder flashes would be used. This procedure can take days to get completed. These drives had happened as early as the 1970s, and the latest to be 2024. From a scientific perspective, the decades of elephant drives that have been done are one of the key reasons for Sri Lanka having the highest level of HEC in the world. Records have clearly shown that after an elephant drive, some or all driven elephants returned. Also, in every location where elephant drives took place, HEC still persists. In many cases, the problem-causing males don’t get driven because those males usually avoid it. Instead, non-problem-causing female elephants get driven. In such incidents, after those driven elephants got enclosed in a restricted home range, those elephants did face starvation and malnourishment that eventually made them die. For this, there are examples coming from Lunugamvehera NP and Yala NP.

Removing the problem elephants

Removing problem elephants could be done in two ways: one is domestication and the other is culling. Such acts can enhance the risk for elephants’ extinction. Problem elephants are usually male elephants, and elephants that raid crops are risk takers. Emerging research shows that risk-taking behaviour contributes highly to their reproductive success. So, if such elephants are removed from the gene pool, it weakens the elephant population.

In modern days, there is a popular misconception that the elephant population has risen, and it is immoderate. In fact, scientifically, there is no way to explain whether the elephant population has risen or plummeted. Because the first legitimate elephant census was done in 2011. Before 2011, elephant population numbers were given as guesses or estimations. After 2011, last year an elephant census was done, but still the results haven’t been published. There are many who think that the elephant population has increased because, around the country, there are places where locals are newly experiencing HEC. This happened because of habitat loss and the blocking of elephant corridors that occurred due to poor development planning done by various governments. So, as a result of it, new places experience HEC.

Still, the Sri Lankan elephant is classified as “Endangered” by the IUCN Red List due to its high risk of extinction and declining population. Also, we must remember that though culling or capturing of elephants is not done, yet annually, in the last few years, over 350 elephants have died due to HEC. This is only the documented data, and the undocumented figure can give a higher value. A mother elephant usually gives birth to a single calf with a two-year gestation period. They have 4-5 years of interval until the next calf is born. Females become less fertile after 40 years. In Sri Lanka only 6,000 elephants are left. So, such a high mortality rate due to HEC is critical.

Biofencing and Geological Barriers

A victim of the human-elephant conflict

Palmyra Palm fencing: This involves planting palmyra trees (Borassus) as a fence to restrict elephants’ movements. Though it has some positive effects, practically there are problems to call it a solution. This project is expected to take a longer time to achieve its anticipated outcomes and could take even a decade. Even so, the germination rate is lower, and by any chance, if at least one tree fails to grow, the fence becomes ineffective.

Thorny plant fencing: Plants such as agave, cacti, and bougainvillaea had been used to deter elephants, but those had been unsuccessful because of elephants’ thick skin. Besides, elephants even feed on thorny plants such as Acacia eburnean that have sharp thorns that can grow up to 1 inch.

Beehive fencing: The fence is erected at chest height with beehives fixed to it and spaced every ten meters. This method had high success in deterring crop-raiding elephants in Africa. In addition, the produce from hives provided economic benefits to farmers. This project was introduced by Save the Elephants Organisation (SEO). From 2014-2019 SEO collaborated with the Sri Lanka Wildlife Conservation Society (SLWCS) to do a pilot project in Wasgamuwa. Unfortunately, results showed it was ineffective due to the reason that African honey bees (Apes mellifera scutellata) and Asian honey bees (Apes cerana indica) behaviour contrasts. Asian bees cannot scare away elephants, and those bees are not active at nighttime.

Trenches: Soil erosion had made trenches ineffective, and also the construction and maintenance cost is very expensive. According to past experiences, it had impeded wildlife movement, and a lot of other smaller animals had died after falling to them. Also, there is a potential of hydrological impacts that would have a negative effect on villages.

Effective methods

Before touching this topic, it is important to mention that the strategies put forward here are science-based projects, and these projects had been put into experiment as pilot projects with successful results. The villagers state that after the implementation of the project, HEC had been solved or mitigated. These projects had been done by the Centre for Conservation and Research and SLWCS.

According to research, it has been proved that the electric fence is the most effective to deter elephants. But it depends where the electric fence is erected. If it is erected in the boundary of a protected area, it can be ineffective, but instead, if it is erected at the border between elephant habitat and human-use areas, it can be successful. This is what is called community-based electric fencing and proved to be successful in mitigating HEC.

Another method is the paddy-field electric fences. These fences are installed seasonally. During cultivation the fences are installed, and during harvest the fence is removed and stored in their houses until the following crop season. So, during the fallow periods, elephants would forage the leftover harvest and other vegetation. By 2020, approximately 50 village electric fences and 25 paddy-field electric fences were active in the Kurunegala, Hambantota, Trincomalee, and Anuradhapura districts for up to 12 years. Feedback from the villagers is positive.

It needs to be mentioned that in 2020 a National Action Plan for the Mitigation of HEC was made by a committee of wildlife experts. Strategies included in the National Action Plan were chosen based on their demonstrated effectiveness, capacity to be executed on a suitable geographic and temporal scale, and cost-effectiveness. Stakeholder discussions were performed with the public and relevant agencies, and their feedback was integrated into the Action Plan as needed. So, if that action plan gets implemented, HEC could be mitigated!

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Congratulations…and celebrations

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Twenty-one years in the news, in Toronto, Canada, and that certainly calls for big time celebrations!

Dirk Tissera, Editor-in-Chief and Publisher of The Sri Lanka Anchorman, is working on making it a big scene.

He says the 21st Anniversary celebrations will take the form of a gala dinner dance, scheduled for Friday, 30th May, 2025, in Toronto, Canada, adding that there would be plenty of surprises!

In fact, The Sri Lankan Anchorman’s 20th Anniversary, ‘A Night To Remember,’ held on 31 May, 2024, at the J&J Convention Centre, in Toronto, turned out to a resounding success.

Dirk mentioned that last year’s event was sold out long before the scheduled date.

“We generally work on our anniversary celebrations months in advance to ensure that the audience got their monies worth, and there was plenty of variety in the music we provided last year, led by veteran singer, the legendary Fahmy Nazick, along with the band Déjà Vu, guest singer Cherry Deluna, and DJ Chami.

What is special about The Sri Lanka Anchorman, a tabloid newspaper, is its wide and varied content which Sri Lankan-Canadians eagerly look forward to reading.

In fact, Dirk Tissera received a top Toronto press award from the National Ethnic Press & Media Council of Canada (NEPMCC) for excellence in editorial content and visual presentation.

An old boy of St. Mary’s College, Dehiwela, he had his early grooming, in journalism, right here, in Colombo, and then moved to Canada, and is now based in Toronto.

Dirk Tissera is efficiently supported by his wife Michelle in the publication of The Sri Lanka Anchorman.

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