Reviewing the Financial Impact of Delay in Implementation of Power Plants - Generation Expansion Plan 2018-203, the Commission further pointed out that “It has to be noted that these financial loss or cost overrun figures are merely the primary outcomes of implementation delays. Cumulative effect of implementation delays over next three year period can very likely trigger a power crisis that can seriously affect the national economy.”

“The Commission does not recommend purchasing emergency power in the future to meet any capacity or energy deficit due to implementation delays of these upcoming power plants and is of the view that such costs should not be passed through to the consumers through tariffs. The government may consider a change in industry structure if the generation plan implementation cannot be efficiently carried out within the current structure”, it added.

The Commission further said that implementation issues pertaining to power plants identified in Least Cost Long term Generation Expansion Plans (LCLTGEP) have been prevalent over the last 20 years. Many of the identified power plants were delayed and some were not implemented at all.

This has resulted in serious problems that have plagued the electricity sector over the past decade and seriously hampered its progress. Cost overruns and load shedding are the most prominent and direct consequences while the impact of these two factors on the economy of Sri Lanka and its competitiveness are secondary consequences. The cost overruns happen because of the expensive emergency power procurement and over dispatch of existing expensive power plants.  The  financial  loss  due  to  non-implementation/delaying  of  the approved power plants over the last 20years is enormous and the economic/impact of load shedding and high prices is much bigger.

And the issue of implementation delays or non-implementation of power plants is not some past phenomena, but something very much prevalent even at present.

Public Utilities Commission has been continuously monitoring the progress of the CEB in implementing the approved plan and has observed delays in the procurement process of power plants expected to be commissioned by 2020.

Based on the information obtained from CEB the Commission expects delays in implementation of the power plants that had been approved to be implemented by 2020. A detailed implementation plan and the actual expected implementation schedule are given in the table below.

Financial impact due to delaying of power plants

Kerawalapitiya 300 MW Natural Gas fired power plant

Even though the plant is expected to be commissioned in January 2019 according to the LCLTGEP, as per the CEB implementation plan it will be commissioned only in June 2020.

Because of this commissioning delay the expensive thermal plants which are already connected to the system has to be dispatched. Thus, the additional energy cost of dispatching the expensive thermal plants is taken  as LKR 8.95 per kWh. It was assumed that the plant when commissioned, will be dispatched  at a plant factor  of 80%. Therefore if the plant is delayed by one month the energy generated at 80% plant factor will be substituted by expensive thermal power at an additional cost of LKR 8.95 per kWh.

Considering all these factors, calculated loss for a month of delay is LKR 1.55 Billion. If the plant is going to be delayed for 18 months as per the CEB implementation plan, the loss will increase to LKR 28 Billion.