By Kelum Bandara
Colombo, November 9 (Daily Mirror): Minister of Power Gamini Lokuge in an interview with the Daily Mirror responded to questions regarding the controversy involving the agreement featuring New Fortress Energy of the United States for the supply of LNG (Liquefied Natural Gas) and the plans for grid connectivity with India and Singapore in the future. He also answered questions connected to the current political issues. Excerpts of the interview.
Q. The trade unions of the power sector demonstrated recently. They vowed to strike. In such an eventuality there will be power cuts or blackouts as feared by people. How prepared are you for this?
Actually, they initially vowed to go for a 76-hour strike. They threatened to stop the distribution of fuel making it even unthinkable to operate a generator. We did not panic. We held talks with the senior engineers of the Ceylon Electricity Board (CEB), other engineers, electricity superintendents, metre readers and others. We briefed them that the issues highlighted by those threatening to strike were not as serious as they were portrayed. Once the CEB was establised and the institute initially started operations as a department it enjoyed a monopoly over generation and distribution of electricity. Yet, in 1990s, the private sector was granted approval for the operation of thermal power plants. The CEB purchases power from them in terms of agreements signed. Today, we have thermal plants in different parts of the country – Embiliptiya, Matara, Sapugaskanda etc. As part of this programme only, Lakdhanavi Power Company was set up. It launched the Yugadhanavi Power Plant. The Government offered encouragement for it. LECO Company, the Employees Task Fund, the Employees Provident Fund (EPF) invested in it. It accounted for 30% of the initial capital. The company raised a loan to finance the rest. That was from the HSBC Bank. The bank agreed to release the loan with the Government’s guarantee only.
We intend to set up power plants in areas such as Siyambalanduwa, Mannar and Sampur. We plan for the generation of 30,000 megawatts of electricity in this fashion. We plan to retire our Norochcholoai power plant in 2045. We will close operation of diesel power plants by 2030
The Government cannot sign it for a company unless it has 50% equity. The Finance Ministry invested in it as a result and signed; offering a guarantee. It is a business operation uniquely different from others. It will be vested with the Government in 2036. It commenced operation with diesel power. In the meantime, there is a huge global outcry that solid LNG is more economically viable than diesel power. We also have given mind since 2000 to go for LNG energy. We held talks and called for tenders at times. During the time of the previous Yahapalana Government there were talks for a joint venture between Japan and India. But, it did not take off the ground. Now, we have also called for tenders – one for the supply of LNG to Sri Lanka, and then conveyance of them from the storage facility to the plant through pipelines. In the process, the Government explored low cost suppliers of LNG. The world is afflicted by the Covid pandemic. No country can escape from the economic downturn triggered by it. We have to position ourselves to face it. As a responsible Government, we don’t like to see an increase in the food prices. Yet, it is inevitable because of the global realities. For example, China is also grappling with problems despite being a country much larger than ours. Factories operate on selected days there. Fuel is issued on ration on selected days. We avoided such a crisis. Against such a backdrop, the American embassy engaged us and proposed its company to supply LNG.
Q There is controversy here because a company that did not participate in the tender process has been selected for the supply of LNG for five years. What have you got to say?
That is true. The American company has been selected. That is to provide LNG for a little more than US $ 1 a unit. The company identified through the tender process has agreed to supply it at US $ 3.50 a unit. Then, we have to select between the two and go for cheaper rate. We have to see whether this company can wield influence on us in power generation in the future . Still, the CEB controls power supply. Hydropower accounts for 45-50 percent of supply. It a fallacy that the American company with just five percent of power supply holds influence over us. The present protest campaign is just an anti-state act. Only Chinese technical officers operate the Norochcholai Coal Power Plant. Has China taken control of power supply? If China withdraws from power supply, we will lose 900 megawatts of electricity then. There is a hollow argument being trotted out by these forces. It is utter rubbish that companies in the thermal power sector can influence the country’s energy security. We find falsehoods being spread by anti-state forces financed by NGOs. That is it. The JVP was a loner in the call for a strike in the power sector. The convener of the trade union alliance- the unions affiliated to the JVP and the SJB- is a JVP member. He crows over alone today. Finally, they were compelled to say that they would not disrupt the power supply. That is how they finally took a step back.
Q. It is alleged that the alienation of 40 percent shares of the company to the American company may have an impact on energy security in a geopolitical context. What is your view on this as the Minister?
In our manifesto, it is clear that we go for public-private partnership ventures. We work accordingly. We are pledge-bound to depend on renewable energy for 70 percent. We have called for bids from the private sector to invest in solar and wind power generation. The companies that can generate more than 50 megawatts of electricity can apply. We have put up a newspaper advertisement. We intend to set up power plants in areas such as Siyambalanduwa, Mannar and Sampur. We plan for the generation of 30,000 megawatts of electricity in this fashion. We plan to retire our Norochcholoai power plant in 2045. We will close operation of diesel power plants by 2030.
Q. Do you say that the government will not scrap the agreement with New Fortress Energy under any circumstances?
We have alienated our shares of Yugadhanavi. If the American company is willing, it can resell it back to an Indian company. The American firm has that right. But, the director board of our company which accounts for 60 percent ownership can control it. There will be a new company to be formed by the Finance Ministry. It will take charge of LNG distribution though the American firm is the supplier. In the establishment of the Coal Power Plant we created a separate firm for coal purchases and delivery.
Q. The JVP, at a press conference, held the Government responsible for any blackout in the future. Can the Government stop any such blackout?
All the electricity workers are not terrorists. Most of them care for the country. In this exercise, we educated them properly. This deal will not have any impact on the CEB. There is no privatization of the CEB. Electricity workers are also electricity consumers. If there is any disruption, it will affect them as well. They also realized it. The JVP threatened to disrupt power supply on November 3. But, the JVP is an isolated group today. People and public servants will not condone any act that destroys the country. They act with their conscience with proper understanding of facts on the ground.
We cannot meet the total requirement of the country through hydropower. That is why we depend on thermal power. Again, it is costly. It costs from Rs.23-30 a unit. Yet, we sell off at Rs. 16. This is the reason for the huge losses of the CEB. On the one hand, we should reduce losses and make it a profitable business
Q. Chairman of India’s Adani Group Gautam Adani arrived in Sri Lanka and visited Mannar. There were reports that he expressed interests in investing in the renewable energy sector. What specific decisions have you taken?
We expect to explore the possibility to lay undersea transmission lines for the supply of electricity to India. We explore whether we can supply energy to Singapore. We had initial rounds of discussions. We need big investments. If we tap wind power, we can generate electricity and sell off to other countries to earn foreign exchange. We also plan for the development of solar storage solutions. It is very expensive. Still, we are studying it. The world is opting for green energy. Our President mentioned this in Glasgow, Scotland.
Q. You mentioned about possible grid connectivity between India and Sri Lanka. In a geopolitical context, what kind of an impact will it have on the energy security of the country?
Today, for power generation, we get only water free of charge. That is for hydropower generation. We cannot meet the total requirement of the country through hydropower. That is why we depend on thermal power. Again, it is costly. It costs from Rs.23-30 a unit. Yet, we sell off at Rs. 16. This is the reason for the huge losses of the CEB. On the one hand, we should reduce losses and make it a profitable business. On the other hand, we should make it an income generating industry. We take steps bearing in mind these two aspects.
Q. Sri Lanka has also discovered gas deposits. What is the plan for their use for our energy requirements in the event an American company has monopoly over its supply?
We had ideas about gas deposits in 1990s. The then government put up a newspaper advertisement at that time calling for bids from companies to explore such resources. Only two companies made their bids. One of them is a Norwegian company. A Norwegian ship was assigned to do a survey on gas and oil deposits. The survey was done in the Mannar basin. Thirty oil wells were found in two blocks of the Mannar basin. Any company willing to invest should purchase data from the Norwegian company. The Norwegian company asked the Government of Sri Lanka to canvass for leading companies in the world for upstream development of the industry. After President Mahinda Rajapaksa took office, the Sri Lankan Government purchased such data. We have gas deposits. Still we have the problem whether extraction of them is commercially feasible.
We don’t have financial resources to do it on our own. We need to obtain the support of the countries that have technology for it. It is not an easy task to extract gas because it is available 3000 feet below the seabed. It will take at least a couple of years for us to extract gas. If we secure gas resources we need a plan to trade them. Unless we embark on it with a plan it will be a disaster. Ours will also become a country like Nigeria. Nigeria is resourceful, but people are poor. The countries such as Libya under Muhammad Gaddafi and Iran are examples for oil rich successful nations. Until we find gas, we should run the country. We need to provide electricity at low tariff rates.
Q. Does it mean that you have paid attention to the use of LNG to be extracted in Sri Lanka?
Yes. Otherwise, we cannot run the country. If somebody gains hugely from a lottery ticket draw without a plan for disbursement of the newfound wealth he will go mad. We should work out a plan for the development of the country using income from oil and gas resources.
This deal will not have any impact on the CEB. There is no privatization of the CEB. Electricity workers are also electricity consumers. If there is any disruption, it will affect them as well. They also realized it. The JVP threatened to disrupt power supply on November 3. But, the JVP is an isolated group today
Q. To digress a bit, I would like to discuss some political matters with you. Prime Minister Mahinda Rajapaksa, at the function to mark the fifth anniversary of the party, said that the struggle by farmers and teachers went out of control because the party did not engage people politically. Do you as a senior politician agree with such comments made by the prime minister?
It is true. When we form a government we are confirmed to the ministry round the clock. As far as the farmers’ struggle is concerned we did not create enough awareness among farmers as to why we introduced organic farming. We need a healthy population in our country. Why have we set up a special hospital dedicated for kidney patients only? We have an eye hospital in Colombo. That is because we have a large number of eye patients to be cured. We have a hospital dedicated for kidney patients. That is because we have a large number of people suffering from renal failure.
It is believed that renal failure is a disease caused by the exposure to agrochemicals. Then, we have a large number of cancer patients. We have to work out a solution to such health hazards. I think there was lack of awareness at the grassroots level. There are people addicted to Kassippu (moonshine) drinking. Doctors warn them. But, they keep drinking because they are addicted to it. It is a difficult job to get them out of this bad habit.
As for teachers and their trade union action we engaged them after deciding upon opening schools with less than 200 students each.
Q. In you rmanifesto you have promised to introduce organic farming in phases over ten years. Is it possible for you to introduce it overnight in this fashion?
Your question is pertinent. We should have done it after the creation of awareness. Now, we cannot go back. We have to implement this programme. We have allowed the use of chemicals in the cultivation of ornamental plants for export markets. We have exempted the tea industry from this ban. If we cultivate tea with organic manure produced in compliance with international specifications, we could get a better price for our products.
Q. There are issues confronting people. The cost of living is surging. There are protests all over the country. Will you go for elections to the local authorities after February, next year?
We should look at why this happened. It is not the fault of the Government. We were hit by Covid which is beyond our control. The Government took measures to contain its spread. Our vaccination drive is one of the best among the developing countries. We see results at the ground level. There are foreign funded NGOs behind the campaign against the government. They want to see this country destroyed even by the pandemic. Recently, there were demonstrations with the participation of children and parents. We won’t be surprised if there are those infected with the Covid virus among them.