Power sector experts have stated that the government would be compelled to go back to Independent Power Producers (IPP) in the event the country fails to cater to the demand and if Sampur plant remained defunct in the coming years.
The Government recently announced that it was in the process of retiring IPPs in Sri Lanka with a view to cut down on unwanted expenditure. Power and Energy Minister, Patali Champika Ranaawaka, told The Nation Gain that the government would save up to Rs.3000 million by stopping power consumption from IPPs.
According to Ranawaka, the Government had stopped obtaining approximately 260mW power through by retiring the IPPs. “We now have the capacity to produce the necessary power,” he said.
However, veteran energy expert Dr. Tilak Siyambalapitiya stated that even though the government had opted to discontinue the IPPs, the expected increase in the demand for power in the next few years would prompt the authorities to revert to IPPs in the event of plants such as Sampur remained non-operational.
“Sampur was scheduled to commence operations in 2018, but nothing has happened as of now,” Dr. Siyambalapitiya said.
At the moment the government is purchasing power from five IPPs out of the initial 11.
According to statistics by the Public Utilities Commission of Sri Lanka (PUCSL), IPPs contributed 21 percent of the total power generation in 2014, an increase from 2013 which recorded a 16.5 percent contribution.
The contracts of the four IPPs, namely Asia Power, AES Kelanitissa, West Coast and Northern Power are still operative and are scheduled to expire in the years 2018, 2023, 2035 and 2018 respectively. However, the Government has hinted that their contracts too would not be renewed.
Ranawaka, however, stated that Sri Lanka had managed to reduce the peak demand of 2100 MW in 2010 to 2000 MW in 2014 due to conservation programs adopted by several high-rise buildings.
Meanwhile, some of the IPPs whose contracts were not renewed stated that they faced losses owing to the termination of the services. An official at Aitken Spence PLC., which operated ACE Matara, ACE Horana and ACE Embilitpiya stated that they incurred a loss of Rs.24 million a month to maintain each engine in running condition.
While the institution had sold the Matara and Horana plants to foreign buyers, it is on the lookout for a buyer for the Embilipitiya plant which was retired on April 5, 2015. Meanwhile, the Ceylon Electricity Board (CEB) is in discussions with the Colombo Power (Pvt) Ltd, whose contract ended in June this year, with regard to a possible acquisition of the plant.