Sri Lanka amends electricity law to remove competitive bidding

Meera Srinivasan | Updated on: Jun 10, 2022
Diesel vehicles queue up in a long line to buy diesel due to a fuel shortage countrywide, amid the country’s economic crisis, in Colombo, Sri Lanka, June 8, 2022. REUTERS

Diesel vehicles queue up in a long line to buy diesel due to a fuel shortage countrywide, amid the country’s economic crisis, in Colombo, Sri Lanka, June 8, 2022. REUTERS

Move comes amid criticism of Adani Group’s entry into the island’s energy sector

Sri Lanka on Thursday amended its electricity legislation to eliminate competitive bidding for energy projects in a move that drew sharp criticism from the Opposition.

A majority of MPs voted for the amendments to the Sri Lanka Electricity Act in the 225-member House, despite trade unions in the state-run Ceylon Electricity Board (CEB) strongly resisting the move.

On Wednesday, the CEB union warned the government of an indefinite strike from midnight in protest the new legislation, and against the government roping in India’s Adani Group to execute renewable energy projects in the island without any competitive bidding process. However, the strike action was suspended after President Gotabaya Rajapaksa agreed to meet the union leaders, besides issuing an extraordinary gazette declaring electricity an essential service.

Minister of Power and Energy Kanchana Wijesekara defended the amendment saying it was “essential to the quick development” of renewable energy. “Hope to encourage Foreign direct investments as well as opportunities to local developers to participate in the renewable energy plans,” he said in a tweet.

Fierce criticism

In March 2022, the Adani Group signed an agreement with the CEB for two large renewable power projects in Sri Lanka’s Northern Province, to be set up at a cost of $500 million, with a capacity of generating 500 MW together.

The move drew fierce criticism from Sri Lanka’s main opposition party Samagi Jana Balawegaya (SJB or United People’s Force) that observed that the Adani Group’s “backdoor entry” into Sri Lanka’s energy sector was “disrupting the country’s competitive electricity generation system”. The party’s chief executive accused the Rajapaksa government of “pampering” Prime Minister Narendra Modi’s “notorious friends”.

While the Opposition proposed a compromise amendment to do away with tenders for projects less than 10MW, it had no takers in government. SJB lawmaker Harsha De Silva termed Thursday’s move a “horrible decision”.

“Due to non-transparent procurement and corruption, we pay so much more than necessary for electricity. One bright spot was the requirement for competition in renewable projects but had delays. Instead of fixing the problem they did away with competition. Horrible decision,” he said on Twitter.

Prime Minister Ranil Wickremesinghe welcomed the adoption of the Sri Lanka Electricity (amendment) bill. “This allows rapid deployment of cost-effective renewable energy to the grid,” he said in a tweet.

(Meera Srinivasan is The Hindu’s correspondent in Colombo)

Published on June 10, 2022
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