Power purchase agreements : CEB, PUCSL to make submissions to COPE | Page 2 | Sunday Observer

Power purchase agreements : CEB, PUCSL to make submissions to COPE

The Ceylon Electricity Board (CEB) and its regulator, the Public Utilities Commission of Sri Lanka (PUCSL) will make submissions to COPE on power purchasing agreements (PPA) and the irregularities that have taken place by extending PPAs after its expiry, this Tuesday, August 7.

When contacted, COPE Chairman Sunil Handuneththi confirmed that the parties have been called to make submissions.

Revelations on CEB power purchasing agreements without following due process that have resulted in the CEB incurring high power purchasing bills that have ultimately trickled down to the consumer through tariffs have been frowned upon by the PUCSL and by its own officials.

In June this year, former CEB Deputy General Manager Sujeewa K. Abeywickrema refused to approve a payment on the basis that the power purchase agreement has not been approved by the PUCSL. The legal requirement under the Act is that every power purchasing agreement, emergency or not, should be approved by the PUCSL.

The letter written by the former General Manager demanded to show the consent letter issued by the PUCSL to approve the payment.

“The legality of payment for the invoices submitted by the above company under the said Power Purchasing Agreement (PPA) for a three year term is not clear, as officers entrusted with making payments we are burdened with the risk of being subjected to undue repercussions,” the letter reads.

A PUCSL official speaking to the Sunday Observer pointed out that the power purchasing through Independent Power Producers (IPP) was done on an emergency basis and there was no necessity to go into power agreements for a duration of three years.

Continuing with IPPs after their retirements by extensions to PPAs can bring negative impacts former GM Abeywickrema points out in his letter dated February 5, 2018 stating that “The tariff for the original IPP had been comprehensively structured reflecting so many cost components and factors affecting during original term and investments had been recovered during that term itself. Hence validity of tariffs are strictly confined to its term and not beyond”.

Extension of PPAs are unsolicited in nature and therefore, the prices cannot be counted competitively. According to the Electricity Act No 2009 as amended in 2013, power procurement should be carried out through a competitive bidding process. 

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