Sri Lanka Member Committee

The Sri Lanka National Committee aims to promote sustainable energy development in Sri Lanka, as a part of the World Energy Council’s energy vision. As a member of the World Energy Council network, the organisation is committed to representing the Sri Lankan perspective within national, regional and global energy debates. The committee includes a variety of members to ensure that the diverse energy interests of Sri Lanka are appropriately represented. Members of the committee are invited to attend high-level events, participate in energy-focused study groups, contribute to technical research and be a part of the global energy dialogue.

Dr Batagoda is a BA Honours (in Geography) Graduate from the University of Sri Jayawardanapura and also holds a PhD in Environmental Science from University of East Anglia, UK, MSc in Natural Resources Management from Michigan State University, USA and an Attorney-at-Law of the Supreme Court of Sri Lanka. In addition, he holds a Certificate in Public Administration from the Institute of Development Administration, Sri Lanka. Dr Batagoda is Secretary to the Ministry of Power & Energy, having previously been Deputy Secretary, Ministry of Finance and Planning Sri Lanka. In addition, he is a Board member of, SAARC Development Fund, Securities and Exchange of Sri Lanka, Lanka Litro Gas, Lanka Sugar Company, Regional Development Bank, Sri Lanka Carbon Fund, Tea Research Institute, National Science and Technology Commission (NASTEC) and United State-Sri Lanka Fulbright Commission. He was the Director General of the Department of Public Enterprises and National Planning, Ministry of Finance and Planning. He held several senior positions in the Ministry of Public Administration, Ministry of Plantation Industries, Ministry of Environment and Natural Resources (Director-Climate Change and Global Affairs). Further, he has served as an Assistant Secretary to his Excellency the President of Sri Lanka, Presidential Secretariat. Dr Batagoda has authored several books including State of the Environment in Sri Lanka, The Economic Valuation of Alternative Uses of Mangrove Forests in Sri Lanka and co-authored books including Urban Air Quality Management in Sri Lanka, Theoretical Manual for Environmental Valuation in Sri Lanka and Fiscal Policies on Fuels and Vehicles in Sri Lanka.

Energy in Sri Lanka

sri lanka, critical uncertainties, action priorities

Energy costs and pricing, the fuel-mix in electricity generation and energy sector governance have been the key uncertainties affecting the energy sector in 2018 in Sri Lanka. These uncertainties are likely to dominate the energy sector development and growth strategy into 2019 and beyond.

Action priorities for 2018 have focused on building more electricity generation capacity, building oil and gas facilities, rationalising energy pricing and implementing renewable energy initiatives.

Sri Lanka’s energy policy requires energy pricing to be cost reflective. The country has so far not been able to achieve this objective for either costing or pricing. With oil and electricity utilities largely owned by the government (directly or indirectly), the gap between costs and prices is financed with taxes on other goods and services. Like many countries in the region, the fuel options to produce electricity, namely coal, imported LNG, oil or renewables, continue to be a subject of intense debate. The all-encompassing regulatory structure for the electricity industry, the Public Utilities Commission of Sri Lanka (PUCSL), has still not reached its full potential and the due recognition. On the other hand, the oil and gas industry remain unregulated or loosely regulated under arrangements initiated more than 50 years ago without oversight by any modern regulatory structure.

Actions to build more conventional electricity generating capacity to serve the base capacity requirements have not been successful, while limited progress has been observed with renewable energy development. Initiatives to rationalise pricing of oil products and electricity remain a major challenge. Significant developments of renewable energy and a rational arrangement to enable both utility and distributed generation to co-exist would remain an action priority for 2019 and beyond.

Commodity prices: Energy imports in Sri Lanka cost USD 3.7 billion in 2017 and represented 18% of total imports. Increasing costs of energy imports in the face of lower economic growth and exports raises serious concerns about the sustainability of the present energy mix. The inability of governments to adjust administered prices of oil and electricity to meet costs and utility overheads has caused serious burdens on the treasury, which manages finances of state-owned utilities.

Corruption: Energy sector governance cross-cuts across policy-making, regulation, ownership and safety. Sri Lanka’s energy policy declaration 2008 is outdated and awaits revision since 2011. Ad-hoc or implied policies have been attempted in the intervening period with little success. There is no established policy review or compliance review mechanism. The government’s role as policy-maker is often mixed-up with that of regulator and owner of energy utilities. Independence of the electricity regulatory agency has been questioned, while the petroleum industry remains unregulated, as Sri Lanka plan major oil and gas investments.

Electricity prices: State-owned electricity and petroleum utilities have shouldered the burden and blame owing to administered prices, while being expected create profit. Pricing methodology (electricity) and formulae (petroleum) have been implemented from time to time, with little transparency, sustainability and public confidence. Deficits owing to administered prices are financed by state banks, at times exceeding USD 500 million per year. Implementation of periodic product pricing revisions with regulatory oversight needs to build public confidence, allowing utilities to be vigilant for costs within their control.

Primary energy for 75% or more of electricity production originated from renewable energies up to 1995. The growing economy required sourcing between 25% and 70% of annual electricity needs from fossil fuels. Balancing the supply and demand for electricity amidst seasonality, intermittency and higher investments on renewable energy, along with fleets of smaller oil-burning power plants, has been a daunting task. A weak decision-making process despite a strong legal framework in electricity industry, caused implementation of both conventional and renewable-based power generation to be delayed.

New bulk power generating capacity to serve the growing demand and to support renewable energy capacity to overcome seasonality and intermittency has been delayed. The last major power plant was completed in 2014. Major generation projects have not commenced since 2010. The 50-year-old refinery is inefficient and inadequate, and the natural gas terminal project has not been implemented since the decision to build it in 2014. In 2017, 35% of electricity was produced from oil. Delays in key power plants, new refinery and gas imports will need short-term solutions, raising oil share in power generation to 50% by 2020.

On a more positive note, Sri Lanka has pioneered feed-in tariffs and standardised agreements to enable private investments on renewable energy projects, and net metering for existing customers. As renewable technologies mature, feed-in tariffs also require moving to competitive pricing in fairness to customers. Capacity costs of utilities must be paid by customers with distributed generation. Absence of a clear procurement policy on next phases of renewable energy development along with utility/private share, hinders accelerated development of renewable energy, especially wind and solar resources

Innovative transport: In Sri Lanka, people are decreasingly using public transport, as incomes are increased, and quality and reliability of public transport is declining. Good quality electric public transport is yet to be deployed to encourage commuters to use cleaner and more energy efficient modes of transport.

Major impediments for Sri Lanka to achieve desired levels of energy supply at the quality and price desired by the society originate from weak sector governance. External impacts of high fuel costs and limitations of renewable energy may be managed with strong and consistent regulatory oversight devoid of administered prices and strengthened management of electric and petroleum utilities. The transport sector, the largest energy end-user ahead of households, commercial and manufacturing, require significant investments and policy change to ensure that an energy efficient mobility can meet demands of a growing urban population.

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