Norochcholai to herald new power era

 To add 900 MW to National Grid by 2011                                                                                        

By Santhush Fernando
With Sri Lanka’s exponential growth and anticipated GDP growth comes the exponential need for energy. Demand for electricity has far outstripped supply, and now a new era will dawn in Sri Lanka’s power and energy sector with the Norochcholai Coal Power Project coming into operation by mid 2010 heralding the Coal Power Era.

The Nation team visited Norochcholai Power Plant last week, and was able to see that nearly 70 percent of its civil construction was over and the project is ahead of its schedule in completing work.
Speaking at a press conference held at Norochcholai Plant site, Chairman of Ceylon Electricity Board E A S K Edirisinghe, said that seventy percent of the Phase One was now complete and added that the project will commence its test operations in the first quarter of 2010, well ahead of its schedule.

“CEB hopes to generate power at the coal power project at a unit cost of 7-8 rupees and anticipates passing on the price reduction to the consumer. With Norochcholai starting commercial operations, we can ensure that there won’t be any ad hoc tariff hikes in the future,” he said.

Edirisinghe said that main reason for electricity to cost so much is because of our dependence on expensive fuel oil. A massive 55 to 60 percent of the power supply was generated by diesel, while the share of hydroelectricity averaged between 40 and 45.
Combination of hydro and coal

Veteran energy expert and generation planner, Dr Tilak Siyambalapitiya believes that although the ideal energy source for Sri Lanka should have been a combination of hydro and coal, high-cost diesel had been promoted due to ‘commercial pressure’ with diesel being preferred the energy source of Sri Lanka’s Independent Power Plants (IPPs).
“Today if we had Norrochcholai Coal Power Plant up and running, the cost of coal up to unloading point at Puttlam would be around US $ 90 a ton which is nearly Rs 10 a kilo in today’s prices. Since 2.5 units can be generated with this, the cost would be only Rs 4 a unit.” Dr Siyambalapitiya said.

Rs 4 vs Rs 14
Five units can be generated by using a litre of diesel costing Rs. 70 a litre, which means that a unit would be nearly Rs 14. A unit generated from another new energy source promoted by CEB - Liquefied Natural Gas (LNG) would cost Rs 10, which is still 150% more when compared with coal power. Hydropower costs Rs five to six a unit but after 20 years the cost is just Rs 1 a unit as the operating cost is very low.

Electricity costs in Sri Lanka were among the highest in the world with all users paying high cost for industrial, commercial and domestic uses and driving away the investors. Average electricity tariff rates to industrial sector is from Rs 7.00 to 7.50 in Sri lanka; Indonesia 1.52 – 3.90; Malaysia 2.63 – 10.52; Singapore 4.32 – 6.78; Thailand 2.89 – 7.01, according to the Central Bank’s Annual Report of 2004.

Projected output of the power plant is 1,658 Gwh while the installed capacity in the country was 2,544 MW (Hydro and thermal combined) in 2006. Demand for electricity in Sri Lanka is said to increase by about 10% annually.

Power crisis averted
It is highly commendable that the severely delayed Norochcholai Plant is not only becoming a reality but is also in ahead of its schedule. CEB identified coal as the most economical and feasible power supply next to hydro, as hydro dependability is threatened by drought and silt while thermal is an expensive source when coal is cheaper and most widely available.
However, the average Sri Lankan had to bear brunt of ‘power politics’ up to now, as on the one hand projects were delayed time and again under various governments to appease from politicians to religious leaders while on the other hand government gave in to the cartel of fuel power plant operators or the ‘diesel mafia’ who wanted coal power projects delayed to accomplish their own commercial interests.

Power politics
When the government was unable make CEB chairperson bow down to their dictates, which were clear against interests of the country, they appointed external ‘Power Committees’ comprised mostly of non-energy professionals, weighing down CEB’s policy and long-term generation plan, which had aggravated energy crisis to what it is today.
From 1992 to 1994 the then United National Party government appointed the infamous ‘Power Committee’ headed by then Treasury Secretary, R. Paskeralingam, to give green light to private power providers.

Between 1995 and 2001, under President Chandrika Bandaranaike Kumaratunga’s regime, it was headed by the then Presidential Secretary, K Balapatabendi. Again under the Ranil Wikremesinghe administration from 2002 to 2004, it was re-structured as the ‘Power Supply Committee’ again headed by R. Paskeralingam.

The then Bishop of Chilaw, Rt Rev Frank Marcus Fernando along with Catholics in the area vehemently opposed Norochcholai site stating that the site was too close to St. Anne’s Shrine, Talawila. The Ceylon Workers Congress (CWC) too opposed the Upper Kotmale Project citing eviction and relocation of plantation workers.

Private power plants along with errant CEB officials and ignorant and corrupt politicians continued to play this power game until President Mahinda Rajapaksa gave strict orders of proceeding with Norochcholai and Upper Kotmale Power Projects. As such the construction of Norochcholai Coal Power Plant was inaugurated by President Rajapaksa on May 11, 2006, even less than one year of coming into power.

Hydro dependence non-pragmatic
Sri Lanka is placed in a precarious situation due its high dependence on hydro as well as expensive fuel power. In May, the government appealed that power reduction programmes be implemented at residential, industrial, commercial and public sectors cutting down consumption by 30 percent in order to avert power cuts and cautioned consumers to use electricity sparingly.
Rainfall has shown a steady decline through out 2009 and hydro storage by end February 2009 was 3.5 GWh, down from 7 GWh for the same period in 2008, with being just 1.5 GWh away from reaching the 2 GWh, considered the ‘critical level’ in hydropower generation.

CEB said that 2008/09 also recorded the lowest inflow (rainfall) to hydro reservoirs during the period from October to February for the last five years. Inflow was just over 1,000 GWh down from 1,600 GWh in 2007/08 and less than half of the inflow recorded in 2006/07, which was 2,250 GWh.
Presently daily electricity requirement of the country stood at 1.9 GW out of which one third was contributed by hydropower projects and the rest by thermal power plants.

Power demand growing
Although Sri Lanka too saw negative growth of 6.2 percent in the first quarter of 2009 following the drop seen worldwide caused by the global meltdown, Sri Lanka has been indicating an average growth of 6.5 per cent during the last 30 years according to Dr Thilak Siyambalapitiya.

“An analysis of Sri Lanka’s compound growth of power demand for the last 30 years shows an average of 6.5 percent per annum although some years have even recorded a high of 14 percent,” he said.

“In January and February 2009, the growth in demand for electricity was a negative 6.2 percent when compared with the same period last year. Although in 2007 the annual growth in demand was 5 percent, in 2008 it had gone down to a mere 1.7 percent!”
However, Sri Lanka’s average consumption is 400 kilo Watt hours per person per annum and for the country to elevate itself to that of a middle-income level country like Malaysia, power consumption should be around 2,000 kWh per capita per annum. The drop is said to be short-lived and with the government anticipating 100 percent electrification of the North in two three or years time, the demand is set to be on the rise soon.

Although when the Northern circuit went down with escalating hostilities, its capacity was a mere 50 MW, it will have to catch up with accelerated development anticipated for the region.
The Eastern Province too has already progressed in the electrification process. However, Sri Lanka’s long-term average growth would be around 7 percent as there will no reduction of demand in the long run.

Sad reality
Dr Siyambalapitiya opines that although today Sri Lanka unlike other countries in the South Asian region does not face power cuts, the cost of generating electricity using expensive fuel to the economy is massive.
“We have 700 MW generated from high cost diesel but if we had encouraged the private power providers to jointly build a coal power plant for the same amount we could have generated electricity at just one third the cost. Sad reality is that even now it is not happening and in any tender where technology is not specified by CEB, the bidder will go for diesel as though the operational cost is high, the capital cost which the firm has to bear in a diesel plant is low,” he added.

High tariffs vs blackouts
Island’s power sector has seen long-term economical power projects such as Norochcholai and Upper Kotmale delayed due to political meddling. If not Sri Lanka could have become a country with lowest tariffs in the world.
So as far Sri Lanka attempts to expand with high-cost diesel or LNG plants Sri Lankan consumers will not be able to consume cheap electricity. LNG although not so expensive as diesel, would still be expensive for Sri Lanka in the long-term, whilst combination of coal and hydro would be best suitable for the country.

Sri Lanka at present has 9 thermal power projects along with 80 mini-hydro-plants altogether contributing nearly 700 MW to the grid. However, the cost to import fossil fuels as well its effect on Sri Lanka’s dwindling reserves has been enormous.
Although Sri Lanka was faced with an imminent power shortage, over 15 percent of the output goes wasted due to system loss while another 20 percent is wasted due to bad usage practices.Two plants a week

Although Sri Lanka was faced with many a teething problems in building just one coal power plant in Norochcholai, whilst China which has the biggest hunger for energy in Asia, is building coal plants at a rate of two projects a week.
Emerging Asian super power - India under its ambitious ‘Power for All’ requires adding up of nearly 100,000 MW by 2012. And, it seems, that India has made steps in this regard with two new successful bids for Ultra Mega Power Projects (UMPPs) in Sasan and Mundra and in January 2006, gave green light to set up nine coal-based UMPPs of 4,000MW each.
Vietnam too is constructing a 2,000 MW in Mong Duong with funding from Asian Development Bank (ADB), while over 50 percent of power in the world’s largest electricity generating nation – the USA is done using coal.

****