Zulfath Saheed outlines measures to counter Sri Lanka’s persisting energy challenge

The challenges faced by Sri Lanka’s energy sector are manifold. On the one hand, it must ensure an uninterrupted supply of electricity; on the other, the economy has to maintain a balance between local energy resources and imported petroleum based fuels. In addition, commercial energy utilities need to improve their financial sustainability and service quality.

Set against this backdrop, it’s widely accepted that Sri Lanka is in urgent need of energy sector reforms – particularly when it comes to growing the base vis-à-vis renewable energy including non-conventional sources, given the requirement for more sustainable development.

REFORM AGENDA Speaking to reporters on the sidelines of the 2019 fall annual meetings between the World Bank and IMF in Washington D.C. recently, IMF Mission Chief for Sri Lanka Manuela Goretti too observed that “governance reforms include state sector enterprise restructuring especially in the energy or electricity sector.”

To this end, she also noted that the “Ceylon Electricity Board (CEB) will require some important reforms… Under the [Extended Fund Facility] programme, we have one benchmark, which has been delayed. The benchmark refers to implementing the existing electricity pricing formula in line with market prices since CEB is running significant losses.”

She continues: “At the same time, our recommendation to the authorities is to address the cost inefficiencies of CEB, which are currently happening, to make sure these are not transferred into retail prices for end consumers.”

“A broader analysis of the electricity sector in terms of pricing, governance, energy sourcing and other pending issues, with support from the World Bank and other partners is important to tackle the heavy losses of CEB,” Goretti explained.

COMBINED EFFORTS Meanwhile, the Ceylon Chamber of Commerce – considered the apex business chamber in Sri Lanka – has launched a working draft of its Sri Lanka Economic Acceleration Framework 2020-25, which also features proposals covering power and energy.

It outlines 12 policy interventions and key activities – including restructuring and standardising bidding processes, engaging professional industry advisory companies, mandating the National Procurement Commission to perform functions of the Procurement Appeal Board, enabling ‘power wheeling’ in the transmission network and amending the Electricity Act.

The proposals seek to rationalise short-term LNG imports also, address the lack of an independent regulator in petroleum, develop a technology road map for a 100 percent (renewable/indigenous) grid, phase in unbundling of the CEB, attract private sector participation in energy projects, introduce key performance indicators (KPIs) for utility companies, and align generation planning with sustainability goals and sector specific technological trends.

UNUSUAL SUSPECTS Sri Lanka recently unveiled plans regarding the use of bamboo as a source of biomass energy. This was revealed at a forum organised by the UN Industrial Development Organization (UNIDO).

As part of the Bamboo Processing for Sri Lanka project – launched by UNIDO and supported by the Global Environment Facility (GEF) to develop a bamboo supply chain and product industry in Sri Lanka, leading to a reduced global environmental impact from greenhouse gas emissions as well as a sustainable industry base – the forum sought to build awareness and facilitate knowledge transfer when it comes to using bamboo as an eco-friendly alternative to hardwood.

Bamboo is touted as having favourable fuel characteristics including low surface moisture and ash content while its high heat value is deemed to exceed that of most identified fuelwood. However, given the limited number of studies that have been conducted on bamboo as a biomass, its full potential is yet to be exploited.

FUTURE VISION The Sri Lanka Energy Sector Development Plan for a Knowledge-Based Economy 2015-2025 of the Ministry of Power and Energy looks to “guide the nation in all its efforts to become an energy self-sufficient nation by developing [the] full potential of renewable and other indigenous energy resources while achieving maximum energy conservation through exploration, facilitation, research and development, and knowledge management.”

Its thrust areas encompass integrated national energy policy formulation, a cleaner future through green energy, conservation and efficient use of energy, customer satisfaction in service and quality, timely development of infrastructure, efficient energy sector institutions and good governance, innovative financing for a diverse energy sector and investment in R&D for cutting-edge product development.

And while looking to address many of the chall-enges identified in relation to the country’s energy sector (including the high cost of electricity, reliance on imported fossil fuels, energy wastage and losses to name but a few), the prospect of yet another change in government makes one wonder whether the envisioned plans would see the light of day.