News
Fuel spat deepens: CEB engineers warn CPC threats endanger energy security
View(s):By Namini Wijedasa
Engineers in charge of the Ceylon Electricity Board’s thermal power plants have told the Energy Ministry Secretary that the CEB’s efforts to introduce competitive fuel procurement “have been blocked by the Ceylon Petroleum Corporation” (CPC).
In a letter, the CEB’s thermal power plantw engineers have said there is an urgent need to authorise competitive international bidding for their fuel requirements. “Allowing open bidding will ensure least-cost electricity generation, protect public finances and align Sri Lanka’s energy sector with national policy and international governance standards,” it states.
They claim, however, that the CPC Managing Director during a meeting at the Energy Ministry opposed their initiative and “even threatened to suspend fuel supply and deny access to pipelines and port facilities if we proceeded”.
“These threats endanger national energy security,” states their letter, signed by the Deputy General Manager, Accountant and Chief Engineer of the CEB thermal complex, and the Chief Engineers of the Kelanitissa, Sapugaskanda and Uthuru Janani power stations. “They also expose the risks of keeping a monopoly.”
“The public wrongly assumes that the CEB is responsible for tariff hikes,” the engineers maintain. “In reality, the main cause is the CPC’s arbitrary fuel pricing. The CPC has no incentive to reduce inefficiencies. As a result, these costs are unfairly passed on to electricity consumers.”
Last week, the Public Utilities Commission of Sri Lanka (PUCSL) announced its decision to issue an “enforcement order” on the CEB to compel it to sign fuel supply agreements (FSAs) with the 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. The regulator has no insight into how these prices are tabulated. The PUCSL has repeatedly called for transparent pricing.
The engineers counter that it is the CPC that isn’t transparent. For instance, the prices of naphtha and heavy fuel oil (HFO)—which make up the bulk of power plant consumption—are not publicly visible.
“Their opaque pricing gives the CPC a free hand to pass inefficiencies directly to the CEB,” they hold. “Ultimately, consumers pay higher tariffs. With no competition, the CPC has no reason to improve efficiency or reduce costs.”
“This embeds inefficiency across the entire power sector,” they say. “The CPC also forces the CEB to accept pipeline measurements at the sender’s end. As a result, the CEB bears the cost of pipeline leakages and losses that should fall under the CPC’s responsibility.”
The six-page letter highlights a slew of other issues with procurement of fuel from the CPC and urges the Ministry, among other things, to authorise competitive international bidding for all fuel procurement of CEB thermal power plants; address the risks of monopoly control by the CPC; ensure pricing transparency for naphtha and HFO; mandate accountability for pipeline losses and delivered fuel quantity measurements (to be taken at the receiver’s end); and introduce bulk-buyer discounts for CEB as one of the CPC’s largest institutional customers, thereby reducing electricity tariffs.
It also calls on the ministry to ensure fuel quality compliance, “preventing CPC from supplying off-specification HFO without calorific value certification”; leverage international and regional suppliers (e.g., India and beyond) to obtain competitively priced, higher-quality fuels such as low-sulphur HFO and higher-grade diesel, which improve specific fuel consumption, reduce emissions and cut operational costs, etc.
It also warns the ministry to prevent a repetition of the 2022 fuel crisis, “where reliance on a single supplier triggered nationwide shortages and power cuts, by diversifying suppliers through open bidding”.
The best way to say that you found the home of your dreams is by finding it on Hitad.lk. We have listings for apartments for sale or rent in Sri Lanka, no matter what locale you're looking for! Whether you live in Colombo, Galle, Kandy, Matara, Jaffna and more - we've got them all!