Hon. (Dr.) Harsha de Silva

¶ 01 Thank you, Hon. Presiding Member.

¶ 02 I am pleased to speak after the Hon. Minister. I want to ask what your policy is for the power sector. Are you trying to create a market? Or will a single buyer continue to take this forward as it is? That is the basic issue. What is the ideology? You said the economy collapsed due to wrong policies for years and that needs to change. Then, what are you going to do in the power sector?

¶ 03 We saw that the Ceylon Electricity Board had a loss of Rs. 298 billion in 2022. But after deciding to adjust the tariff to reflect costs, there was a profit of Rs. 61.8 billion in 2023. By October 2024, there was around Rs. 140 billion profit. Thus, a state-owned enterprise that had long been loss-making became profitable because of that decision. My question is: how far forward do you intend to take this change?

¶ 04 You said you decided to amend the 2024 Electricity Act. As Hon. Ajith P. Perera noted, when it went to Cabinet for Legal Draftsman action, the President, as Minister of Finance, presented fundamentally different observations. My question is this: like a priest bringing a Bible to preach in a temple, did you bring the foundational document when you came? Let me cite it.

¶ 05 I table the Cabinet decision of 23.01.2025.

¶ 06 It begins “...to revisit the Electricity Act ...” and “(i) to grant approval (a) to carry out an extensive review...”.

¶ 07 This part is important. It says, “(b) to appoint a Committee comprising of key stakeholders, experts in the electricity sector and energy policies...”. That is, a committee of key stakeholders to bring amendments, and to submit a report within a month.

¶ 08 Who was appointed matters. The nine members are all electrical engineers; six are university academics. Then the heads of LECO and CEB. There is a serious conflict of interest there. Next, one person from the private sector as routine. There are no lawyers; no finance specialists. One corporate expert. Then four from NPP political unions.

¶ 09 They submitted a Concept Paper. It went to Cabinet to bring amendments to the Act as a new law. The Ministry of Finance gave observations. Cabinet then decided: yes, there are observations; send it back to the Committee and, without a deadline, ask for a fresh report “someday.” But initially it said a committee of all key stakeholders. When amending the Electricity Act, beyond engineering, there are many issues: financial viability, legal aspects, and the nature of investments. Therefore, I ask the Government to rethink the composition of the new committee.

¶ 10 Now, I will take five key points from President Anura Kumara Dissanayake’s observations as Minister of Finance.

¶ 11 First: “A Committee is proposed to be established in place of the ‘National Electricity Advisory Council’. However, it is essential to consult all the relevant stakeholders and organizations during the development of the aforesaid policy. Final recommendations and approvals must be obtained in accordance with existing Government procedures and regulations.” What does this mean? The President says you cannot do this unilaterally; there must be consultations; public consultation is needed. We saw that public consultations enabled us to revise the electricity bill reductions. When some engineers said we could reduce by only one per cent, we finally reduced by about twenty per cent due to public consultations around the country. You yourselves earlier said tariffs must be set at the lowest possible price.

¶ 12 Let me give an example. On page 28 of your Concept Paper, under “Present Section”, for Section 29(1) it reads: “The national tariff policy shall include the principles to be adopted by the Regulator...” That is, policy must go through the regulator. Under “Proposed Amendment” you say the Ministry of Energy should also be added. I actually accept that, because the regulator must be able to receive Government policy.

¶ 13 But under the present Section 29(2), it reads: “In setting the tariffs, the Regulator shall ensure financial sustainability including a reasonable return on the investment of the regulated entities.” Under your “Proposed Amendment” you say: “In setting the tariffs, the Ministry of Energy and the Regulator shall ensure...” So you are trying to politicize tariff setting; to take power from the regulator and give it to the Minister. That is what happened before. The reason we could reduce tariffs by around twenty per cent and not by one per cent was because the Minister did not hold that power. Why should the Minister intervene in feed-in tariffs, final consumer tariffs, and power purchase tariffs for new generation, which are determined periodically? The Minister should make policy; the independent regulator should implement. The President is absolutely right. You are wrong. Do not do that.

¶ 14 Next, on procurement: “... obtained in accordance with existing Government procedures and procurement.” Hon. Mujibur Rahman kept raising the Mannar Wind Power Project. He and others said a bid of USD 4.65 cents was selected versus a previous 4.85 cents. The issue raised is that the selected bid had been previously rejected as technically non-compliant. If that is so, it violates procurement guidelines. That is where the problem lies—no good governance.

¶ 15 Another critical point. Your Concept Paper, under the current Act’s clause referencing “... in accordance with the Long Term Power System Development Plan and least cost economic dispatch,” safeguards least-cost. The regulator carefully ensures least cost. But on page 13 of your proposed amendments, “least cost” has been removed; it just reads “economic dispatch.” Why has “least cost” been cut? Did you do this deliberately or by mistake? The President also says “least cost” must remain. You are wrong; the President is right.

¶ 16 Second, you say your objective is to support the industry by segregation and separation. If the single-buyer market is an initial phase before wholesale and retail markets, you must set a definite timeline. The President says, give a date or timetable; do not say “someday.” If you accept markets, give a timeline.

¶ 17 You have two minutes remaining.

¶ 18 Hon. Gayantha Karunathilleka, may I have three more minutes?

¶ 19 Granted. Hon. Harsha de Silva is given a further three minutes.

¶ 20 The President’s policy is to create a market. Yours appears different; the President has pointed that out.

¶ 21 Third, you propose separate successor companies for generation, transmission and distribution, with 100 per cent Government ownership of all entities. The President observes: strengthening transmission needs extensive investment; therefore it is essential to revisit holding 100 per cent under Government and to enable private investments. What are you saying? Your fundamental line is 100 per cent Government ownership of generation, transmission and distribution assets. The President says that is not feasible. Which is it? Is it the President or the Power Minister? Pick one.

¶ 22 You also agree to seek policy-based loans.

¶ 23 My final minute. After the recent blackout, you said we need a pumped storage scheme costing around USD 1.3 billion, and you went to ADB for funding. What did ADB say? With the 13 per cent cap and fiscal constraints, they said they cannot fund USD 1.5 billion; it must be a public-private enterprise. But your law prevents private investments in transmission because you insist on 100 per cent Government ownership. So choose: beard or porridge; you cannot have both. Tell us clearly whether you will privatize or at least open parts to the private sector.

¶ 24 Thank you.