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President’s energy directives ignored by the Power Ministry: Another Point of View

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Dr Tilak Siyambalapitiya

Dr Janaka Rathnasiri laments (The Island 19 Feb 2021) that the Power Ministry has ignored the President’s directive to draw 70% of energy from renewable sources by 2030. I saw the approved costs of electricity production for 2019, published by the Public Utilities Commission (PUCSL).

PUCSL has also approved the prices to sell electricity to customers. Although various customers pay at various “approved” prices, the average income from such “approved” prices in 2019 was Rs 17.02 per unit. It is not only the Ministry, according to Dr Rathnasiri, ignoring the President; PUCSL is also breaking the law, which says prices and approved costs should be equal.

So there is already an illegal gap of Rs 21.59 minus 17.02 = Rs 4.57 per unit of electricity sold. If electricity prices are not to be increased, as stated by many in the government and PUCSL, let us say the following: Distribution costs should decrease by 0.57 Rs per unit. Generation costs should decrease by Rs 4.00 per unit.

PUCSL also published the approved cost of purchasing or producing electricity from various sources for 2019. The actual energy values were different to what was approved, but let us stick to PUCSL approved figures:

I suggest Dr Rathnasiri fills-up the following table, to show how much electricity will cost in 2030 to produce and deliver, if the President’s 70% target is to be achieved and for PUCSL to abide by the law. Let us assume that electricity requirement in 2030 will be double that of 2019.

Since PUCSL has to save Rs 4 from 13.92, the average selling price for energy should be Rs 13.92 minus 4.00 = Rs 9.92. With a target network loss of 7% (in 2019 it was 8.4%), the average cost of production has to be Rs 9.27 per unit. Eight cages have to be filled-up by Dr Rathnasiri.

In 2012, PUCSL approved the energy cost of electricity produced from coal power to be 6.33 Rs per kWh. In 2019, PUCSL approved 9.89 (56% increase). For renewable energy, it was 13.69 in 2012, and 19.24 in 2019 (a 40% increase, but double the price of electricity from coal fired generation). In 2012, rooftop solar was not paid for: only give and take, but now paid Rs 22, against Rs 9.89 from coal. There seems to be something wrong. The price reductions of renewable energy being promised, being insulated from rupee depreciation, are not happening? Either Sri Lanka must be paying too little for coal, or it may be renewable energy is severely over-priced?

On coal we hear only of some corruption every now and then; so Sri Lanka cannot be paying less than it costs, for coal.

 

Enough money even to donate
vaccines

Another reason for the Ministry of Power to ignore the President’s directive may be the Ministry’s previous experience with similar Presidential directives. In 2015, the President at that time cancelled the Sampur coal-fired power plant, and the Ministry faithfully obliged. That President and that Prime Minister then played ball games with more power plants until they were thrown out of power, leaving a two-billion-dollar deficit (still increasing) in the power sector. Not a single power plant of any description was built.

Where is this deficit? You do not have to look far. In the second table, replace 24.43 with 9.89, to reflect what would have happened if Sampur was allowed to be built. The value 12.79 will go down to 8.55, well below the target of Rs 9.27 per unit to produce. Not only would CEB and LECO report profits, but the government too could have asked for an overdraft from CEB to tide over any cash shortfalls in the treasury. All this with no increase in customer prices. Producers of electricity from renewable energy could enjoy the price of 19.24 Rs per unit. And that blooming thing on your rooftop can continue to enjoy Rs 22 per unit. The Minister of Power, whom Dr Rathnasiri wants to replace with an army officer, would have been the happiest.

In the absence of Sampur (PUCSL’s letter signed by Chairman Saliya Mathew confirmed cancellation and asked CEB not to build it), PUCSL approved electricity to be produced at Rs 21.59 and sold at Rs 17.02 per unit. The annual loss would be Rs (21.59 – 17.02) x 15,093 = Rs 69 billion per year of approved financial loss. Sri Lanka has a Telecom regulator, an Insurance regulator, a Banking regulator, who never approve prices below costs. Sometime ago the telecom regulator asked the operators to raise the prices, when operators were proposing to reduce prices amidst a price war. But the electricity industry regulator is different: he approves costs amounting to 27% more than the price, not just once but, but continuously for ten long years !

That is 370 million dollars per year as of 2019, the economy is spending, and for years to come, to burn oil (and say we have saved the environment). Did the Minister of Health say we are short of 160 million dollars to buy 40 million doses of the vaccine? Well, being a former Minister of Power, she now knows which Presidential “order” of 2015 is bleeding the economy of 370 million dollars per year, adequate to buy all vaccines and donate an equal amount to a needy country.

Prices are the production costs approved by PUCSL for 2019. The selling price approved by the same PUCSL was Rs 9.27 per unit.



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Opinion

Harin batting for India

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The Minister of Tourism, Harin Fernando, has stated that the Sri Lankan Government will be handing over the operation of Mattala International, Ratmalana International and Colombo International Airports to India. He has added that Sri Lanka is a part of India! Has he lost his senses?

Separately, should it not be the role of the Minister of Ports, Shipping and Aviation Nimal Siripala de Silva to make such a far-reaching decision?

Mattala, Ratmalana and Colombo are the three main airports of entry to Sri Lanka. Giving their management over to Indian organisations is tantamount to putting the proverbial snake inside one’s sarong and complaining that it is stinging.

What then will be the future of Airports and Aviation Sri Lanka (AASL)? They are, in any case, a ‘service provider’.

It is the responsibility of the government of Sri Lanka through its regulator, the Civil Aviation Authority Sri Lanka (CAASL), to adhere to International Civil Aviation Organisation (ICAO) requirements and regulations. Will this be compromised?

The International Air Transport Association (IATA) guidelines for airport governance declare that the State (in this case Sri Lanka) must be accountable irrespective of national, legal or regulatory framework, or airport ownership and operating model. Could that be ensured under this recently announced arrangement?

Such accountability must be guaranteed by enactment of primary legislation in the aviation sector, mindful of the adage that a chain is only as strong as its weakest link. I believe that the Legal Draughtsman’s Office will take an inordinate amount of time to deliver this guarantee, amongst other things.

There is also the matter of establishing an effective regulatory framework with CAASL to monitor technical/safety and economic performance of the aviation sector, and compliance with International Civil Aviation Organisation (ICAO) obligations, Standard and Recommended Procedures (SARPs), and policy guidance.

In my opinion CAASL is not yet capable of that. In a combined operation such as this, IATA stipulates “Awareness and mitigation of potential conflicts of interest inherent in the regulatory framework or ownership and operating model through clear separation of powers, for example conflicts between economic oversight and shareholding arrangements, and separation of regulatory and operational functions”.

So, it is not an ‘open-and-shut case’, as Fernando believes. It is complex. His optimism is amazingly unrealistic, to say the least.

Remember, certification of aerodromes by the technical/safety regulator under ICAO requirements will continue to be carried out by CAASL as at present. According to the Organisation of Professional Associations (OPA), report Sri Lankan regulators tend to be more “obstructive” than “facilitative” when it comes to certification. CAASL needs to be revamped for greater efficiency.

Other refinements involve the independence of regulatory authority (CAASL) from government, and striving for separation of economic regulation from technical/safety regulation. CAASL was formed under the ‘Private Companies Ordinance’ but unfortunately it has drifted back to conducting its business as a regular government office, with political interference and all.

Besides, it is vital to establish an Aircraft Accident Investigation Authority, preferably independent of the CAA. Annex 13 to the ICAO convention says: “The State shall establish an accident authority that is independent of the aviation authorities and other entities that could interfere with the conduct or objectivity of an investigation.”

That, I believe, is what ‘checks and balances’ are about.

Meanwhile, the silence of the Aviation Minister is deafening.

The proposed ‘Indian involvement’ is a sad state of affairs when we have aviation experts in this country who have retired from careers in many parts of the world, and are now capable of sharing their knowledge and experience to good effect.

There is already an Indian-managed flying school at Ratmalana catering to Indian students. Maybe the camel has already put its head in the tent, and only money will talk.

GUWAN SEEYA

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Opinion

Pledges to abolish executive presidency

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With the presidential elections around the corner, the abolition of the executive presidency has come up for discussion once again.

This time around, the proposal for abolishing the executive presidency has come from former President Chandrika B. Kumaratunga. She pledged to scrap it first when she ran for Presidency in 1994. But she did not fulfil her promise.

Former Presidents Mahinda Rajapaksa and Maithripala Sirisena are also now for scrapping the executive presidency.

Almost all the former Presidents came to power promising to scrap it but once in power they swept it under the carpet.

The Opposition parties claim they are for the abolition, but after the next presidential election. which, they say, they are confident of winning.

Mahinda has recently said it is preferable to abolish the executive presidency because he has already held it twice. However, he seems to have forgotten that he was greedy for power and he failed in his third attempt. For him and most other past Presidents, executive presidency is sour grapes.

They are now trying to have the executive presidency abolished in the hope that they will be able secure the premiership.

Ironically, Anura K Dissanayake, NPP leader and presidential candidate is against the abolition of the executive presidency as he is confident of winning the next presidential election.

So, all of them are in the same boat and one thing is clear; whoever becomes President will never have it abolished.

The campaign for scrapping the executive presidency will go in circles, forever.

Dr. P.A. Samaraweera 

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Opinion

Dispelling Misconceptions: Visionary Future of an NPP-led Sri Lanka

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NPP Leader Anura Kumara Dissanayake taking part in a protest (file photo)

by Shantha Jayarathne, PhD

In recent discussions, concerns have emerged about the National People’s Power (NPP) in Sri Lanka, with some fearing a return to outdated communist traditions if the party ascends to power. These apprehensions, often fueled by political agendas, particularly target those with limited political literacy. This article aims to dispel these misconceptions and shed light on the NPP’s forward-looking vision for a progressive and prosperous Sri Lanka.

Coalition of Visionaries

Contrary to the narrative peddled by certain factions, it’s essential to recognise that the NPP represents a diverse coalition of 22 parties and civil society organisations, with the Janatha Vimukthi Peramuna (JVP) as its main partner. Importantly, both the NPP and JVP members boast of a commendable track record, free from accusations of corruption, nepotism, or cronyism. Nominations are filed for any election from the NPP under the “Compass” symbol, and contestants with high repute and integrity will be drawn from all 22 constituent parties in the broad coalition.

A Clear Development Roadmap

The NPP has consistently articulated a comprehensive roadmap for the development of Sri Lanka. Emphasising the importance of a thriving Agriculture, Industry, and Service sectors, the party is committed to eliminating barriers hindering investments. Corruption, favouritism, and covert dealings of officials and people with vested interests will be totally eliminated under an NPP government. Furthermore, the NPP pledges to introduce efficient systems, ensuring minimal delays and promoting a business-friendly environment that attracts both local and foreign investors.

Government’s Primary Obligations

Addressing fears of property takeover, the NPP asserts that its government will not engage in business activities but will focus on essential public utility services, education, health, social security, and defence to ensure the well-being and security of the nation. NPP will not only encourage local investments but also it will take all possible measures to attract foreign direct investments. State-Owned Enterprises (SOEs) facing financial challenges will undergo restructuring with utmost transparency, fostering efficiency and accountability.

Business Friendly Environment

The NPP is dedicated to creating a level playing field for businesses by implementing regulations inspired by the most developed economies. Consistent antitrust laws, investment protection laws, and laws that are inconsistent and complex will be amended or new laws will be enacted to ensure fair competition and safeguard business interests. By fostering an environment that encourages innovation and competition, the NPP aims to boost economic growth and prosperity. NPP plans to streamline the systems and process to facilitate investments within the shortest possible timeframe whereby it aims to take Sri Lanka in the Ease of Doing Business Index from 99th position today to a position within the first 50. The Cooperative system will be strengthened in an NPP government and they will be regulated to deliver an effective and efficient service to the periphery.

Transparent Tax Policy

Simplifying Sri Lanka’s tax policy is a priority for the NPP, aiming to create a transparent and tax-friendly environment. NPP will ensure a stable and consistent progressive tax policy in the country, and all regressive taxes will be eliminated. Citizens will be provided with clear information at the end of the Tax Year on how their tax contributions are utilised for public services, promoting accountability and citizen engagement. This transparency is crucial for building trust between the government and its citizens.

Learning from Developed Countries

Taking lessons from successful models of governance in developed countries, an NPP government will strive to implement best practices in public administration. Emphasising the importance of accountable institutions, streamlined bureaucracy, and effective public service delivery, the party is committed to ensuring transparency and efficiency in governance. There will be a minimum number of cabinet ministries for key areas, and their roles and functions will be clearly defined while making the officials accountable to their respective assigned functions. Zero tolerance for corruption and the law of the land will be applied to everyone alike.

Economic Adjustments and IMF Negotiations

Acknowledging the need for economic stability, the NPP plans to initiate negotiations with the International Monetary Fund (IMF). This strategic move aims to strike a balance between economic adjustments and safeguarding the livelihoods of the people in the country. The NPP is dedicated to ensuring that any economic reforms are implemented with a people-centric approach, minimising adverse effects on the general population and the industry.

Nonaligned Foreign Policy

The NPP upholds a nonaligned foreign policy, reflecting a commitment to Sri Lanka’s sovereignty and independence. While fostering international relations, the party is resolute in not allowing foreign nations to utilise Sri Lanka’s soil for military purposes. This stance ensures that the country remains neutral and independent in its dealings with other nations, safeguarding national interests and security.

Repositioning Sri Lanka in the World Order

A central tenet of the NPP’s vision is the repositioning of Sri Lanka in the global context. The party is dedicated to identifying and leveraging the country’s potentials, addressing weaknesses, seizing opportunities, and managing threats, both internal and external. This strategic approach aims to elevate Sri Lanka’s standing on the world stage, fostering positive engagement with the international community.

Quality of Life Improvement

A key focus of the NPP government is enhancing the quality of life for all citizens. The party recognises the importance of social welfare, healthcare, education, and infrastructure development in elevating living standards. By prioritising these aspects, the NPP aims to create a society where every citizen can enjoy a higher quality of life, emphasising the well-being and prosperity of the people.

Addressing False Propaganda

Amidst the misconceptions surrounding the NPP, it is crucial to address the motivations behind certain groups disseminating false propaganda. The fearmongering tactics employed by those with vested interests seek to perpetuate a status quo that has allowed for ill-gotten wealth and alleged illegal transactions. These groups, resistant to change, attempt to sway public opinion by sowing seeds of doubt about the NPP’s commitment to a fair and just governance model.

However, when one closely examines the NPP’s dedication to transparency, efficient governance, and inclusive development, it becomes evident that these accusations are nothing more than a desperate attempt to cling to the shadows of a fading era. The party’s emphasis on tackling corruption, restructuring inefficient State-Owned Enterprises, and simplifying the tax policy directly challenges the interests of those who have thrived in an environment of opacity and undue influence.

As citizens, it is paramount to discern the true intentions behind such narratives and recognize the NPP as a force poised to break free from the shackles of corruption and vested interests. By supporting the NPP’s vision, Sri Lankans have the opportunity to usher in a new era – one marked by ethical governance, economic prosperity, and a society that prioritises the well-being of its people over the interests of a privileged few.

In conclusion, the NPP stands not only as a political entity but as a beacon of hope, calling on the people to embrace change, reject false narratives, and collectively forge a path towards a brighter and more equitable future.

(The Writer, a UK resident, is a former Senior Consultant at the Sri Lanka Institute of Development Administration (SLIDA). He is a member of the NPP-Policy Development Team, and he can be reached through email: shantha323@gmail.com)

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