ADB Extends $160 Million in Loans for Sri Lanka's Power Program
MANILA, PHILIPPINES - The Government of Sri Lanka’s push to expand and improve its electricity services, especially to the poor and those living in conflict-affected areas, will receive support from the Asian Development Bank (ADB).
ADB’s Board of Directors today approved loans of US$135 million from its Ordinary Capital Resources (OCR) and a further $25 million from its concessional Asian Development Fund (ADF) for the Clean Energy and Access Improvement Project (Sri Lanka). The funds will be used to support energy efficiency improvements, to develop the use of renewable energy, and to increase connections and services to rural households.
Sri Lanka’s power sector has struggled for decades to meet rising demand and to provide efficient and cost-effective electricity services. Around 20% of households still lack electricity access and the government-owned Ceylon Electricity Board (CEB), is weighed down with debt, crimping its ability to fund new infrastructure or attract private investment. In addition, the share of thermal power in the power generation mix has surged dramatically from 1% of the total in 1986 to 58% in 2008.
The Government has now launched a 10-year development plan to address these constraints and the project will support the CEB and the Lanka Electricity Company to improve coverage and service efficiency. The initiatives will include modernizing and upgrading the country’s transmission system and launching a demand-side management program for public lighting. Support for renewable energy will add 200 MW of hydro-generated electricity to the national grid and encourage private sector investment in the industry. At least 60,000 poor households will be connected to electricity services through micro-credit support.
“The access for the poor component will directly benefit the Eastern Province which has been severely affected by the conflict (between the Government and the Liberation Tigers of Tamil Eelam) as well as other poor regions,” says Tomoyuki Kimura, Principal Energy Specialist with ADB’s South Asia Department.
The loans cover 85% of the project cost of $188.2 million. The demand-side management initiative will receive $2.2 million from ADB’s Climate Change Fund. The OCR loan has a 25-year term, including a grace period of five years, with the interest rate set in accordance with ADB’s London interbank offered rate. The ADF loan of 32-years will carry an interest charge of 1.0% per annum during the 8-year grace period, and 1.5% for the balance. The Government of Sri Lanka will also provide the equivalent of $24 million.
Technical assistance grants of $3.8 million will be given to support the project implementation and to strengthen capacity of the Public Utilities Commission of Sri Lanka (PUCSL). PUCSL, as the independent regulatory body, will play a critical role in efficient regulation of the power sector under the recently passed Sri Lanka Electricity Act. ADB will provide $1 million from its regular TA funding program, with $800,000 from the Climate Change Fund and $2 million from the Japan Special Fund, administered by ADB. The Government of Sri Lanka will provide $950,000 in-kind.
The Ministry of Power and Energy will be the executing agency for the project which is due for completion in May 2013.
Source : Asian Development Bank , Dated 14 April 2009 |
| Power to Sri Lanka BY AUSTRALIAN TRADE
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Trends and opportunities
The market
The demand for power has been increasing at a rate of 7–8 per cent per annum over the past 20 years. This trend is expected to continue in the near term. Approximately 100 megawatts (MW) of new generating capacity will be required annually.
Sri Lanka’s power is generated by over 68 power stations – a combination of hydro electricity and thermal powered plants (mostly oil-fired).
It is estimated that only 54 per cent of the population is connected to the grid. Sri Lanka’s installed capacity is approximately 2500 MW (hydro – 54 per cent, thermal – 46 per cent), a capacity which struggles to service current demand. Households consume 40 per cent of production and 60 per cent is consumed for industrial and commercial purposes.
Sri Lanka’s total electricity generation is over 8700 gigawatthours (GWh) a year. The government controlled Ceylon Electricity Board (CEB) and its subsidiary, the Lanka Electricity Company (LECO), generate 85 per cent of electricity; independent power producers supply the rest.
The estimated potential for large scale hydropower generation in the country is in the region of 2000 MW. Over two-thirds of this amount has already been harnessed and new plants are planned. The electricity generation by hydro plants can be highly affected by drought. Government policy is encouraging private sector development of mini hydro plants.
New thermal capacity is being developed – predominately coal-fired but also using natural gas. Sri Lanka imports all its thermal fuels. Rapidly rising oil prices have caused the Ceylon Electricity Board to moderately increase electricity charges (which are comparatively high within the region) but not to a level to recover costs and therefore accelerated losses suffered by state-owned energy agencies which are already loss-making concerns.
Transmission of electricity is carried out at 220 kilovolts (KV) and 32 KV. Primary distribution voltage is 33 KV while in some areas 11 KV is used. Low voltage distribution is carried out at 440 volts.
Opportunities
Opportunities include:
- New power plants (hydro, liquid natural gas, coal, other alternate sources)
- Converting auto diesel-fired plants to duel fuel (liquid natural gas) plants
- Mini hydro electricity plants
- Home solar systems
- Electrical meters and switches
- Power measuring equipment and control systems
- Power billing and systems
- Power transmission and control systems
- Power cables
Sri Lanka plans to expand privately owned mini hydro electricity power plants connected to the national grid from the current 70 MW capacity (from 31 plants) to 450 MW capacity.
Competitive environment
The power sector is organised under the Sri Lanka Government Ministry of Power and Energy, which has the overall responsibility of managing and driving this sector.
Nearly 93 per cent of the total installed capacity in Sri Lanka (both hydro and thermal) is in the hands of the fully government-owned Ceylon Electricity Board and its subsidiaries and only around seven per cent is in the hands of independent power producers.
Suppliers from Japan, India, the USA and EU are most active in the Sri Lanka power generation industry.
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Tariffs, regulations and customs
Sri Lanka has liberalised import and export procedures and import licences are only required for a few specified items due to health and security reasons.
Sri Lanka uses a five-band tariff schedule based on the harmonised system of classification. The bands are:
- Zero – High value and essential commodities
- 2.5 per cent – Basic raw materials
- 6 per cent – Semi processed items
- 15 per cent – Intermediate products, spare parts, etc.
- 28 per cent – Motor vehicles and other finished products
In addition, a surcharge of 20 per cent on import duty is also payable.
Most power generation, transmission and monitoring equipment including solar products and gases, coal, fuels, etc., come between the 0–15 per cent duty rates.
A mark-up of seven percent is applied to the cost, insurance and freight (CIF) value of imports for the charging of VAT at customs. A port and airport development levy at a general rate of 2.5 per cent is applicable in some circumstances although imports used for exports are exempted.
The rates that apply for the valued added tax (VAT) are as follows:
- Standard: 15 per cent – applies most commonly
- Basic: 5 per cent – applied to essential commodities (and only at point of import) such as sugar, rice, dhal, milk powder, dried fish, and vegetables including potatoes, chillies and onions
- Luxury: 20 per cent – applied to items such as liquor, electronics, whitegoods, motor vehicles (excluding three-wheelers and buses), and hotel services
- Zero – designed to assist Sri Lanka’s exports especially in the apparel manufacturing industry
The government varies the application of VAT and custom duties on items as a means of supporting its priorities. For instance, the VAT rate for financial services is 20 per cent. Computers and accessories are exempted from VAT to encourage increased computer usage. Required machinery and technology are duty and VAT free. Many items associated with the textile industry are minimally taxed as imports.
Industry standards
Product standards are set by The Sri Lanka Standards Institute (SLSI) which also manages the mandatory import inspection scheme that is conducted for national safety and health reasons on 58 identified items.
Sri Lanka uses ISO 9000 series standards on quality management and assurance and ISO 14000 standards on environment management systems.
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Marketing your products and services
Market entry
The Sri Lankan Government actively canvasses foreign direct investment. Foreign direct investment is permitted in most sectors and foreign exchange controls have been progressively dismantled. Up to 100 per cent foreign equity is permitted in the banking, insurance sectors and infrastructure development activities, while shipping, travel and freight-forwarding agencies are limited to 40 per cent.
To encourage private sector investment and involvement – both local and foreign – tax and financial incentives have been granted to key sectors and priorities such as exporters, agriculture, information technology and large scale infrastructure development projects including power development activities.
The Sri Lanka Government offers a wide range of incentives to both foreign and local investors – provided they meet a specific eligibility criteria and the investment is undertaken through a company incorporated in Sri Lanka. The Board of Investment (BOI) of Sri Lanka manages this program.
Sri Lanka has signed a double taxation agreement with Australia whereby Australian companies operating in Sri Lanka receive a concessionary or zero tax breaks in Australia if they have deemed to pay taxes in Sri Lanka. This also includes companies that have received BOI concessions.
Repatriation of dividends is subject to a withholding tax of 15 per cent while interest and royalty payments are subject to a withholding tax of 10 per cent under this agreement.
It is advisable for companies interested in doing business in the power sector to adopt the following market entry strategies:
- Employ the services of a local agent or representative with a good local connections
- Form a strategic alliance with key companies for large scale investment
- Forming an alliance with a distributor involved in exporting small scale products and services.
It is customary to pay agents a commission on sales, in the range of 5–20 per cent of earnings. However, with regard to large projects, promoters/representative fees would be negotiated to the mutual agreement of all parties. Most significant companies are members of key chambers of commerce and industry.
Companies selecting joint venture partners are advised to visit the local company offices to view existing operations and also network with the local business community (which is quite small) for referrals and tips, prior to making a decision.
It is advisable for clients marketing their products and services to have printed promotional documents including capability statements.
Distribution channels
The government will continue to own and control large scale hydro electricity plants and developments as well as the transmission infrastructure.
The private sector will be heavily involved in thermal power plants, financed by the means of either: build, own and transfer (BOT); or build, own and operate (BOO) arrangements.
The development of mini hydro electricity plants will be primarily driven by the private sector, as well as the ongoing expansion of home solar power.
The government is interested in alternative sources of energy and has instituted incentives to encourage new technology.
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| Source: Australian Trade Investment |
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| Wind energy electricity generation is a reality in Sri Lanka
By Noor Nizam
(August 27, Toronto, Sri Lanka Guardian) The news article written by Garvin Karunaratne, formerly of the Sri Lanka Administrative Service under the heading “The Wind Turbines of Spain , France and Portugal ” dated August 25, 2009 and published in an Internet Newspaper which highlights issues concerning Sri Lanka is of great value and concern. Gavin Karunaratne should be commended for his boldness to take to task the lethargic and selfish bureaucrats on this issue of renewable energy development of electricity energy in Sri Lanka . When Gavin Karunaratne is stating that “Someone is trying to prove that wind power is not feasible and the oil lobby is so strong as to sabotage the feasibility of wind power”, the message should be well taken by others too, handling national planning and development strategies to assist the little island of nearly 21 million people to come out of the rut of poverty, misery, the destruction of the civil war and the dependence of foreign powers.
Our planners and bureaucrats should think anew. They should not work by the Plans drafted and approved by interested groups, be they aid, private sector or political, who have had their say in lobbying the big wigs in power in various countries where it was meant not to develop our countries but to give our countries Aid in a manner that the Aid money flowed back to the donor countries with interest. John Perkins’ “Confessions of an Economic Hitman” should be a guiding light in our new thinking of planning and development strategies.
But what worries me most is the statement made in the article that – “Someone is trying to prove that wind power is not feasible and the oil lobby is so strong as to sabotage the feasibilit y of wind power”.
While there is much room to believe the later, Wind Energy Electricity generation has been winning the struggle against those no-green power generation pundits of the CEB and the International lobby that has been promoting natural gas, coal power and fossil fuel power generations since 2002. In 2002, a US aided wind assessment study was launched in Sri Lanka and the final report was released in 2003. The Wind Farm Analysis and Site Selection Assistance Project report covered areas such as North and Southeast Coast – Hambantota to Buthawa, West Coast – Kalpitiya Peninsula and Puttalam, Northwest Coast – Mannar Island, North Coast – Jaffna, and Central Province – Ambewela,
M. Young and R. Vilhauer, Global Energy Concepts, LLC, Kirkland, Washington , NREL were the researchers who did the study for US Aid.
The first 3 MW grid connected pilot wind power plant was set-up in the country at Hambantota. It has been commissioned in 1999 and the monthly plant factor has been in the range of 5% to 15% in year 2006. Sri Lankan researchers have made substantial studies on this plant to strengthen the viability of wind energy electricity generation. Mention has to be made of the team that made this possible. The study under heading “Wind power development and its status in Sri Lanka ” 2006. - The Research project team was from Department of Electrical and Electronic Engineering, comprised of Sri Lankan scientist from the University of Peradeniya , supported by National Science Foundation. The scientists were - A. Atputharajah, A.P. Tennakoon, R.P.S. Chandrasena, J.B. Ekanayake, S.G. Abeyratne. This paper discusses the wind power development in the world and summarizes the status in Sri Lanka . Possible research areas, that was needed to be motivated in Sri Lanka to check the feasibility of wind power generation, have
also been discussed.
It was subsequent to such indigenous and pioneering research studies and engagements that wind energy electricity generation has today reached its present position in Sri Lanka .
In 2006, the CEB signed Letters of Intent in mid August 2009 with four commercial developers for the purpose of building plants to produce 34 megawatts of wind power on the west coast of Sri Lanka . The proposed wind plants with installed capacity of 34 megawatts were to produce about 1 percent of total power generation in Sri Lanka . Venturing into green energy, in its continued effort to produce green energy non dependent on fossilized imported oil Sri Lanka’s Hayley s Group in around 2008, built a wind power farm on the Western coast of Sri Lanka. A 10 MW wind power plant was being built at Nirmalapura at Kalpitiya in Puttlam District to augment Hayley’s already existing green energy power generating plants like the Hydropower stations.
Another project in the area is the farm of wind power generators set-up by Sulunga Energy. The farm of wind power generators will have seven turbines when completed with each turbine producing 1.5 MW of power. Preparation for signing a Power Purchase agreement by the end of 2008 was completed. The venture was initiated by Sulunga Energy. Interlink Group the holding company of Sulanga Energy has substantial investment in real estate in Kalpitiya. Additional new projects were also approved and Indian wind turbine manufacturer Suzlon Energy has received orders to supply 10MW of wind turbine capacity to a project developed by Senok Wind Power in Sri Lanka . The project is supplied with eight units of Suzlon's S64 1.25MW wind turbines, will come up in the Kalpitiya region of Sri Lanka . Supply of turbines to the project already commenced and in process in 2009, with project completion slated for fiscal 2010.
Non-the-less, the President Mahinda Rajapaksa government has to be commended in it’s thrust for indigenous resolutions to issues that are facing the Nation, specially at a time, the Nation is striving hard to pull it’s self from the rut of the 3 decades of civil war that had and will never have any meaning, except to the international forces that are still committed to destroy our island in the Indian ocean - Sri Lankan, the pearl of the Indian ocean as narrated by great writers and poets.
It was indeed heartening to note that The Board of Investment of Sri Lanka granted investment approval to four companies for investments worth US $ 68 million.
Chairman/Director General Dhammika Perera signed the agreements on behalf of the BOI and presented the BOI Certificate of Registration to the investors.
Two investment agreements worth US $ 37 million were signed with Vidatamunai Wind Power (Pvt.) Ltd and Seguwantivu Wind Power (Pvt.) Ltd. The companies will set up two wind power plants at Vidatamunai and Seguwantivu in Puttalam. Akbar Brothers, Hirdaramani Group and Debug Computers are the main promoters of the venture. The two wind power plants will supply 20 megawatts of power to the national grid. The ventures will utilise 13 and 12 wind turbines imported from Spain at Vidatamunai and Seguwantivu.
Director of the companies Asgi Akbarali said that wind power is a green energy and will not affect the environment. When the power plants are completed these will be the only wind power plants that are operational in Sri Lanka .
Directors of Vidatamunai Wind Power (Pvt) Ltd and Seguwantivu Wind Power (Pvt) Ltd Asgi Akbarali and Moiz Najimudeen signed the agreements. CEO Manjula Perera was also present at the occasion.
But the cream of the wind energy electricity generation is still to be announced. The project which is in the pipeline and has received the “go ahead signal in principal” from the Government of Sri Lankan, is a 134 mega watt project that will be spread in the North specially and parts of the North Eastern provinces. Proudly naming the Nation that always has been a friend of Sri Lanka at good and bad times, through they had inter-governmental relationship frictions due to political misunderstanding and HR issues, claimed as bad by certain of their national politicians, when in reality the world has begun to understand the truth slowly and with patience, Canadian consultants are working on the project planning with eagerness and dedication. The team is led by a Canadian lady who is a Production Engineer and Wind Energy Consultant with many years of experience in the field with the consulting Canadian Wind Energy Engineering Company, which is engaged in some of the innovative and largest Wind Energy Electricity generating projects in Canada . The Sri Lankan partnering company, which is already in the business of renewable energy production, hopes to engage all it’s resources to make this venture a real joint success in the coming months.
The driving force of this Canadian-Sri Lankan Renewable Wind Energy Generation Project is the Sri Lankan Canadian Diaspora comprising of Sri Lankan Canadian citizens who want to contribute their best towards the infrastructure development of the North in the aftermath of the end of the armed struggle between the LTTE and the Security forces in May 2009. Like the rise of the phoenix from the ashes, the destroyed supply of electricity in the North will arise again with green energy projects like the Canadian-Sri Lankan Renewable Wind Energy Generation Project with assistance from Canada , a friend always to Sri Lanka . As Mr. Garvin Karunaratne wishes, Wind Energy Electricity Generation will be a reality in Sri Lankan for the next generation.
Source : Sri Lanka Guardian ; Dated August 26, 2009 |
Sri Lanka power generation up in August
Energy Trends
Nov 22, 2009 (LBO) - Sri Lanka's power generation rose 1.3 percent in August 2009 to 845 GigaWatt hours from a year earlier, with hydro power increasing its share, the latest official data showed.
In the first half of the year power generation contracted in line with a slowing economy, though official gross domestic product estimates were still in positive territory.
In the first quarter the economy officially expanded by 1.5 percent (down from 6.2 percent a year earlier). The second quarter estimate showed 2.1 percent growth down ggrom 7.0 percent in 2008.
But economic activities, including external trade have picked up in the second half and Sri Lank is expecting to end the year with 3.5 percent growth.
In August state-run Ceylon Electricity Board (CEB), had generated 338 million units or GigaWatt hours of hydro power up from 291GWh a year earlier. CEB thermal generation fell to 153GWh from 180 last year, wind was flat at 0.5GWh.
Private sector generation fell to 354GWh from 362 and emergency power fell to 7GWh from 9GWh.
From January to August power generation was down 2.2 percent from a year earlier at 6,488GWh. CEB hydro was down 24.6 percent to 2004GWh and hydro was up 7.6 percent to 1484GWh.
Private sector power was up 15.6 percent to 2,008 and emergency power was down 18.1 percent to 59GWh.
Auto diesel sales were flat 127,000 metric tonnes. Diesel is widely used for power generation in Sri Lanka. Diesel sales were up 3.7 percent to 1,143 metric tonnes to August.
Petrol sales, used mostly for private transport was up 7.1 percent to 45,000 metric tonnes. To August petrol sales were up 4.6 percent to 363,000 metric tonnes.
Source : Lanka Business Online; 22 Nov 2009
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