Electricity power sector caught in a whirlwind of impromptu decisions as the fate of PUCSL hangs by a thread 

(By Abdul Rahuman)
It is quite catastrophic that a decision was made to shut down the Public Utilities Commission of Sri Lanka (PUCSL), which is preserving people rights. P.B. Jayasundera who is the Secretary to the President of Sri Lanka in a letter has advised the Secretary of Finance S.R. Attygalle to take mandatory steps to wind up the PUCSL.

What is this PUCSL?

The PUCSL is the economic, technical and safety regulator of the electricity industry in Sri Lanka and the designated regulator for petroleum and water services industries. It was established by the Public Utilities Commission of Sri Lanka Act No. 35 of 2002, during the presidency of Chandrika Bandaranaike. Launched in mid-2003 with the appointment of the first group of Commissioners and its Director General, it is a multi-sector regulator set up to regulate certain physical infrastructure industries in the country.

Why is PUCSL essential for the country to function?

The PUCSL is playing a big role on behalf of its nation. It protects the interests of all consumers and speaks for the safety and service quality in public utilities industries etc. Here we should emphasize the PUCSL has been dealing with consumer complaints and keep an eye on corruptive electricity projects. When emergency and non-emergency purchases of electricity occur in violation of the Electricity Act, the commission will reject those proposals and give the support for saving the public money. The commission was set up to protect the power industry and consumers. In addition, the PUCSL act appoints the Commission as an intermediary to ensure reasonable electricity prices and resolve consumer grievances.

Moves to shut down the PUCSL

P.B. Jayasundera who is the Secretary to the President of Sri Lanka in a letter has advised the Secretary of Finance S.R. Attygalle for the essential steps to close the PUCSL, but the abolition of the Commission (PUCSL) cannot be done by an order. As the commission (PUCSL) is established by an Act of Parliament, so abolition can only be done by another Act of Parliament.
After the letter of the secretary to the president arose multi dialogues between the people and they all started to react against those suggestions. Soon after the above incident the five members of the commission resigned themselves from their designations. What are the reasons behind the sudden shut down of PUCSL? And who are the conspirators of those plans? From the date the letter was issued to today, if one observes the incidents in ascending order one can get an idea about who is behind the scene.
The Ceylon Electricity Board (CEB) should obtain additional electricity when needed through the Sri Lanka Electricity (Amendment) ACT, No. 31 OF 2013 of section 43 under the tender procedure. Once they submit their proposal to PUCSL they will search about the truth of it and revert them to their answers. It can be negative or positive.

Another attempt to an emergency purchase ?

Since the beginning of 2016 to 2020, the Commission has received 16 projects seeking approval to purchase 1841 MW of emergency and non-emergency power purchases. It is noteworthy that the Commission did not approve 14 of these projects. Because some of the projects are not actually needed at that time and some others are not requested in order to the Sri Lanka Electricity (Amendment) ACT, No. 31 OF 2013 of section 43, opposition to that the emergency power purchases give rise to authorities to sell electricity at a higher cost to consumers. This will amount to a waste amounting to a billion rupees.
According to Sri Lanka Electricity Act, when the Cabinet makes a decision that there is an emergency situation it permits gaining of emergency power, at least the cost, and allows the CEB with the approval of the PUCSL to buy emergency power bypassing Government consummation guidelines.
When the Cabinet of Ministers had granted approval (No: 19/1283/102/024-1 dated April 26, 2019), to purchase emergency power from the Turkish ship mounted power plant (Powership), it is claimed by the PUCSL that this decision had been taken without calling tenders. The PUCSL is not granted approval for the Turkish ship mounted power plant, and it stated that CEB has informed that if the country doesn’t purchase emergency power in the coming months, the country will suffer large power cuts. However, the absence of such power cuts proved that CEB’s statement was baseless.
These events began to take place earlier in the month of September.
The CEB released a board paper (Reference No. & Date-AGM (Tr)/56/BP; September 02, 2020) where it was mentioned the purpose to obtain the approval of the Board to procure generating capacity requirement to supplement available generating capacity for the period 2021-2023 until the planned major power plants become operational.
Point no. 2 of the recommendation of board paper reads as follows:
“Commence negotiations with the three furnace oil fired IPP plants (ACE Power Embilipitiya, Ace Power Matara & Asia Power) having a total capacity of 170 MW to extend the contract period beyond April 2021 up to December 2023. A suitable business/operation model needs to be decided during negotiations, such as, (a) Acquire all or some of the power plants by CEB and operated by CEB (b) Acquire the ownership but continue to be operated under an O&M contract by the existing operator. (c) Continue as an IPP as at present and procure only energy and capacity under a PPA.”
Minister of Power, Dullas Alahapperuma tabled a Cabinet Memorandum on 19th of October 2020 addressed Current Power Generation Plans and Actions Proposed to Mitigate Possible Lapses. He stated, in order to avert possible power shortage in the country, it is evident that a well-coordinated, efficient and economical power supply systems be planned in an expeditious manner to bridge the capacity shortage until the present power generation plants are materialized.
The Memorandum cited in para (3.2.2) “The CEB has proposed to commence negotiations with the three furnace oil fired IPP plants (ACE Power Embilipitiya, Ace Power Matara & Asia Power) till 2023.
And the para 3.3, in the meantime, USA based companies’ M/S New Fortres Energy with General Electric (GE)have forwarded a project proposal through her Excellency Aliana Tepliz, US Ambassador in Colombo to the Minister of Power & Energy proposing a Liquid Natural Gas (LNG) solution to meet this emergency requirement. According to the Ministry of Finance its observations on the above proposal appears to be technically and environmentally feasible, even though a detailed evaluation of the proposal is yet to be undertaken, they have no objection to the proposal.
In the observations on the above proposals, He mentioned in para 5.2 “in referring to para 3.2.2 – to direct CEB to first obtain the approval of the PUCSL to negotiate to extend the period of the power purchase agreements of three furnace oil fired IPP plants (ACE Power Embilipitiya, Ace Power Matara & Asia Power) till 2023” and “to instruct the Secretary to the Treasury to appoint a Project Committee and a Cabinet Appointed Negotiating Committee for the above purpose”.
As well as in para 5.4 “in referring to para – 3.3 section (b), to instruct the Secretary to the Treasury to appoint a Project Committee and a Cabinet Appointed Negotiating Committee to evaluate the proposals to make recommendations to the Cabinet of Minister to authorize the CEB and Treasury to sign a power Purchase agreement, Implementation Agreement and other relevant agreements with the selected investor”.
Following the above Memorandum, Ministry of Finance issued the observations of the Minister of Finance, Prime Minister Mahinda Rajapaksa on 23rd of October 2020. It states that he was not in agreement with IPP project proposals. And he had no objection to the proposal of M/S New Fortrass Energy and Ge.
Following that, a decision was taken at the Cabinet Meeting held on November 02, 2020 to grant approval to the proposal about M/S New Fortrass Energy and GE.  And action need not be pursued with regard to the proposals of IPP plants. Secretary to the Cabinet Mr. W.M.D.J. Fernando informed relevant institutions about the cabinet decision on 10th of November 2020.
However, the proposal of M.S New fortress Energy and GE needed the approval of the PUCSL to begin the next phase of work. On the other hand, the PUCSL is following Tender Procedures for an effective way by which it can examine whether they have the best supplier available for their particular needs. But here CEB is asking for an approval for the emergency power purchases without submitting the accurate documents for the PUCSL. It was noted that the emergency power purchases give rise to authorities to sell electricity at a higher cost to consumers.
Unexpectedly, President’s Secretary P.B. Jayasundera on 1st of December 2020 wrote to Treasury Secretary S.R. Attygalle instructing him to take steps to shut down the commission.
If we observe the events that have taken place so far in chronological order, it is doubtful that the Commission has been asked to close down immediately.
It is advised that the PUCSL be protected. Civil society organizations say that “the government should take necessary steps against lawless secretaries who worked with the power mafia to shut down the PUCSL.”

 

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