Apart from the organic fertiliser fiasco and the fuel queues, the other main factor that hastened the untimely end of the previous administration was the imposition of power cuts that sometimes stretched to 13 hours a day.
There was, of course, a link between the fuel crisis and the power crisis, because the Ceylon Electricity Board (CEB) generated power mostly from fossil-fuel powered thermal generators in the absence of rain. With the dearth of foreign exchange to import fuel and coal, the thermal power plants and the coal-fired Norochcholoai power plant could not operate at full capacity, which led to power cuts.
Fast forward almost two years and there are no power cuts at all, with most people having forgotten that such a phenomenon existed in the first place. The only downside was that electricity tariffs had to be increased by a massive margin to cover the CEB’s losses and fuel costs. This decision, taken in October last year, was naturally not popular at all and Power and Energy Minister Kanchana Wijesekara went to great lengths to explain why it had to be done. The only consolation was that the January hike in the Value Added Tax (VAT) was not applicable to electricity bills.
Most middle class families and Small and Medium Industries including tourist hotels were hard hit by the unprecedented electricity rate hike. Power has been disconnected from nearly one million households that were unable to pay the increased bills. There was a clamour from MPs in both sides of the House, industries and consumer associations for a reduction in the tariffs, which had a cascading effect on many other goods and services. In fact, many traders and service providers increased their charges to cover the increased power costs.
With the country experiencing incessant rains for a few months, the CEB’s hydropower capacity increased substantially, making it profitable after many years. This reduced its dependence on thermal power to a discernible extent, thus saving forex as well. In this context, the Government has taken a commendable decision to reduce the electricity tariffs of almost all categories – residential, industrial, educational and religious.
This will be a boon to all those who struggled to pay the higher bills amidst other concerns such as increased VAT and Cost of Living (COL). Moreover, the CEO and its affiliate the Lanka Electricity Company (LECO) must give an opportunity to the defaulters to pay their bills in installments, in case they cannot pay a lump sum.
Above all, the lowering of tariffs must be used to attract investors, who had shied away from investing in Sri Lanka which had earned a reputation for having the highest electricity tariffs in South Asia. Even though most other countries in the region have a patchy supply of electricity, unlike our 24/7 feed, investors still preferred those destinations as the overall costs were lower. Thus the Board of Investment (BOI) must capitalise on this move and strive to get more investors coming this way.
However, caution has to be exercised in terms of power generation and consumption as we are probably on the threshold of another dry spell that could drain our hydropower reservoirs. This is why the Government should double down on its efforts to establish more Renewable Energy (RE) plants before the 2030 deadline, when the CEB is targeting 70 percent of power from RE sources. Currently, this stands at a paltry 10 percent (solar and wind). Needless to say, the failure to construct any RE plants for many decades has boomeranged on us in a spectacular fashion – but it is still not too late to get going.
Sri Lanka has only around 750 MW of rooftop solar, but it should have been at least 10 times more. In this respect, the Government should reconsider the VAT imposed on Photovoltaic (solar) panels to encourage more households, commercial establishments and industries to take the solar route. Plans have been announced for floating and fixed solar systems and wind farms, all of which should be operational by 2030 to reduce our dependence on thermal energy. In any case, all fossil fuels will eventually run out and RE will be the only option left, apart from nuclear power.
Studies have also been conducted on building a number of 300 MW Small Modular Reactors (SMRs) here to complement the RE and hydro plants. An SMR costs less than US$ 1 billion to build, compared to more than US$ 30 billion for a full-size nuclear reactor. There are even designs for Micro Reactors, producing just 10 MW. Both these options are much safer than full-scale nuclear power plants. However, the holy grail of nuclear power is nuclear fusion, the same process that powers the Sun. Several breakthroughs have recently been reported in this regard and scientists hope to have working nuclear fusion power plants within the next 30-40 years. We should also be keeping an eye on newer technologies such as Green Hydrogen and Blue Hydrogen.
Another reason for having more alternative sources of power is the expected influx of Battery Electric Vehicles (BEVs). The whole point of having BEVs will be negated if thermal power is used to charge them. This is where solar and DC Superchargers can come in. The right mix of energy sources will help stabilise generation costs and hence, the power bills.
