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Regulator orders CEB to sign fuel supply deals with CPC, Lanka Coal
View(s):By Namini Wijedasa
The Public Utilities Commission of Sri Lanka (PUCSL) has given notice that it will issue an “enforcement order” on the Ceylon Electricity Board (CEB) to compel it to sign fuel supply agreements (FSAs) with the Ceylon Petroleum Corporation (CPC) and Lanka Coal Company (Pvt) Ltd.
At present, the CEB buys fuel from the CPC and Lanka Coal for its thermal power plants at rates that are not bound by any supply agreements.
This impacts the cost of electricity and the tariffs consumers pay for power. It also impacts the utility’s financials. The regulator presently has no insight into how these prices are tabulated.
These prices should be transparent to all parties and should be part and parcel of the public consultation process,” a PUCSL source said.
The regulator contends that to ensure the security, reliability and cost-effectiveness of electricity generation through thermal power plants, it is essential that the CEB enters into duly executed and Commission-approved FSAs.
“To this end, the Commission has issued multiple directives to the licensee [CEB], including explicit instructions set out in the Commission’s tariff decisions issued from 2023 onwards,” states the notice of proposed enforcement order, issued this week. “However, the licensee has failed to submit complete and finalised agreements in a form acceptable to the Commission, thereby disregarding the directives issued.”
The enforcement order seeks to secure compliance with the CEB’s generation licence (granted by the PUCSL), which requires the utility to comply with all decisions, directions and orders made by the Commission pursuant to the Sri Lanka Electricity Act and its licence.
The CEB’s continued failure to obey PUCSL directives concerning the execution of FSAs “has compromised regulatory transparency and contributed to operational inefficiencies,” the regulator holds.
“Furthermore, such conduct has undermined the integrity of the fuel cost pass-through mechanism and reflects a lack of accountability in the fuel procurement process,” the regulator asserts. It maintains that the timely execution of FSAs is essential to safeguard the interests of electricity consumers and ensure the efficient and economical operation of the generation licence.
If the CEB violates the enforcement order, it shall be guilty of an offence under the Sri Lanka Electricity Act of 2009 and shall be liable, on conviction after a summary trial before a magistrate, to a fine not less than Rs. 1 million and not exceeding Rs. 10 million, and to a further fine of Rs. 500,000 for each day during which such contravention continues after conviction.
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