No new coal power

On September 24, President Gotabaya Rajapaksa while speaking at a UN International Energy Forum?said?Sri Lanka would stop building new coal-fired power plants, and committed to achieving net zero carbon emissions by 2050. As part of this commitment, Sri Lanka along with Chile, Denmark, France, Germany, Montenegro and the UK announced a “No New Coal Power Compact”. Sri Lanka had already set a target of achieving 70% of all energy requirements from renewable energy sources by 2030 (currently, renewable energy sources account for about?35%?of our power demand). China?also?announced that they would be ending support for new coal projects overseas at the UN General Assembly. This is unsurprising given President Xi Jinping?announced?a net zero target by 2060 at last year’s General Assembly, but relevant given that China has funded several infrastructure projects in Sri Lanka in the past,?including?the only active coal power plant in the country. The cost of being reliant on coal has also been in the news - India is facing a power crisis, with just?four?days worth of coal left at the end of September after a slump in local coal production due to flooding. And now, Sri Lanka is facing its own crisis, due to low foreign exchange reserves,?writing?to India for a USD 500 million credit line to pay for crude oil purchases. (It has been?reported?that the Ceylon Petroleum Corporation owes nearly USD 3.3 billion to Bank of Ceylon and People’s Bank). Opposition MPs have?warned?that failing to resolve this situation could result in power cuts.

Loopholes

And yet, weeks after the announcements at the UN International Energy Forum, the Sunday Times?reported?that loopholes are already being found that will allow for the continued use of fossil fuel. Earlier this year, the Central Environmental Authority (CEA)?granted?provisional approval for Lanwa Sanstha Cement Corporation to import thousands of tonnes of coal via the Hambantota Port, for a steel company being set up in the Mirijjawila Export Processing Zone. The same company is?already?in the process of setting up a cement plant, also in Mirijjawila, and plans to import 20,000 metric tonnes of coal a year for this plant alone, with more coal to be used along with other raw material for the steel plant, once it’s cleared after an Environmental Impact Assessment. The Sunday Times?reported?on an exchange between the CEA and the Ministry of Ports and Shipping (canvassing on behalf of Lanwa Sanstha Cement) on how to allow coal to be unloaded from ships and transport it via conveyor belt for the project without raising environmental concerns. In the end, the CEA responds noting that the Hambantota port had already been built in 2007 after an environmental impact assessment (EIA) and that further, an industrial zone was being planned in Hambantota district, so a separate EIA wouldn’t be needed.?

Incidentally, the owner of Lanwa Sanstha Cement, Nandana Lokuwithana, has been in the news in the past. In 2016, he was?named?in the Panama Papers, linked to an entity called Nilona Fashions in the jurisdiction of Seychelles. While using offshore companies alone isn’t evidence of illegal activity as the ICIJ has pointed out (though it might be an indication of tax evasion) Lokuwithana’s name came up again the year before - in connection with the Dubai Marriott Hotel Al Jaddaf, which he owned. In 2015, the Financial Crimes Investigation Department?filed?a B report informing the Kaduwela Magistrates Court that they were investigating whether Mahinda Rajapaksa had invested in the Marriott Hotel. Rajapaksa said this was done on the basis of an anonymous letter and implied that this might be politically motivated (since in 2015, the coalition government between Sirisena and the UNP was in power). He denied that he had concealed any assets.?

Sri Lanka’s history of coal

Sri Lanka’s history of coal power has been fraught. At present, there is just one active coal-powered station - Lakvijaya, better known by where it’s situated - Norochcholai. The Norochcholai power plant has been mired in controversy ever since it was first commissioned in 2011. In?2018, it was discovered that it was operating without an Environmental Protection License. Despite being constructed at a?cost?of USD 1.3 billion dollars, it?frequently?malfunctioned. Apart from?regular?power cuts, the malfunctioning of the power plant caused fly ash to be released in the air and sea, leading to respiratory diseases, including asthma, and skin problems for those living in the vicinity. The hot water released from burning coal was also released into the sea, harming marine life.?

Source

In 2018, the Daily Mirror?reported?that even though the North Western Provincial Environmental Authority had written to the Norochcholai power plant, first to submit their own proposals to minimise pollution, and then to request them to stop operations and repair the malfunctioning equipment, the power plant continued to operate. More recently, Norochcholai made the news again when the report on the Parliamentary Committee on Public Accounts (COPA)?found?that the government had lost more than Rs. 130 million in revenue due to what state media termed an ‘error’ on taxes levied for imported coal for the plant. The report found that 50% of the fine levied after a customs investigation went to the officers as a reward, while 40% went to the officer’s welfare management and compensation fund (which, as the report noted, would amount to fraud).?

The story of Sampur

In 2006, a Memorandum of Understanding was?signed?between Sri Lanka and India for another coal power plant in Sampur. Again, from the outset, there were protests by residents in the area, many of whom were displaced by war and who feared the plant would destroy agriculture and livestock.?

Source

Yet, an EIA was conducted which gave the project a green light. The protests continued, with environmental group Environmental Foundation Limited filing legal action. After years of wrangling, the government announced that it would not be going ahead with the coal power plant in 2016, and that they would most likely go ahead with a Liquefied Natural Gas plant (LNG) in Kerawalapitiya instead. Again, from the beginning, the government did not initially pursue truly renewable energy sources, instead calling for tenders for a diesel powered plant, calling it a liquefied natural gas plant in name alone to avoid protests from environmentalists. Apart from it being a non-renewable energy source, using diesel would also come at significant economic cost - in 2015, it was estimated that the cost per unit of electricity would be Rs. 45.75 compared to Rs. 7.63 for coal.?

Also in the news in recent weeks have been discussions about an oil farm in Trincomalee, part of a controversial lease agreement between the Ceylon Petroleum Corporation and the state run branch of the Indian Oil Corporation (LIOC) for the lower part of the oil farm, for USD 100,000. There has been much opposition to the agreement, with questions raised about what the tanks would be used for. At present, only 15 out of 99 tanks have been utilised, and LIOC has borne some costs for refurbishment. While the deal has languished for years (and while the story of the Trincomalee oil farm is not directly connected to power generation) it is telling that the reason for the delay is not out of concern for Sri Lanka’s over-reliance on fossil fuels - rather, it’s once again the lease agreement itself, its terms, and the fact that it involves an Indian company that has fueled controversy.?

What this highlights is that successive governments have prioritised convenience and short term thinking over thinking about long term benefits. This can be seen from our energy mix - as I wrote in August 2020, thermal energy made up 73% of our electricity sources. What’s more, the government is continuing to find more ways to continue using non renewable energy despite the President’s announcement - just 2 months ago, it was reported that an ‘extension’ of the Norochcholai power plant was still ongoing. Interestingly, the Ceylon Electricity Board Engineers Union is still framing the benefits of coal power in terms of cost, comparing the much lower cost of coal to thermal power. The longer-term costs, including the costs of multiple breakdowns (if the existing plant is anything to go by), pollution to the environment and health effects don’t seem to figure into these costs.?

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