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Long-term generation expansion plan – Legal barrier against implementing the Electricity Act

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By Dr. Janaka Ratnasiri and Eng. Parakrama Jayasinghe

A retired Professor of Electrical Engineering has claimed that “the CEB’s long-term generation expansion (LTGE) plan is the best strategy for this country to follow at this time, which is revised once or twice a year” in a write up appearing in The Island of 03.09.2020. Obviously, the learned Professor does not seem to be familiar with the CEB plan because it is not revised once or twice a year but only once in two or three years. Nor has he studied the proposals made by the CEB in relation to the current developments in the energy sector worldwide. The LTGE Plan has some importance for Sri Lanka because compliance with it has been made mandatory for capacity addition both in the Act as well as in the Power Ministry mandate.

SRI LANKA ELECTRICITY (AMENDMENT) ACT NO. 31 OF 2013

This Act, which is an amendment to the Sri Lanka Electricity Act No. 20 of 2009, governs the addition of any new power plants or expansion of existing power plants in Sri Lanka. This amendment to the Act requires that such addition of generation capacity needs to comply with the CEB’s LTGE Plan which has received the prior approval of the Public Utilities Commission of Sri Lanka (PUCSL). There are six instances in the Act where reference has been made to the CEB’s LTGE Plan making it mandatory that any new capacity addition or expansion has to meet the requirements specified in the CEB Plan.

Some extracts of sections of the Act where reference has been made to the LTGE Plan are given below.

“A transmission licensee shall, based on the future demand forecast as specified in the Least Cost Long Term Generation Expansion Plan prepared by such licensee and as amended after considering the submissions of the distribution and generation licensees and approved by the Commission, submit proposals to proceed with the procuring of any new generation plant or for the expansion of the generation capacity of an existing plant, to the Commission for its written approval”.

“Upon obtaining the approval of the Commission under subsection (2), the transmission licensee shall in accordance with the conditions of its transmission licence and in compliance with any rules that may be made by the Commission relating to procurement, call for tenders by notice published in the Gazette, to develop a new generation plant or to expand the generation capacity of an existing generation plant, as the case may be, as shall be specified in the notice”

“Upon the close of the tender, the transmission licensee shall through a properly constituted tender board, recommend to the Commission for its approval, the person who is best capable of meeting the requirements of the Least Cost Long Term Generation Expansion Plan of the transmission licensee duly approved by the Commission”, among others.

“The Commission shall be required on receipt of any recommendations of the transmission licensee, to grant its approval at its earliest convenience, where the Commission is satisfied that the recommended price for the purchase of electrical energy or electricity generating capacity meets the principle of least cost and the requirements of the Least Cost Long Term Generation Expansion Plan and that the terms and conditions of such purchase is within the accepted technical and economical parameters of the transmission licensee”.

“For the purpose of this section- “Least Cost Long Term Generation Expansion Plan” means a plan prepared by the transmission licensee and amended and approved by the Commission on the basis of the submissions made by the licensees and published by the Commission, indicating the future electricity generating capacity requirements determined on the basis of least economic cost and meeting the technical and reliability requirements of the electricity network of Sri Lanka which is duly approved by the Commission and published in the Gazette from time to time”.

 

MINISTRY OF POWER MANDATE

The recently established Ministry of Power has stipulated as a key mandate of the Power Ministry the following:

Meeting the electricity needs of all urban and rural communities based on the long-term generation expansion (LTGE) plan prepared by the Ceylon Electricity Board (CEB).

Among the special priority areas identified for the Power Ministry is the Implementation of the long-term generation expansion plan.

LONG-TERM GENERATION

EXPANSION PLAN

Since the Electricity Act as well as the Ministry of Power mandate require that the generation capacity addition needs to be carried out meeting the requirements of the LTGE Plan, it is necessary to examine closely what this plan is. The CEB prepares a long-term generation expansion (LTGE) plan once in two or three years outlining the least cost options of generation plants that need to be added to the system annually for the next 20 years to meet the forecasted demand. The latest plan is in respect of the period 2020 – 2039 but it is still in the draft form yet to be approved by the PUCSL as required by the Sri Lanka Electricity Act No. 31 of 2013. As such the LTGP in effect is the 2018-2037 plan which has received the written approval of the PUCSL.

Being a rolling plan updated once in two or three years, the types and capacities to be added in a given period keeps changing with the plan. Hence, a potential developer is at a loss to know which plan to follow in planning a future power plant development project. This becomes clear when the capacities recommended to be added in the three recent plans covering the periods 2015-34, 2018-37 and 2020-39 (Draft) given in Table 1 are examined. For simplicity, only the additions of large thermal power plant capacities are included in the Table.

It is seen that the 2015-34 Plan has included only coal power plants amounting to 3,200 MW up to 2034. The 2018-37 Plan, on the other hand, has included addition of 2,700 MW of coal power plants together with 1,500 MW of natural gas (NG) power plants, up to 2036. Whereas the 2020-39 Plan (Draft) has included addition of 2,100 MW of coal power plants together with 3,000 MW of NG power plants up to 2039. When the capital cost of power plants and fuel costs keep varying year to year, it is impossible to forecast accurately 20 years earlier what the cheaper option would be in 20 years hence.

 

ISSUES IN IMPLEMENTING

THE CEB PLAN

If the CEB Plan was implemented in 2016, by 2025, coal power of capacity 1,400 MW, including the proposed coal power plant at Sampur, needs to be built according to 2015-34 Plan. However, according to the 2018-37 Plan, 3×300 MW of coal power plants, together with 2×300 NG power plants, need to be built by 2025. On the other hand, according to the 2020-39 draft Plan, 3×300 MW of coal power plants together with 4×300 MW of NG power plants need to be built by 2025. When a plan keeps changing in this manner with so much divergent recommendations, it cannot be called a long-term plan. There is no unique recommendation for a given period for an investor to pursue. If the 2015-34 Plan decided that coal power plants are the cheap option up to 2025, how is that the 2018-37 Plan decided that NG power plants are the cheaper option for this period? This shows the weakness of the planning methodology.

If an investor wishes to build a power plant in 2015, he is required to follow the capacity additions as specified in the 2015-34 Plan and will decide to build a coal power plant. After spending the first two years on the preliminaries such as feasibility studies and environment impact studies, he finds that an updated 2018-37 Plan released in 2018 recommends NG power plants, instead. Is he then required to change his plans and start building a NG power plant instead? In view of environmental consideration, a NG power plant is always preferred to a coal power plant. It should be noted that a 300 MW coal plant will generate about 100,000 t of ash annually which is an environmental hazard.

There is also an ambiguity in applying the condition laid down in the Act that the capacity additions shall meet the requirements of the LTGE Plan. The Act does not specify whether the Plan to be applied is what is in force at the time of commencing the power plant project or what is in force at the time of commissioning the power plant. Within a matter of four to five years’ time taken to build a coal power plant, the requirements in the Plan could change widely during this period. Hence, it is essential that this be clearly specified or this condition removed altogether enabling implementation of the Act without leaving room for it to be questioned in a court of law.

 

DISPUTE BETWEEN THE REGULATOR AND THE LICENSEE

The Electricity Act requires that the LTGE Plan prepared by the CEB shall be approved by the regulator, PUCSL. However, the approval of the Plan for 2018-37 ran into a problem when the original draft submitted by the CEB was not approved by the PUCSL who in turn proposed an alternative Plan which was not accepted by the CEB. This dispute went dragging for over a year and settled only after the intervention of the President. Even in the case of the current draft for 2020-39, the CEB had submitted it to the PUCSL for approval last year, and is still awaiting approval. Possibly, the PUCSL may want the Plan to fall in line with the Government policy of giving priority for renewable energy sources as described in the writer’s article appearing in the The Island of 25th and 26th September.

This dispute was brought to stark reality in respect of the CEB plan 2018-2037 both by the evaluations of the PUCSL and in the submissions made during the public hearings. The blatant errors and misrepresentation sin the draft submitted by the CEB which was obviously done to force the adoption of further coal power plants ignoring the world wide rejections can be seen in the submissions made to the PUCSL during the public hearings and is available in the PUCSL web page ().

Accordingly, an amended LTGP was formally issued by the PUCSL which should be considered as the LTGP in force until such time a new plan is approved after going through the processes including the public hearings as done in the case of the 2018-2037 LTGP. The fact that the CEB refused to accept this plan and the fact that the Government decided to force the PUCSL to issue an approval for the flawed plan submitted by the CEB makes a mockery of the entire process and the role of the PUCSL as the regulator of the Electricity Sector. As such, it does not make sense to incorporate such a flawed variant plan as mandatory for capacity addition in the Act as well as in the Ministry mandate and to describe it as the best strategy. As a matter of fact, it is the worst strategy for power sector development in the country.

 

AMENDMENT TO THE ELECTRICITY ACT AND MINISTRY MANDATE

To get over the problem of the Act and the Ministry mandate not being able to meet the requirements of the LTGE Plan in view of the uncertainty of the technologies which the Plan recommends for different time periods, it is necessary to amend these two documents. The first reference to the LTGE Plan in the Electricity Act described previously says that procurement of generation capacity shall be based on “the future demand forecast as specified in the Least Cost Long Term Generation Expansion Plan”. This is in order because there is little variation in the demand for a given year between different Plans.

The rest of the references say that future capacity additions shall meet the requirements of the LTGE Plan. Since the requirements include the technology whether a coal plant or a NG plant should be installed and this changes from Plan to Plan causing the uncertainty in implementing the provisions in the Act or the Ministry mandate, it is best if these sections are amended. It is proposed that the words “meet the requirements of the LTGE Plan” appearing in the Act be amended to read “meet the demand forecasted in the LTGE Plan”, wherever the term “requirements” appear.

The Act says that “Upon obtaining the approval of the Commission the transmission licensee shall in accordance with the conditions of its transmission licence and in compliance with any rules that may be made by the Commission relating to procurement, call for tenders by notice published in the Gazette, to develop a new generation plant or to expand the generation capacity of an existing generation plant, as the case may be, as shall be specified in the notice”. Hence, it is logical to keep the fuel option open when calling tenders at the time capacity addition is required giving sufficient time for the procurement process and construction of the plant. The bids received would show which fuel option is the cheaper.

It is important to issue a set of specification with respect to performance and emissions which should be met by the plant offered. The tender should also be required to specify the levelized cost of generation including the amortized annual cost of the plant, cost of operation and maintenance and the fuel cost for generating a unit of electricity giving a formula to work out the fuel cost depending on its price in the international market. The price should also include the cost of externalties. It will be then possible to select the best and cheaper option, whether coal or gas, meeting the specifications.

It should also be noted that the Electricity Act has interpreted “least cost of generation” to mean “least economic cost of generation”. Economic cost should include the cost of damage to the environment due to emission of fly ash as well as from accumulation of about 100,000 tonnes of bottom ash annually from a 300 MW coal plant. It should also include the cost of health damage to people exposed to gaseous emissions and release of toxic substances from the plant. The current plans do not include these and if they are included, all the coal plants included in CEB’s LTGE Plans need to be changed to NG power plants as such plants do not cause emission of toxic gases or other substances.

 

CONCLUSION

Though the Electricity Act and the Ministry mandate stipulate that capacity additions be carried out to meet the requirements of the CEB’s LTGE Plan, practically it is not possible to follow this in view of the fact that the type of plants to be added keep changing with the Plan. It is therefore proposed that the Act as well as the Ministry mandate be amended suitably. It is also proposed that the type of plant be selected after calling tenders keeping the fuel option open a few years ahead when the capacity addition is required and not 20 s years beforehand.

It is important to recognize that the basic purpose of the LTGP is to ensure the long-term energy security of the country using means and technologies that enables realization of the least economic cost of generation, which should include the cost of externalities. As such, unless a firm binding feed in tariff over the life of the plant cannot be guaranteed via suitable tender procedure accepting the above premise, making any long term plans using numbers such as parity rate and price of coal or gas is a futile exercise.

Furthermore, the changes occurring in the energy sector practically every day which helps to realize the above objectives must constantly be factored in to the planning process. Thus, the CEB plans available currently certainly comprise the worst strategy to follow in developing the power sector in the country, as they completely ignore the very progressive advances made the world over which are of great benefit to Sri Lanka.



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Features

Mindset changes and the dangerous ‘Religious War’ rhetoric

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Israeli border police on patrol at the Damascus Gate in occupied East Jerusalem (Pic courtesy Al Jazeera)

Nothing could be more vital at present in the conflict and war zones of the world than positive mindset changes and the wish of the humanist is likely to be that such momentous developments would quickly come to pass in particularly the Middle East. Because in the latter theatre almost every passing hour surfaces problems that call for more than average peace-making capabilities for their resolution.

For instance, the Islamic Supreme Fatwa Council in Palestine has reportedly warned of a ‘Religious War’ in the wake of recent allegations that Israel is planning to prevent the Muslim community from having access to the Al-Aqsa Mosque in East Jerusalem in the month of Ramadan. If true, this development is likely to further compound the Gaza violence and take it along an even more treacherous track. This is on account of the fact that religious passions, if not managed effectively, could prove most volatile and destructive.

As pointed out in this column previously, peace movements on both sides of the main divide in the region would need to quickly activate themselves, link-up and work as one towards the de-escalation of the conflict. What the Middle East and the world’s other war zones urgently need are persons and groups who are endowed with a pro-peace mind set who could work towards an elimination of the destructive attitudes that are instrumental in keeping the conflicts concerned raging.

This could prove an uphill task in the Middle East in particular. For, every passing minute in the region is seeing a hardening of attitudes on both sides in the wake of issues growing out of the violence. Accordingly, if peace-making is to be contemplated by the more moderate sections in the conflict, first, we need to see a lull in the violence. Achieving such a de-escalation in the violence has emerged as a foremost need for the region.

Right now, the Israeli state is showing no signs of climbing down from its position of seeing a decisive end to the Hamas militants and their support bases and going forward this policy stance could get in the way of de-escalating the violence even to a degree.

On the other hand, it would not be realistic on the part of the world community to expect a mindset change among Israeli government quarters and their supporters unless and until the security of the Israeli state is ensured on a permanent basis. Ideally, the world should be united on the position that Israel’s security is non-negotiable; this could be considered a veritable cornerstone of Middle East peace.

Interestingly, the Sri Lankan state seems to have come round to the above view on a Middle East peace settlement. Prior to the Ranil Wickremesinghe regime taking this stance, this columnist called repeatedly over the past few months in this commentary, in fact since October 7th last year, for the adoption of such a policy. That is, a peace settlement that accords priority to also the security needs of the Israelis. It was indicated that ensuring the security and stability of the Palestinians only would fall short of a comprehensive settlement of the Middle East imbroglio.

However, in the case of the Ranil Wickremesinghe regime, the above change in policy seems to be dictated almost wholly by economic survival considerations rather than by any well thought out principle or a sense of fairness to all relevant stakeholders.

For example, close on the heels of the regime playing host to the Israeli Transport Minister recently, it accorded a reverential welcome to the Iranian Foreign Minister as well. From the viewpoint of a small country struggling to survive, this is the way to go, since it needs every morsel of economic assistance and succour.

However, if permanent peace is to have a chance in the Middle East it would need to be based on the principle of justice to all the main parties to the conflict. Seen from this point of view, justice and fairness should be accorded to the Palestinians as well as the Israelis. Both parties, that is, should live within stable states.

The immediate need, though, is to at least bring a lull to the fighting. This will enable the Palestinian population in the Gaza to access humanitarian assistance and other essential needs. Besides, it could have the all-important effect of tempering hostile attitudes on both sides of the divide.

The US is currently calling for a ‘temporary ceasefire’ to the conflict, but the challenge before Washington is to get the Israeli side to agree to it. If the Israeli Prime Minister’s recent pronouncements are anything to go by, the US proposal is unlikely to make any impression on Tel Aviv. In other words, the Israeli Right is remaining an obstacle to a ceasefire or even some form of temporary relief for the affected populations, leave alone a political solution. However, changing their government is entirely a matter for the Israeli people.

Accordingly, if a stable peace is to be arrived at, hostile, dogmatic attitudes on both sides may need to be eased out permanently. Ideally, both sides should see themselves as having a common future in a peacefully shared territory.

Peace groups and moderate opinion should be at centre stage on both sides of the divide in the region for the facilitation of such envisaged positive changes. The UN and democratic opinion worldwide should take it upon themselves to raise awareness among both communities on the need for a political solution. They should consider it incumbent upon themselves to work proactively with peace groups in the region.

The world is a vast distance from the stage when both parties to the conflict could even toy with the idea of reconciliation. Because reconciliation anywhere requires the relevant antagonists to begin by saying, ‘I am sorry for harming you.’ This is unthinkable currently, considering the enmity and acrimony that have built up over the years among the volatile sections of both communities.

However, relevant UN agencies and global democratic opinion could begin by convincing the warring sections that unless they cooperate and coexist, mutual annihilation could be their lot. Mindset changes of this kind are the only guarantors of lasting peace and mindset changes need to be worked on untiringly.

As this is being written, the ICJ is hearing representations from numerous countries on the Middle East situation. The opinions aired thus far are lopsided in that they do not present the Israeli viewpoint on the conflict. If a fair solution is to be arrived at to the conflict Israel’s concerns too would need to be taken into account expeditiously.

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Dubai scene brightening up for SL fashion designers

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Sri Lankans are lighting up the scene in Dubai, not only as musicians, but in other fields, as well.

At the recently held Ceylon Food Festival, in Dubai, a fashion show was held, with Sri Lankan designers doing the needful.

The fashion show highlighted the creations of Pubudu Jayasinghe, Tehani Rukshika and Peshala Rasanganee Wickramasuriya, in three different segments, with each designer assigned 10 models.

The fashion show was choreographed by Shashi Kaluarachchi, who won the Miss Supermodel Globe International 2020, held in India, and was 1st runner-up at the Mr., Miss and Mrs. Sri Lanka, in Dubai.

Shashi says she was trained by Brian Karkoven and his know-how gave her a good start to her modelling career.

She has done many fashions shows in Sri Lanka, as well as in Dubai, and has worked with many pioneers in the fashion designing field.

The designers involved in the fashion show, in Dubai, were:

Pubudu Jayasinghe,

a 22-year-old creative and skilled makeup artist and nail technician. With a wealth of experience gained from working in various salons and participating in makeup and fashion projects in both Dubai and Sri Lanka, he has honed his talents in the beauty industry. Passionate about fashion, Pubudu has also acquired knowledge and experience in fashion designing, modelling, and choreography, showcasing his multifaceted expertise in the dynamic world of fashion.

Tehani Rukshika,

who studied at St Joseph’s Girls School, Nugegoda, says she went to Dubai, where her mom works, and joined the Westford University in fashion designing faculty for her Masters. Her very first fashion show was a Sri Lankan cultural event, called ‘Batik’. “This was my first event, and a special one, too, as my mom was modelling an Arabic Batik dress.”

Shashi Kaluarachchi

Peshala Rasanganee Wickramasuriya

has been living in Dubai for the past 21 years and has a batik shop in Dubai, called 20Step.

According to Shashi, who is on vacation in Sri Lanka, at the moment, there will be more Sri Lankan fashion shows in Dubai, highlighting the creations of Sri Lankan designers.

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Features

A mask of DATES…

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Yes, another one of my favourites…dates, and they are freely available here, so you don’t need to go searching for this item. And they are reasonably priced, too.

Okay, readers, let’s do it…with dates, of course – making a mask that will leave your skin feeling refreshed, and glowing

To make this mask, you will need 03-04 dates, and 02 tablespoons of milk.

Remove the seeds and soak the dates, in warm milk, for about 20 minutes. This method will soften the dates and make them easier to blend.

After the 20 minutes is up, put the dates in a blender and blend until you have a smooth paste. Check to make sure there are no lumps, or chunks, left.

Add the 02 tablespoons of milk to the blended date paste and mix well.

Okay, now gently apply this mixture to your face, avoiding the eye area. Use your fingertips, or a clean brush, to evenly distribute the mask all over your face.

Once the mask is applied, find a comfortable place to sit, or lie down. Relax for about 15-20 minutes, allowing the mask to work its magic on your skin.

After the mentioned time has passed, rinse off the mask with lukewarm water. Gently massage your face while rinsing to exfoliate any dead skin cells.

After rinsing off the mask, pat dry your face with a soft towel, and then follow up with your favourite moisturizer to lock in the hydration and keep your skin moisturized.

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