Power costs see decline
Licencees to see profits by 2015:
New tariff reforms progressive:
Ramani KANGARAARACHCHI
Production costs of electricity will decline from 2011 to 2015 and
the electricity sector profitability is not too far away, an energy
sector expert said.
“By 2015 ,all licencees should report real profits and customers
should be paying lower prices than today in real terms. This is as a
result of reduction on the use of oil burning power plants and network
losses,” Energy Consultant Dr Tilak Siyambalapitiya said.
Dr Tilak Siyambalapitiya |
Delivering the Prof R H Paul Memorial Lecture on “The new electricity
pricing policy in Sri Lanka” at the Institute of Engineers he said oil
burning power plants will be replaced by coal-fired generation and
retirement of several independent power plants will save on capacity
charges.
Meanwhile overall improvement in network utilization and efficiency
will also have an impact on reducing the production cost.
Dr Siyambalapitiya said the country has embarked on a process to
reform in the electricity industry to gradually bring it back to
profitability or at least to breakeven so that it would not be a burden
on the public. However, the most important factor is the transparency of
the process. It is for the first time in the history of the electricity
industry in Sri Lanka, electricity customers know how much it costs to
serve them with electricity ,how much they pay, and who is subsidied and
who has to pay a surcharge.
He said that keeping the new tariff reforms on track and taking it
towards full implementation is a challenging task as there are many
sceptics, both in the Government hierarchy and in the utility industry.
“However, it is necessary to begin with a positive mind. The reform
process has begun and the licencees have become revenue neutral entities
from January 1, 2011. If they run the business according to the rules
,by the end of 2011 all licencees should be reporting marginal revenue
surpluses, which does not mean the sector has become profitable, because
the sector enjoys a debt moratorium until end 2013,” he said.
The licencees accounts are most likely to report losses for 2011 too.
But the important issue is whether the sector is on the path of
recovery.
“There will be many shortcomings and interferences in achieving the
desired goal but can be overcome if the Public Utilities Commission
remains string and professional, and the licencees cooperate and stand
strong against outside interferences. The customers also must stand
strong and demand for their rights and the cost reflective price,” he
said. |