August 01, 2006 (LBO) – Sri Lanka says it may not entertain new investments into expensive oil fired power plants, under a proposed energy policy for the country published this week.
The government shall not initiate or entertain any proposal either by electricity utilities or private developers to build power plants that will use oil, oil based products or fuels of which the price is indexed to the oil price¦..
¦..unless they are required to be included in the generation expansion plan due to technical limitations of other plant types. the policy said.
The moratorium is to stay in force until 80 percent of Sri Lanka’s power generation is from non-oil based fuels – until 2015 – the policy, which is still open for public comment, said.
The island is already heavily dependant on thermal power, with as much as 61 percent of electricity produced from costly diesel fired plants and the balance from hydro power.
Costs of generation are between 10 and 12 rupees a unit, monopoly state utility the Ceylon Electricity Board (CEB) says, but sold at a subsidised 7.60 rupees a unit.
Sri Lanka is trying to diversify its supply sources to coal power,