Extension of Norochcholai coal power plant – Putting people from frying pan into the fire (Was the President in slumber when this decision was taken?)
www.island.lk, 2nd October 2019, By Dr Janaka Ratnasiri
The Cabinet of Ministers at its meeting held on 24.09.2019 has granted approval to build a fourth unit of 300 MW coal power plant (CPP) at the premises of the existing 900 MW CPP at Norochcholai, according to the Cabinet Office website.
Environment pollution at Norochcholai
Wide publicity was given in the past to the adverse impacts on the environment around the Norochcholai CPP causing health problems not only to the people living in the area but also to the staff of the CPP itself. In addition, dispersion of coal dust into the sea during unloading operations has caused the fish population in the area to decline affecting the livelihood of fishermen. Farmers have also complained about the loss of their crops due to coal dust and ash depositing on crops. In response to the numerous complaints made by people, the government decided to build a wind screen along the coast to prevent coal dust and ash from getting blown into neighbouring settlements costing several hundreds of million rupees but this is not going to provide 100% protection.
Currently, a law suit filed by a public-interest organization against the power plant operator to enforce implementation of pollution control measures at the CPP is pending. It was revealed during the hearings that the CPP was operating without a valid environmental protection licence (EPL) which was an offence according to the law of the country. But the authorities are turning a blind eye because of the possible disruption of the power supply to the country had the law was enforced. It was reported that the Ceylon Electricity Board (CEB) has sought additional time to instal the control measures to mitigate pollution. The question is whether the CEB could achieve something in a short period of time which it could not do for the last seven years.
Violation of ambient air quality standards
The Environment Impact Assessment (EIA) study undertaken prior to building the power plant has found that when all three units are operating, the pollution concentration around the plant reaches 80% of the permitted levels under the ambient air quality (AAQ) standards gazetted by the Central Environmental Authority (CEA). Therefore, it is inevitable that when all four units are operating, the pollution levels around the plant will exceed the maximum permissible levels. The writer understands that the CEB engaged the Industrial Technological Institute (ITI) recently to survey the AAQ around the CPP. However, the results of this survey have not been made public so far.
The worst source of pollution from coal power plants is the accumulation of ash containing a variety of toxic heavy metals including mercury, zinc, lead, chromium, nickel, arsenic and cobalt as well as radionuclides. But the specification for coal purchases do not give any maximum permissible levels for these substances. Combustion of coal with 16% ash which is the permissible level for coal purchase will generate 130,000 tonnes of ash annually from a 300 MW plant which will add on to the release of about 390,000 t from the existing plants. When the CEB was unable to dispose the ash accumulated over the last 7-8 years safely, building an additional unit of 300 MW at the same premises will only aggravate the situation.
The fly ash emitted from the stacks is another problem caused by coal power plants. Even after filtering, nearly a thousand of tonnes of fly ash will get released into the atmosphere annually which get dispersed over a wide area depending on the wind regime. During the south-west monsoon period, winds blowing into the interior of the country will carry the pollutants from Norochcholai into North Western and North Central Provinces. People in these areas are already suffering from not only respiratory ailments, but also chronic kidney disease for which one likely causal factor cited is the presence of toxic heavy metals in ground water. When fly ash containing these heavy metals get deposited on the ground over many years, they could easily contaminate ground water adding to the existing problems. This will make the people living in the area already suffering from various ailments falling from the frying pan into the fire.
President’s change of policy
According to the Cabinet decision, the proposed CPP is said to be in conformity with the policy of the future electricity generation mix of Sri Lanka and the CEB’s Long-Term Generation Expansion (LTGE) Plan approved for 2018-2037 by the Public Utility Commission of Sri Lanka (PUCSL). The writer has described at length in his articles published in The Island recently how CEB trade unions succeeded in getting their LTGE Plan approved by the PUCSL after a year-long deadlock. This they did by getting the President to reverse his policy of “no coal” to “yes coal” after threatening to intensify their trade union action meaning switching off power to the country. The new policy on energy mix for power generation comprising 30% coal was adopted as a result.
The writer believes that all members of the CEB trade union are members or fellows of the Institution of Engineers, and it is surprising it turned a blind eye to this situation without verifying whether its members are breaking the code of ethics, if any, of the Institution. In no other country, such a reversal of policy by the President would take place and also professionals managing power plants threaten to shut off the power supply. The President, in doing so, has broken the pledge he made at the Climate Change Summit Conference held in Paris in 2015, where he said that Sri Lanka would move away from fossil fuels to renewable energy.
In an earlier occasion in January 2018, when a joint cabinet paper was submitted by the Minister of Power and Renewable Energy and the Minister of Special Assignments seeking approval to build two coal power plants, one at Norochcholai and other at Trincomalee, the President was very vociferous (as shown on a TV news telecast) saying that no such cabinet paper should be submitted to the cabinet without first getting the concurrence of PUCSL, and disallowed the proposal. However, when the present cabinet paper to build a CPP at Norochcholai was tabled, he must have been in a slumber.
Non-availability of slots in the CEB Plan
With the cancellation of the proposed CPP at Sampur, the government persuaded India and Japan to build two natural gas power plants each with a capacity of 500 MW. The Cabinet in July 2017 granted approval to build these two power plants in collaboration with the Governments of India and Japan along with an LNG terminal on the Western Coast and issued Letters of Intent. After preliminary negotiations extending over a year, in September 2018 the Cabinet granted approval to sign a Joint Venture and Shareholders Agreement for the construction of the 500 MW Liquefied Natural Gas (LNG) Power Plant to be constructed jointly by the Ceylon Electricity Board (CEB) and NTPC Limited, a Company owned by the Government of India, in Kerawalapitiya.
However, nothing was heard about the progress of these negotiations since then. The public would be interested to know some details of these projects – type and model of plants and their efficiencies, costs and cost sharing agreement, who is responsible for operation and maintenance and who owns the plant. Will CEB issue a detailed set of specifications for these plants also as it did for the Kerawalapitiya BOOT project? The only news available on these gas power plants is that a Cabinet decision has been taken recently allocating a block of land at Kerawalapitiya to build these two power plants.
According to media reports, Cabinet has also granted approval to accept the two offers for building dual-fuel 300 MW combined cycle power plants at Kerawalapitiya received in response to the request for proposals (RFP) issued by CEB in November 2016, almost three years ago. It is anticipated that these two plants will fit into the slots for LNG plants in the LTGE Plan 2018-37 provided for in 2019 and 2021.
Extension of…
There is no provision in the CEB Plan to add two of 500 MW power plants although the cabinet has granted approval to build them.
The only slot available is for two 300 MW Coal power plants due in 2023. Since the two gas power plants are committed, these two can be accommodated only by replacing the two 300 MW coal power plants due in 2023. As far as feeding power to the grid is concerned, it is immaterial whether electricity comes from a coal power plant or a gas power plant. Hence, building a 300 MW coal power plant at Norochcholai for commissioning by 2023 will cause an over-supply of generation capacity in 2023 if the government has to meet the commitments made to India and Japan to accept their offers.
Violation of National Procurement Procedures
According to the Power & and Energy Minister’s Cabinet paper, the proposed CPP is to be purchased from the same supplier of the existing CPP without calling for any tenders as required in the Electricity Act. Only a govt-to-govt (G2G) purchase is exempted, but this is not such a purchase. Whether a G2G or not, purchasing a CPP from this supplier is a gross violation of the government’s procurement procedures. The cost of a conventional 300 MW CPP will be about USD 450 million when estimated at the same rate as that for the existing CPP. Allowing an escalation of price over the last 10 years, it should cost at least USD 500 million or LKR 90 Billion now. When the government insists on following accepted procurement procedures even for an item costing several thousand of rupees, it is surprising that the Cabinet is willing to forego adhering to such procedures for such a massive transaction!
It is also surprising the Cabinet wishes to purchase a second power plant from a supplier when the first CPP supplied had so much of a bad history, always breaking down. Even after eight years of operation, the CPP is operated and maintained by Chinese technicians. Is it because they were not willing to train the CEB staff for carrying out these operations or whether CEB staff are not willing or incapable of undertaking these operations? So, if a second CPP is also purchased from the same supplier, it will obviously have to be operated and maintained by the Chinese. On the other hand, if a gas power plant is purchased instead, its operation and maintenance could be handled by Sri Lankan staff as proven at the existing gas turbine power plants.
Failure of the National Procurement Commission
The National Procurement Commission (NPC) was established under the 19th Amendment to the Constitution of Sri Lanka as an independent commission to formulate guidelines and manuals on procurement of goods and services by public organizations as well as to monitor all procurements being carried out by them to ensure fair play and transparency and also to oversight major procurement cases. However, some recent events concerning procurements in the power sector have shown that the NPC has failed to exercise the powers vested in it, particularly in respect of its monitoring functions.
For example, a news item on the CEB tender for the 300 MW dual fuel power plant at Kerawalapitiya which appeared in The Island of 23.09.2019 reported that the Chairman of the Procurement Appeals Board (PAB) in testifying at the Presidential Commission of Inquiry has confessed that he had made a mistake in reversing the recommendation of the TEC which prompted the Cabinet to award the tender to the higher bidder as the PAB has no power to assess any build, own, operate and transfer (BOOT) projects. This news item may be accessed via the link: http://www.island.lk/index.php?page_cat=article-details&page=article-details&code_title=211033. This kind of events wouldn’t have happened had the NPC monitored this procurement.
The issue is that based on the PAB’s recommendation which had no legal validity, the Cabinet had granted approval for awarding the tender to a higher bidder setting aside the Technical Evaluation Committee (TEC) recommendation to award the tender to the lowest bidder. Had the NPC monitored this procurement case it should have told CEB that the issue of a 500-page RFP was not relevant to a BOOT project and saved much time wasted on its assessment. Also, when the matter was referred to the PAB, the NPC could have told the PAB and CEB that PAB had no mandate to examine a tender for a BOOT project. Regrettably, NPC had opted to turn a blind eye to this case. The writer wrote to the Chairman of NPC drawing his attention to this lapse, but had no official response from him yet.
Even with the present case of procurement of a 300 MW CPP without calling for any tenders or giving a set of specifications, it is within the powers of NPC, writer believes, to stop this acquisition as it does not conform to the procurement guidelines published by the NPC, and also considering many adverse environment and health impacts and past history of the existing CPP supplied. This has to be done before any firm commitment is made to award the contract to the selected party.
Obligation towards the Paris Agreement
On 06.08.2019, the Cabinet having considered a paper titled “Minimization of greenhouse emission in energy sector as at 2030 in compliance with the Paris Agreement” submitted by the President highlighting that Sri Lanka is obliged for the minimization of the greenhouse emission in the year 2030 by 20% comparative to the year 2020, decided to take note of “the importance of focusing special attention on environmental conservation, public health security and greenhouse emission, and on the significance of taking decisions connected with the matter concerned based only on the observations and recommendations granted through scientific environmental assessments conducted by following the national environmental laws, in case of power stations constructed using non-renewable energy sources during the decade from 2020 to 2030”.
It is noteworthy that the cabinet has only taken note of, and not decided, to do what the President has said. It is interesting to note that while the President talks about reducing carbon emissions by 20% in 2030 relative to emissions in 2020, the cabinet chaired by him has approved building a 300 MW coal power plant to be commissioned in 2023 which will add to the carbon emissions beyond emissions in 2020. This is why the writer said earlier that the President must have been in slumber when others took this decision.
The best way to achieve the President’s aspiration is to build a gas power plant for commissioning in 2023 instead of the proposed CPP. A 300 MW sub-critical coal power plant will emit about 2 million tonnes (Mt) of carbon dioxide (CO2) annually whereas a similar capacity natural gas (NG) power plant will emit only 0.7 Mt of CO2. Hence, the President should expedite the negotiations being conducted with Indian and Japanese parties who are planning to build NG power plants here along with a terminal to import LNG, enabling their early commissioning. The President should also forget about the Korean offer to build a floating terminal to bring LNG for 20 years on their terms which is detrimental to the country.