Sri Lanka Hydro Power Generation Picks up Sharply in 2013

02nd April 2013, www.lankabusinessonline.com

Hydro power generation has picked up sharply in Sri Lanka allowing state-run Ceylon Electricity Board to cut thermal power, while demand was barely growing in January 2013, official data shows.

Total power generation in the month rose just 0.6 percent to 987 GigaWatt hours (millions of units of electricity) from a year earlier.

In December total generation fell in absolute terms by one percent to 988GWh amid a slowing economy and higher tariffs which promote conservation.

In 2012 total generation grew just 2.4 percent to 11,807GWh as the economy slowed, with some power cuts also reducing generation, as a large coal plant broke down repeatedly.

This year the CEB is expecting to sell 10,950GWh of energy. Sales could be lower than generation due to system losses.

Data released by the Central Bank shows CEB's hydro power generation grew 270 percent to 593GWh in January 2013 from a year earlier, while purchases from private power producers plunged 60 percent to 214GWh.

CEB's own thermal generation - which includes coal power - was also down 21 percent to 234GWh.

CEB has sought a price hike from April. The regulator removed three thermal plants whose power purchase agreements had expired but which were listed in the generation schedule for 2013 shaving off 15 billion rupees in costs filed by the power firm.

From late 2011, low rainfall triggered a steep increase in thermal generation, creating large losses in both the CEB and state-run Ceylon Petroleum Corporation which sold subsidized fuel to the power firm.

The losses which were filled by bank loans, was ultimately accommodated by Central Bank credit (printed money), making the Sri Lanka rupee fall from 110 to 134 to the US dollar.

Market pricing energy helps reduce bank credit demand and avoid money printing which in turn helps keep inflation low and the exchange rate stable.

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