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| Saturday, 4 October 2003 |
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Power generation : Game, set and match Reference the article published in Daily News in July 2003 titled "Power Game and Regaining Sri Lanka", power games within the Ceylon Electricity Board and the Energy Supply Committee defies the norms of rational behaviour. In the said article the writer had eluded to imaginary deadlines and announcement of performance bonds and subsequent withdrawals which have been a persistent practice in the calling of tenders for coal power generation, which even the Steering Committee under the Prime Minister now considers to be critical to save the country from another power crisis greater than what we faced in the past. The energy planners have forecasted electricity demand to be in excess of 12,000 G.W., hours by the year 2007 and the immediate demand to be around 9,000 G.W., from year 2004, under average GDP growth conditions of about 7% per annum. This forecast also presumes stable hydro conditions. However in the event hydro conditions become unfavourable thermal generation requirements would be much more and is predicted to be around 65 to 75% of the total capacity. Another episode in this power game of the Ceylon Electricity Board is the medium term supply of electricity for which tenders were called in February 2002 for a total of 100 megawatts in two locations. Surprise! surprise! the Ceylon Electricity Board amends its tender notice again in April 2002, to revise the generation capacity to 200 megawatts for combined cycled thermal generation. What defies the rationale of any average thinking person is when some vendors from overseas had bided Rs. 4.60 per K. W. hour and another party even less, the Energy Supply Committee has thought it fit to award the tender to two parties for the 200 M.W. CC Plant in Puttalam and 100 M.W. CC Plant in Embilipitiya who had quoted much higher. What is not known to many is that these two successful tenderers are now in the throes of trying to devise financial packages to finance this gigantic project after securing the bids on doubtful assurances. The general public and more so the industrialist is now faced with the escalating cost of power which would eventually damage the relocation plans of many of the new industries which have been planned within the Southern area development scheme. This will particularly affect industries like apparel and leather goods manufacture at Bataatta. The planners are very adapt at offering short term solution such as the AES 54 M.W. steam plant and moving the goal posts, when they wished to, for bringing on line the 200 M.W. medium term power plant from 2003 (as announced in the tender notice in February 2002) to 2005. The closing date for the tender too was differed to the 29th of May 2002. Presumably this was done to accommodate the two successful bidders who have quoted a higher K.W. hour rate than the bidder mentioned above. Be as it may even with Kukuleganga performing at the maximum of 70 M.W. capacity and Kerawalapitiya with the planned 200MW, a persistent deficit will remain in power generation if the steam plant does not supplement the existing power and the scenario will be worse if hydro conditions deteriorate. One can well imagine a prolonged period of drought when hydro capacity plunges further, leading certainly to a power crisis. The above however does not take into account the rural electrification schemes, designed to light up 1,400 villages in the various provinces. Restructuring of the Ceylon Electricity Board The restructuring of the Ceylon Electricity Board according to progress reports have been completed for the period up to 2003 and plans are afoot to improve the liquidity position of the board. With stringent measures such as two months billing periods for even government accounts and maintaining electricity price stability around Rs. 6 to 7 per K.W. hour. Here in lies the mystery of rejecting bidders who quote less than Rs 7 per K.W. hour in order to dent the short-term liquidity of the CEB. The question we have to face: Is this justified? and does it not tantamount to robbing Peter to pay Paul. The poor domestic electricity consumer is progressively pushed to the wall, having to pay a higher rate even for the basic domestic requirements. The industrialist continues to suffer on a artificially maintained penal rate, while all the time the policy makers and the planners are talking about the elusive Rs. 2.15 per K.W. hour rate which is bound to make the Sri Lankan Industrial Zones, the most sought after, not only for the local industrialists but also to transnational companies who will locate their plants there. The much announced high growth, low growth scenarios with favourable and unfavourable hydro conditions forecast by the Power and Energy Steering Committee has not come to much, except having to chase behind the two medium term electricity suppliers and a steam plant of low capacity which does not seem to be able to live up to its demands. The sad situation that the country faces is that action plans and forecasts replete with commissioning dates for many of these plants such as the medium term combined cycle plant and the Kerawalapitiya 300 M.W. combined cycle plant as well as the 900 M.W. coal powered plant, to be located in Trincomalee, will ever become operational in 2008? or even by 2012. If one should glance at the annexure to the document "Regaining Sri Lanka", it will be clear in order to reap all these added energy on line, the signing of agreements of each of these projects should have been completed in 2002. The rest we leave to the readers' good judgment and vivid imagination. Implications on poverty reduction An article titled "Post Tokyo Policy Imperatives" in June this year in the Sunday Observer claimed our aid utilization never exceeds 25% and was a mere 16% in 2002. This is very close to the truth because as at July 2003 our utilization of aid on funded programmes was 21%. The said article also poses the question whether the target of 45% aid utilization by 2004 is an absurdity? One thing must be said about this - while it is true that the prevailing dysfunctional system of approvals and poor implementation capacity with poor utilization of foreign aid, in projects approved by the EPC, will ensure that we do not improve on the predicted 25%, the present administration under the Hon. Prime Minister has not left things as it were. Besides the working of the Administrative Reforms Committee under the able Chairmanship of Bradman Weerakoon, Secretary to the Hon. Prime Minister, there is a programme, which was started recently under the Monitoring and Implementation cell of the Hon. Prime Minister's Office on "Public Sector Performance Improvement". Simply it means mainstreaming much of the implementation work of approved projects through capacity building of its implementation managers. The programme has an ambitious target of developing 100 - 200 competent Public Sector Project Managers. Initially four such hand picked officers who are involved in development projects are currently undergoing training in the Asian Institute of Management, Philippines in Project Planning Development and Management. The second phase of this programme will involve both the faculty of the AIM, which has been selected after careful evaluation with similar institutions in India and in Malaysia, the Distance Learning Center (DLC) and the Sri Lanka Institute of Development Administration in its implementation. The purpose is to cross-fertilize some of these skills, imparting those competencies distilled from an experienced overseas faculty, to the local teaching staff of the SLIDA. The "Regaining Sri Lanka" document envisages electrification and infrastructure development resulting in improved access and speeding up of connectivity between rural centers and regional commercial towns. The bridging of the digital divide in Sri Lanka initiated by the Information Computer Technology Agency (ICTA), which will bring the internet into the village economy and enable among other things, more effective markets for agricultural produce. It will also mean secondary industrial zones and community based participatory projects, which will provide the necessary conditions for an economy with substantially reduced unemployment. You may be able to see now, how much is riding on when the country receives its electricity requirements at a manageable tariff. It is not only competent managers but the outcome of their competencies which will determine whether there is productivity gains or whether they will remain a part of fiction. If competitive advantage is be reaped from a more superior application of human talent, the cost of energy will become the integral element in this equation between man and machine. - Saladin |
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