A stoppage of fuel supplies by the Petroleum Corporation to the Electricity Board due to non-settlement of an outstanding bill — which triggered an unannounced all island power cut last Monday morning — is pushing the Power and Energy Ministry to fast track negotiating a Rs 10 billion loan from state banks. The Ceylon Petroleum [...]

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Energy Ministry seeks Rs. 10 billion loan to prevent power cuts

Probe on last Monday's unannounced countrywide blackout
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A stoppage of fuel supplies by the Petroleum Corporation to the Electricity Board due to non-settlement of an outstanding bill — which triggered an unannounced all island power cut last Monday morning — is pushing the Power and Energy Ministry to fast track negotiating a Rs 10 billion loan from state banks.

The Ceylon Petroleum Corporation (CPC) served the Ceylon Electricity Board (CEB) an ultimatum by stopping fuel supplies to the CEB thermal power plants. The CEB, which owes the CPC Rs. 88.9 billion in unpaid dues cut power to consumers without notice the day before Independence Day.

CEB, CPC and Finance Ministry representatives along with officials of the Bank of Ceylon and the People’s Bank are due to attend the meeting presided over by Power and Energy Minister Mahinda Amaraweera tomorrow.

The outstanding dues are over the threshold of Rs. 80 billion that the CEB is allowed to maintain with the CPC.

As the CPC-CEB differences mounted this week, Minister Amaraweera has instructed the CEB to take measures to settle 50 percent of the portion due to the CPC for fuel delivery each month. A letter sent by the CPC to the Power and Energy Ministry Secretary on January 31 states that Rs 986 million was due from the CEB to them from December 2019 to January 29, 2020.

The CPC had stressed that it would be facing a severe financial issue itself if it continued to supply uninterrupted fuel to the CEB from February 1.

The island-wide power cuts last Monday lasted two hours after the CPC suspended fuel supplies to the CEB’s Kerawalapitiya power plant. Neither Minister Amaraweera nor power sector regulator Public Utilities Commission of Sri Lanka was informed of the move.  The power cuts were later suspended after the minister intervened and he has now appointed a committee to probe the incident.

A senior Government source said the Cabinet had now approved a proposal to raise the CEB’s credit limit with the CPC to Rs 100 billion, considering the impending drought situation and the need to buy emergency power.

Minister Amaraweera, meanwhile, told the Sunday Times that he would submit a Cabinet paper next week seeking approval for the construction of three 300 MegaWatt (MW) Liquefied Natural Gas (LNG) power plants amounting to 900MW in total.

One 300MW plant will be from Japan while the other will be from India. Both projects will be on Government-to-Government basis. The third power plant will be subjected to international competitive bidding.

He said the Government hoped to finalise the agreements on these projects in three months.

Meanwhile, the Cabinet has also approved a proposal to amend the National Electricity Act by removing a clause which requires the declaration of the lowest cost on long term generation plans as reported in the Sunday Times in its January 26 issue..

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