Sri Lanka’s CEB urged to have competitive bidding for all new plants

Apr 10, 2013 (LBO) – Sri Lanka’s state-run Ceylon Electricity Board should have competitive bidding for all new plants, electricity users said at a public hearing, as an expensive plant that was ‘negotiated’ came under repeated fire from irate customers. Some diesel plants running reciprocating engines are selling power at a little over 20 rupees to the CEB. There are also questions over the efficiency of other combined cycles.

An independent power producer (IPP) is selected on two criteria. A capacity charge is set for a guaranteed payment on the promise of a minimum availability of the plant. The cost of building the plant and profits usually come from the capacity charge.

An energy charge is also paid for every unit produced for fuel and operating costs: the greater the efficiency (heat rate), the lower the energy charge.

Competitive Bidding

In a competitive bid, operators will try to build the cheapest plant with the cheapest financing and most efficient to outbid others and try to run the plants as efficiently as possible. Usually little or no profit is made on the energy charge.

On the basis of a ‘state connection’ Kerawalapitiya was ‘negotiated’. Its heat rate was not guaranteed (usually the responsibility of the fo