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‘Mini hydros’ could save Rs 50 b annually

Sri Lanka could save over Rs 50 billion thermal power generating cost annually if authorities minimise red tape and allow mini hydro power plants get off the ground.

Currently there are several mini hydro power plants pending approval and they could generate over 500 MW power in three years time.

Bhathiya Ratnayake addressing the ‘mini hydro’ event. Dr Nishantha Nanayakkara, Past President, Riyaz Surgni, Secretary, Anil Makalanda, President and Prabodha Samarasekera,Past Vice President were also present. Picture by Saliya Rupasinghe

Vice President, Small Hydro Power Developers Association Bhathiya Ratnayake said the present 94 mini hydro plants with 201 MW capacity saves Rs 17 billion annually . This is 5% of the total power generation and the government's vision is to generate10% of total requirement by 2015.

Ratnayake said that the Ceylon Electricity Board gets a unit of thermal power at around Rs 21, while they purchase an unit of hydro power for Rs 13. “We also appeal to the CEB to revise this rate,” he said.

Secretary of the Association M Rizmy disclosed that an entrepreneur has to go to 12 institutions such as Ceylon Electricity Board, Irrigation Department, Water Board, Mahaweli Authority, Environmental Authority, Divisional Secretariats and Pradeshiya Sabhas to get the green light to commence a project and this takes nearly two years thus discouraging the investor.

Mini hydro plants are developed in remote isolated villages thus creating infrastructure development and job opportunities to village youth.

Furthermore, the professional knowledge gained by entrepreneurs, engineers and financiers in this regard is now used in East Africa and surrounding Asian countries, bringing in much needed foreign income to the country.

“Government intervention to fast track the development of this sector is needed with a fair and transparent tariff offered and red tape cut off, which will automatically attract foreign and local investments required to boost the sector,” he said. Recent macro economic developments in Sri Lanka, including rupee depreciation and especially the drastic increase in interest rates, would have serious implications on the viability of investors commencing small hydro power plants.

The government should step into mobilizing long term project lending for the small hydro power sector, especially from state banks, with loan tenures of 15 years and longer plus moratoriums at project inception of up to 5 years.

At present the typical loan tenure is eight years. The cost of the loan and its repayment account for over 50% of the unit cost from a typical small hydro plant.

The present power generating system of Sri Lanka is predominantly based on fossil fuel.

Over 85% of the total daily generation is produced from coal power plants and CEB and privately owned thermal power plants. With post war industrialization, service and consumer sector growth of the country, the demand for electricity is expected to grow at nearly 7.5% every year.

Thus it is clear that existing thermal plants and large-scale hydro power systems alone cannot meet the current demand.

Due to its adverse effects such as pollution concerns and high expenses due to fuel importation, thermal power generation in Sri Lanka can weaken the macroeconomic image of the country drastically. Maximizing renewable energy production to the full potential is the most suitable and sustainable form of energy generation accepted globally, and it is in the interest of national energy security.

 

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