🚨 CEB says No open bidding for Naphtha & Heavy Oil for electricity generation

⭕ Last week, President AKD, in his capacity as the Minister of Power and Energy, directed the CEB to purchase all fuels, including naphtha, diesel, and heavy fuel, through competitive open-market processes.

⭕ The decision aims to reduce fuel costs for energy generation.

⭕ Despite the President's direction, the CEB now states there is no other feasible supplier for naphtha and heavy oil for energy generation other than the CPC; only diesel is viable for purchase through open bidding.

⭕ Despite naphtha being a byproduct of CPC's refinery process, CPC sells naphtha to the CEB at a significantly higher price than the market rate, under a "mutually agreed-upon price."

⭕ In 2023, the CEB purchased naphtha from the CPC at prices ranging from Rs. 161 to Rs. 263 per litre, while the global market price stood at Rs. 110 per litre (according to the Sunday Times). - https://t.co/fiF0ZG88ID

⭕ As a result, the CEB incurred a loss of Rs. 17.27 billion in 2023 due to the high cost of purchasing naphtha. This loss was recovered through a 3% increase in electricity tariffs, paid by electricity consumers.

⭕ According to the people familiar with the matter the likely reason for the reversal of the policy is the stockpile of naphtha sitting at the CPC due to the CEB not purchasing it. Despite two international tenders, the CPC was unable to sell the stock because the prices quoted by buyers were too low. Since both the CPC and CEB fall under the Ministry of Power & Energy, it is possible that a deal was struck at the ministry level to resolve this.

⭕ By not proceeding with open bidding, as initially directed by the President, the CEB will miss the opportunity to secure lower prices, which could have significantly reduced their costs. Additionally, the public will lose transparency into fuel purchasing prices, and electricity consumers will ultimately bear the cost of inefficiencies at the CPC.

A win for bureaucrats & unions and a loss for the people.

#SriLanka 🇱🇰 #OpenBiddingUturn