Transport Policy and Vision for the Future
21st March 2020, By Eng Parakrama Jayasinghe
Transport Policy – The need for A Paradigm Shift
The wartime Prime Minister of UK Winston Churchill is reported once said “ Never let any Crisis be wasted” One may add the more familiar saying : Behind every Crisis Lies an Opportunity” . When I commenced drafting this article I had the issue of the drop in world oil industry in mind, which some would say is not a crisis but a boon. But now Sri Lanka is faced with the greater crisis of managing the Covid 19 virus which has now reached a worldwide pandemic status. As such it could also lead to a crisis in the energy security, of the country overriding any potential benefits form the drop in price.
The overdependence on imported sources of energy in the recent decades would definitely lead to such problems of supplies even if we have the finds to pay for them. The benefits of any price reduction would not be realized for many months even if the low prices prevail. The corona virus epidemic may keep the world market oil prices depressed for some time to come and as has been the behavior of the market in the past, the prices are bound to bounce back when the OPEC and Russia mange to overcome their differences. However, Sri Lanka has refining capacities to cater to only about 40% of the demand and thus the price of petrol and diesel will be determined by the pricing policies of the refiners, and not the published world market prices of crude oil. In the meanwhile what matters to the Sri Lankan economy and the consumers is the price per liter in Sri Lanka Rupee terms, which will inexorably go up irrespective of the world market price in US Dollars. The current trend in the face of the Covid 19 is most worrying with the Dollar already at Rs 190.00
http://www.dailymirror.lk/business-news/Did-COVID-19-alter-conventional-economic-wisdom-/273-185374
Did COVID-19 alter conventional economic wisdom?
Dilina Kulathunga
Daily Mirror 19th March 2020
However the virus will certainly alter the conventional economic wisdom which framed much of the economic order. It will also pose questions which will demand the attention of all nation states, policy makers, and businesses which require deep reckoning of the relevance of the conventional global order in politics, national security and economics which dominated the past four to five decades.
- Did we, and the world miss an opportunity to diversify our supply chains during the close to three year negotiations aimed at rebalancing trade between the USA and China which resulted in a Phase I deal this January ?
- Or should we continue to drift in the same old path, having seen it failing for over four decades, and knowing it will fail, due to the fear of causing ire from the supranational agencies who have been very generous lenders to us or succumbing to the pressure from the semi-intellectuals with some Ivy League education, working in the so called think tanks ?
While import substitution may be a forbidden tactic in the market fundamentalists’ play book, it is time that every country starts seriously exploring ways and means of producing stuff which can be domestically produce with domestic workers.
Further it also makes sense to enter in to agreements to buy goods we actually need. It is no good deal if we import something we can already produce at home with
domestic workers.
What this narrative ignores is the fact that when Sri Lanka source or outsource products which can be manufactured domestically for cheaper labor or materials, Sri Lankans either lose jobs or it doesn’t create jobs in the least, in the productive sectors which give a living wage. (No wonder why over a million plough on the streets of the metropolis in Sri Lanka).
What good is a cheaper widget, if you don’t have the paycheck to buy it?
Just imagine a world where most of our life saving pharmaceutical drugs and medical devices are produced in China or any other one country. What kind of a national security threat could it pose to every nation state?
This is why it was said in the beginning of this piece that there is closer linkage between trade and economics and national
security of a nation.
But the message is clear to our policy makers and the industrialists ; that is, it is time Sri Lanka starts diversifying its supply chains, starts in-shoring what is possible to produce domestically and invest in import substitution in whichever the sectors that is possible, because production and jobs create more wealth and contentment, than an instant gratification one receives from a cheaper widget from elsewhere.
(The writer can be reached
via dilinainbusiness@gmail.com)
The increased impact of the Corona -19 virus and the impending global shut down of many economic activities throughout the world will have much severe negative impacts , than any marginal benefits we could gain form a drop in price of crude oil.
Under these circumstances it is encouraging that the government has decided not to change the price of fossil fuels for a year, ignoring the “Braying” ( As the Editorial of the Island mentioned) of the opposition. Our appeal to the government is to make good use of this one grace to put in place policies that could at least dilute Sri Lanka’s over dependence on imported energy , be if oil, coal or even Gas. At least part of the possible savings which may not be as expected should be diverted to enable such policies to be implemented. The priority of course is to offset the losses made by the CPC due to short sighted actions of the previous government. These options are discussed in detail later,
In this light it is hoped that His Excellency the President would think twice than reducing the consumer tariff for electricity as reported recently. It is quite apparent that The President is ill advised on the workings of this sector for hi to even contemplate this move. It is doubtful if anyone has taken the trouble to realize that the Rs 85 Billion loss of the CEB in 2019 and the very likely Rupees 100 Billion loss this year is finally borne by the people of the electricity consumers. This in fact even the very low end consumer paying Rs 4.85 per Unit is in fact paying and undisclosed Rs 20.60 per unit ( the Rs 100 Billion spread over the estimated total generation of 15 Billion units of electricity for year 2020) just to keep the CEB afloat.
There is much discussion and many articles written on the electricity sector, with the most quoted expert in the electricity sector promoting the continued use and even expansion of the use of imported coal ignoring the already well demonstrated environmental disaster in Norochcholai. On the other hand his arguments for providing cheap electricity by the use of coal has been as empty as the promises made by the politicians at time of elections. Leaving the arguments on stability of the national grid and importance of large power plants etc and that only experts of his ilk and his acolytes in the CEB are capable of planning the future energy mix for the country it is very doubtful if he has considered the most important factor of long term energy security. This is certainly not ensured by depending more and more on the imported fossil fuels with the volatility of prices, supply uncertainties and more than all the impact on the value of the Rupee.
This is the thrust of this article to spell out the need for a much broader outlook where future energy security must receive the highest priority in the policies and strategies.
Elements Contributing to National Security
Late Vdiya Jothi Dr Ray Wijewardene was often reported to say that to ensure National Security a Nation should be None Dependent on external sources for the following
- Defense
- Food
- Education
- Health
- Shelter
- Energy
Over the past decades, except for the Sri Lanka becoming self-sufficient in rice, I believe that Sri Lanka has become overly dependent on external inputs on many sectors with disastrous consequences. This is particular so in case of food and energy. Leaving the discussion on possible interventions for the other sectors to the relevant experts with the right mind set of having the national interest upper most, this article explores the means of making use of this “Crisis” to emerge with a nationally secure energy sector which could also have many other spin off benefits other than the mere supply of energy. It would further focus on the energy needs for the transport sector, for the very good reason that it constitutes the much greater challenge being 100% dependent on imported fossil fuels and receives near zero attention. There have been enough proposals to make the electricity sector independent with The President declaring a target of 80% Renewable Energy Contribution , which by the way is totally indigenous, by 2030. It remains to be seen to what extent the state monopoly CEB would comply with this task given by the President and if the President would exercise his executive powers to force them to comply.
Energy is not Electricity Alone
The sad story behind the development of our energy resources over the last few decades illustrates this calamity. While some intrepid developers have contributed to reach some degree of none dependence in this sector, of course not forgetting the huge success achieved by Eng D J Wimalsurendra, the electricity sector has more than a good chance of achieving the Presidents target by 2030 and proceed towards 100 % RE and thereby near total independence soon thereafter. It would be remiss of me not to acknowledge some very progressive initiatives by the Ministry of Power and Energy such as the establishment of the Sustainable Energy Authority and the NCRE scheme and the Surya Bala Sangraamaya which has already proven its worth and potential . However, the situation regarding the transport sector is lamentable with absolutely not attempt or policies towards achieving even a degree of none dependence as shown below.
With the projected growth of energy demand including the transport sector Sri Lanka needs to take cognizance of the present status of supply for which we have to pay at whatever prevailing prices in foreign exchange.
Transport Fuels Entirely Imported Oil Based
Annual Foreign Exchange drain US $ 4 Billion
The electricity sector which contributes a mere 11% of the primary energy supply commands 90% of the government attention, with the policy makers swayed by the interested parties with private agendas and so called experts who chose to hide this reality and try to push the country to deeper into the mire. Even the so called National Energy Policy is concocted by the Ministry of Power and Energy which had no jurisdiction over the transport sector. (At present the Ministry has been give both portfolios)
No dount electricity is most desired form of energy which can serve all the sectors which require energy, and thereby should provide increasing percentage of the energy supply.
But as we have seen over the years is a total lack of vision and strategies of the state monopoly, resulting in the electricity sector stagnating at this level. More over they have allowed the rapid deterioration of the contribution of the indigenous resources for electricity supply from a most laudable level of over 95% in the year 1995 to less than 30% in the current months. Even during the past years with good rainfall it has barely reached 50%. However the big wigs in the Utility boast of Sri Lanka being in the forefront of the renewable Energy Utilization. Successive Ministers in charge have been parroting this claim with scant attention to reality. The cabinet papers approved recently point towards continuing this practice which is totally opposite to the President’s declared target of 80% RE by 2030.
The contribution of 48% as per this plan in 2030 is even less than the level reached in 2019.
The current status is even more pathetic as per the generation data on the 10th March 2020 ( www.pucsl.gov.lk) which is a mere 17.4 %
Transport Energy – The Elephant in the Room not noticed.
While electricity sector continue to blunder along and demanding more and more sacrifices from the citizens like absorbing billions in losses and very low voltages in many locations, the Elephant in the Room – energy for transport is never given even a passing mention. As shown in the figure No 2 above, the transport sector energy demand has been over xx % for some years and continues to grow. This is entirely serviced by imported fossil fuels and thus contributes greatly to the import expenditure causing severe pressure on the balance of payments. Currently the expenditure for the import of fuels is about US$ 4,000 Million or Rs 678 Billion in the year 2018 and accounts for over xxx % of the total foreign exchange earnings.
There does not seem to be any attempt to address this continuing problem at National Policy level or at Ministerial level. The Western Region Megapolis Transport Master Plan published by the previous government in November 2016 has only a passing reference to electrification of transport with no targets.
The recent Gazette published by the former Ministry of Power and Energy in August 2019, on National Energy Policy, indicates a target of electrification of 20% of the light vehicles by year 2023. It is not clear if this policy would be accepted by the present administration.
However, considering that 40% of the national energy demand is for transport , which is 100% imported and is likely to remain so in the foreseeable future, this is the opportune time for a paradigm shift. This change is obviously dictated by the very nature of the technology used in all transport vehicle big or small in Sri Lanka, dependent on the use of the Internal Combustion Engines ( ICE), for both diesel and petrol driven vehicles. ( Hardly any vehicles use LPG now)
It is an inherent feature of these ICVE engines that a considerable fraction of the energy available in the fuel used is wasted as heat in the exhaust. Thereby the over all efficiency of energy usage for useful work remains at a very low level of about 20% .In contrast this efficiency could be as high as 80% in a battery powered electric vehicle as shown in the chart below.
One could argue that the efficiency of generation of electricity used for charging the batteries should also be factored in. This is unfortunately true at present in Sri Lanka as a major percentage of our electricity generation is fuel based to over 50% till 2019 and could be higher this year. But this need not remain so and if the Presidents Target of 80% is taken seriously we will be overcoming this problem very quickly.
But in the meanwhile there are other options. If Sri Lanka has the right policies which are also mandatory rather than mere wish lists, for the electrification of the transport sector these other options can be instituted immediately by developing the necessary infra structure. It is evident that majority of the personal vehicles are parked in sun scorched carparks during most of the day time. It would be a simple matter to provide solar powered charging stations in all such carparks. Similar arrangements can be be made to provide fast charging stations for the larger vehicles and for those who would not be parked for adequate length of tie. These are not new technologies or innovations but are already in practice in many forward looking countries. For example tiny Singapore already has 200 charging stations and are planning to increase to 1000 stations.
While none of these can or need to be implemented overnight, the major positive changes that can be achieved in many sectors of the economy , environment and health are self evident. While the country is fully aware of the environmental and health disaster ongoing at Norochcholai , the impact of the vehicular emissions , particularly in the urban areas is less known or publicized. The detailed article By Dr L C Jayasinghe in the Island on the 15th March 2020 addresses this issue.
http://island.lk/index.php?page_cat=article-details&page=article-details&code_title=220395
The present crisis created by the Covid-19 virus and the unfathomable long term impacts behooves Sri Lanka to be more visionary in its policies and strategies for future development. These might prove to be a matter of survival if the wrong decisions are made based on short term issues and private agendas of interested parties. In this regard the decision by the Cabinet not to change the price of fuels as well as to restrict the import of vehicles are laudable and points the way for the future. These signify a rational approach in the face of “Braying” of the opposition as the editorial of the Island called it.
While the world price of oil may not rise sharply for some time, it is prudent to assume that there would not be any further down ward movement in spite of the reduced demand caused by the Corona Pandemic. Even if does it would be short lived till the world get over the crisis. On the other hand any benefits or savings that Sri Lanka could have expected by the drop in price of crude oil is already eroded by the sharp devaluation of the Sri Lankan Rupee which is not at Rs 190.00 per US$.
Therefore this is the ideal time for the government to declare a firm mandatory policy with time bound targets for eventual 100% electrification of the transport sector with challenging intermediate targets . This has already been done in many countries too numerous to be listed here. Please the visit For more information. The target methane in the National Energy Policy Gazette of 20% electrification of the light vehicles by 2022 is a suitable and achievable first target. (Enhancing Self Reliance Section 5f) This also calls for CEB/LECO to install 25 fast charging stations by 2020 . It also calls for the SEA to provide incentives for the private sector also to install charging stations.
The Way Forward.
Even the positive moves made such as the Surya Bala Sangramaya and the wish list in the National Energy Policy mentioned above are of no value if certain very negative polices and regulations in practice at present are not removed. The starting point is of course the national policy, which unlike has happened in the past remain just wish lists and paper confined to the Ministry which launched it. Even the institutions under such Ministries often ignore such policies in their day to day programs. The case in point is the policy to install 25 Nos Charging Stations by 2020 by CEB/LECO. One wonders if this is even know by the CEB/LECO authorities.
Therefore the following urgent action is recommended if Sri Lanka is to covert this Crisis to an Opportunity.
- Declare a policy and time targets to reach 100% electrification of transport sector with intermediate target levels and time frame and make it a mandatory requirement for all state agencies to provide facilitation to achieve same.
- Set a date by which all imports of ICE driven vehicles by the state sector is to be banned
- Accept the policy statement Enhancing Self Reliance Section 5f in the National Energy Policy Gazette No 2135/61 of 9th August 2019 as a national target and assign responsibilities of achieving this target to the relevant agencies. CEB/LECO to set up Charging Stations and RMV to limit registration of ICE driven light vehicles
- Remove the punitive duty rates imposed on the import of Electric Vehicles which came in ton force on the 1st April 2019. These nearly doubled the price of the EVs coming into the country destroying the small growth seen
- Remove the punitive duties and taxes on the import of deep cycle batteries, imposed on the notion of protecting local battery industry , which does not manufacture any deep cycle batteries used in EVs
- Set Up the incentive scheme proposed under Enhancing Self Reliance Section 5f in the Energy Policy Document to encourage the private sector to set up charging stations.
- Provide a reasonable tariff for charging batteries using the National Grid to encourage private sector to set up charging stations.
- Permit the Private Sector to levy a charge to customers to charge batteries either using the CEB grid or using their won solar PV systems. The PUCSL to declare applicable tariff.
- Levy a charge on all imports of fossil fuels at point of import and use this fund to offset the loss of income to the treasury by 4 and 5 above and to assist the private sector to install charging stations
- Initiate R & D to manufacture deep cycle batteries and Super Capacitors in Sri Lanka with the emerging technologies for which our high quality graphite is an excellent ingredient . The SLINTECH institute has already commenced such R & D and must be funded to conclude same speedily.
The private sector has shown its willingness to contribute to this paradigm shift a few years ago. But this movement was throttled by interested parties who lobbied with the government to imposed the punitive duties and levies mentioned above and killed this initiative.
The many ways that this change could benefit the Sri Lankan economy, environment and health is far too many to be included here. But even without such detailed analysis anyone with common sense can readily understand the timeliness and the value of embarking on this change without any further delay.
Eng. Parakrama Jayasinghe
Council member
Bio Energy Association of Sri Lanka
Solar Industries Association of Sri Lanka
Sri Lanka Forum for Sustainable Consumption and Production Forum
E Mail: parajayasinghe@gmail.com
21st March 2020