By Rusiripala Tennakoon –

Old records and references provide exciting and thought-provoking information which help us to learn from the past mistakes and move forward eliminating those that arise in the process. In particular when those reveal gross shortcomings and lapses of a system, it is worthy of revisiting those to learn from them to move on.

Several years ago, some important revelations were made about the Renewable Energy Sector based on audit observations.

Considering the prudency of revisiting these due to the prevailing current situation, we reproduce them to enable those interested in the issue to make a fair assessment of the developments since.

Renewable Energy: A Worthy Revelation by the Auditor General

Following an audit conducted by the Auditor General’s Department to evaluate the performance of the licensing and activation processes for new renewable energy power projects, the Auditor General has issued a report with his observations and recommendations based on the facts revealed. This report is an excellent contribution that could greatly aid in reviving the renewable energy sector. However, these revelations would have been even more impactful if they had been made earlier when renewable energy sector developers were voicing their concerns about numerous impediments and barriers in the approval process.

Had these obstacles been addressed and removed earlier, the current crisis could have been avoided. Nonetheless, the report articulates the grievances of entrepreneurs and provides invaluable insights for policymakers. The Auditor General deserves commendation for his disclosures, which enable policymakers to focus on these issues with credible information. Furthermore, the report exposes the bureaucratic inefficiencies causing delays in the sector.

The report is set to be tabled in Parliament—a welcome move that paves the way for further discussion. Lawmakers will gain greater insight into the challenges facing the sector and have the opportunity to take necessary action. To its credit, the government has already initiated steps to address many of the issues highlighted in the report. However, the findings and recommendations in the report could serve as a catalyst to accelerate efforts to stimulate the sector. In light of the government’s current policy, which aims to achieve 70% renewable energy generation by 2030, this report provides essential support to expedite these goals.

Institutions Supporting Renewable Energy Development

Sustainable Energy Authority of Sri Lanka (SEA)

Established under Act No. 35 of 2007, the SEA has a mandate to identify, evaluate, and develop renewable energy resources. It is also tasked with improving approval and evaluation guidelines for renewable energy projects and promoting them among investors to enhance the efficiency, productivity, and environmental balance of the energy sector. Sri Lanka is committed, alongside the global community, to achieving a carbon-free environment.

The SEA was envisioned as a “one-stop shop” to expedite developers’ approval processes. Unfortunately, it has remained confined to a monitoring role and has not adequately assisted developers in overcoming bureaucratic hurdles with other state agencies.

Public Utilities Commission of Sri Lanka (PUCSL)

Established under Act No. 35 of 2002 and further empowered by the Sri Lanka Electricity Act No. 20 of 2009, the PUCSL is tasked with:

Advising the government on power generation and usage,

Regulating and inspecting licenses,

Setting and regulating tariffs,

Levying an annual tax on licenses.

Ceylon Electricity Board (CEB)

The CEB, a key player in the sector, has failed to resolve an issue arising from a provision in its governing Act for nearly seven years.

Contradictions in Policy and Plans

The Auditor General’s report highlights contradictions between the National Electricity Policy and the CEB’s Long-Term Generation Plan (2022–2041). Key discrepancies include:

The government targets 70% renewable energy by 2030, while the CEB projects only 50%.
The government opposes coal power capacity additions, but the CEB’s plans do not align with this directive.
Cabinet-approved directives for carbon neutrality by 2050 are not reflected in the CEB’s plans.
The PUCSL returned the CEB’s generation plan, requesting revisions to align with government policies by June 30, 2022.

Deficiencies in the Approval Process

The audit revealed several flaws:

Failure to establish a central coordination mechanism to reduce project approval time to under two years, as required by policy.

Non-appointment of a committee to coordinate approvals and land acquisition.

Suspension of power purchase agreements (PPAs) by the CEB since 2016.

Objections by the CEB to standard tariffs approved by the Cabinet, resulting in unfavorable conditions for developers.

These shortcomings have left 1,374 projects, representing 4,014.84 MW of potential capacity, stalled.

Impact on Renewable Energy Developers

Developers face significant financial and operational challenges due to prolonged delays:

Rising costs for machinery, freight, labor, and construction.

Withdrawal of concessional loan schemes by banks, which now charge commercial rates.

Exhaustion from years of waiting with little progress.

Recommendations

The Auditor General’s report calls for immediate attention from policymakers and outlines the following recommendations:

Institutional Reform: SEA, PUCSL, and CEB must improve coordination and fulfill their roles in facilitating the sector.

Policy Alignment: The CEB must align its plans with government policies and directives.

Financial Support: The Central Bank of Sri Lanka (CBSL) should incentivize banks to offer concessionary loans to renewable energy developers by relaxing statutory reserve requirements.

The Auditor General has provided a valuable service to the nation by highlighting the obstacles faced by the renewable energy sector. This report is an opportunity for the government and opposition to address these issues collaboratively, ensuring the sector becomes a cornerstone of Sri Lanka’s energy future. Timely action will help restore developers’ confidence, support national energy goals, and promote a sustainable energy transition.