Warns country heading right into a LNG trap CEBEU declares stern TU action

Ceylon Electricity Board Engineers’ Union (CEBEU) has decided to initiate stern trade union action on Thursday (7) against the pressure to push for Liquid Natural Gas (LNG) Power Plants by the Cabinet Committee on Economic Management (CCEM) who they accuse of manipulating the Public Utilities Commission of Sri Lanka (PUCSL) into submission.

CEBEU has also decided to withdraw all their members from the Technical Evaluation Committees starting from 7 September, unless the Least Cost Long Term Generation Expansion Plan (LCLTGEP) compiled by PUCSL is withdrawn.

CEBEU has sent a letter dated 28 August to Minister of Power and Renewable Energy, Ranjith Siyambalapitiya, notifying him about the trade union action.

When inquired by Ceylon Today former CEBEU President Athula Wanniarachchi said that India and Japan have pushed an unsolicited proposal to set up a LNG terminal in Sri Lanka. He pointed out that two 500 MW LNG plants are included into the proposal.

The proposal has mooted the setting up of a company of which majority stakes will belong to Japan and India whereas Sri Lanka will own fewer shares.

“Their main intention is not to invest on a terminal and earn profits out of the terminal business, but to dump the high cost LNG in their hand on unsuspecting Sri Lankans. In order to ensure that there is sufficient demand in Sri Lanka for LNG to dump their high cost, high volume contracts, they are also trying to force LNG power plants into the country,” Wanniarachchi charged.

Explaining further, he said, “If we accept this proposal, this country would run straight into a trap and we will be forced to bear the sins of others and buy LNG at a higher price for generations to come, when LNG is traded very low at the moment. Further, giving terminal operations and LNG procuring to a non-State-owned entity is very dangerous and the energy security of the nation would be at serious risk one day.”

He added that it is clear that forcing LNG plants on CEB is not an isolated incident but a part of a larger conspiracy. World Oil and LNG prices crashed in August 2014. However, as LNG contracts are based mainly on long and medium-term contracts, there are many countries that still hold pre-August 2014 priced LNG contracts and are required to buy LNG at prices that they have signed prior to August 2014.

CEBEU has been at loggerheads with the PUCSL for some time now citing the PUCSL is influenced by outsiders who wish to manipulate the country’s generation mix. In February and April this year, CEBEU wrote two strongly worded lengthy letters to the Commission alleging that PUCSL staff are supporting anti-Coal lobby and are siding with the LNG mafia, for which the PUCSL replied in April denying the allegations.

The fight took a new turn with the PUCSL granting approval to the CEB’s LCLTGEP for 2018-2037 periods on June 2017.

Both CEB and CEBEU had claimed that what the PUCSL had approved is not the plan submitted by CEB for approval but a plan that PUCSL has prepared on their own after removing Coal plants in the CEB plan and forcing LNG plants instead. CEB wrote officially to PUCSL claiming PUCSL had exceeded the powers given to it under the Sri Lanka Electricity ACT by amending the CEB’s recommended plan on their own.

And then CEB wrote to the Attorney General too asking for legal opinion.

However, the PUCSL claims that the generation mix that they had approved is of lower cost than the CEB generation mix. CEBEU strongly denies this claim and had even stated in their letter to the subject Minister that by doing so PUCSL had “surprisingly proved to the world for the first time that LNG fired generating technologies are cheaper than Coal Steam Plants”.

CEBEU now claims that the action by the PUCSL is part of a bigger conspiracy to dump high cost LNG plants on the country.