Annual Report 2010 - Ministry of Finance and Planning

Ministry of Finance and Planning Sri Lanka > Annual Report 2010made thermal power less expensive 8 ,specially the thermal power plantsowned by the Independent PowerProducers (IPP) despite utilizing themat full capacity 9 to meet the boost indemand for electricity. At the sametime the operation and managementreengineering process implementedthrough the “Ten year plan” alsoallowed the CEB to increase itsproductivity significantly.The policy of the governmentto invest in excess of Rs. 35,000million during the last five yearsfor upgrading and maintenance ofpower plants such as New Laxapana.Moragolla, Upper Kothmale, Ukuwelaetc. increased the capacity of thewater tanks allowing CEB to reapthe benefits of heavy rainfall. Atthe same time the investments inDistribution and Transmission ofabout Rs. 30,000 million during thelast five years in the upgrading ofthe power grids in Kerawalapitiya,Galle, Kilinochchi and the Northand East resulted in the CEB beingable to cut down its system lossesto 13.39 percent in 2010 from 14.58percent in 2009, thus making CEBone of the most efficient poweroperators in the region.As such, although the governmentincreased the price of Heavy Fuelto Rs. 40/l in September 2010 fromRs. 25/l in January 2010, due to thesystems being improved, CEB wasable to absorb the increase in cost ofproduction and yet earn a profit.While CEBs balance sheet improvedin 2010, its dues to CPC amountingto Rs. 46 billion as at the end of2009 remain unpaid. In line with agovernment directive all purchases offuel made by CEB from CPC in 2010was settled in full. The governmentcontinued to support CEB in 2010too with the continuation of the debtmoratorium extended to CEB since2007, costing the government almostRs. 11 billion per annum. This is inaddition to the on lending facilitiesextended to CEB of Rs. 30 billionin 2010 for various developmentalprojects. In addition the governmenthas issued guarantees amountingto Rs. 14,741 million enabling CEB tosecure financing from external sourcesfor both operational and capitalexpansionary purposes.During the year CEB providedconnections to almost 87 percent ofhouseholds continuing its efforts toachieve 100 percent electrificationRs. Mn2500020000150001000050000Chart 4.8 > Budgetary Support to the CEB 2000 -20102000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010The governmenthas invested inexcess of Rs.35,000 millionduring the lastfive years forupgrading andmaintenance ofpower plants8CEB incurred Rs. 79,421 million on the purchase of fuel in 2010. However, if there was no subsidy the cost of fuel forthermal power would be almost Rs. 100,000 million9Full capacity of the IPPs-1,059 MW217