The GCSPDA Chairman Dr. Nishantha Nanayakkara said that in 2004, Sri Lanka used 7,000 million units of electricity. Last year, only 3,000 million units were generated from hydropower sources, while the balance of the requirement was met by thermal power plants (mainly diesel), owned by either CEB or private producers.

"According to the CEB, the demand for electricity increases by 8% per annum. Thus, 600 million units must be added every year, which means that by 2010, Sri Lanka's estimated annual electricity consumption would increase to 10,000 million units. To supply the additional 3,000 units required by 2010, Sri Lanka needs another 500 MW of plant capacity," Mr. Nanayakkara said.

He said that currently, there is a shortage of generation capacity. CEB needs another 300 MW of low cost power to meet even the present demand. With the projected annual increase of 8%, this shortage will worsen year by year.

"We accept that only hydro and coal power plants can generate electricity at a low cost. In spite of this, the construction of low cost Upper Kotmale and Norochchalai plants are getting delayed day by day," Mr. Nanayakkara lamented.

According to him, to ease the financial crisis faced by CEB and to lessen the burden carried by the Treasury on behalf of CEB and to provide relief to consumers plagued by high electricity costs, the only immediate solution is to expedite the development of 300 MW of small hydro power projects (of capacities less than 10 MW) as proposed in this year's budget and develop the Upper Kotmale and Norochchalai power plants without further delay. "Delaying the implementation of these projects is tantamount to the Government and CEB inviting disaster on the country," he said.

He also said that the only way to temporarily avert the impending disaster caused by delaying the Upper Kotmale and Norochchalai power plants was to immediately commence constructing the proposed combined cycle power plant at Kerawalapitiya as planned. Though the cost of a unit of electricity generated by this plant is said to be over Rupees 10, it is well below the cost of purchasing thermal power from private power producers.

It is prudent, therefore, to implement the Kerawalapitiya project immediately, Mr. Nanayakkara said.

Though the Government has promised to encourage the development of hydro resources of capacities between 10 to 50 MW, on the basis of a public-private partnership, a policy and action plan for this purpose is yet to be established. �If the Government now takes the necessary steps to uphold their promise, we estimate that at least 250 MW can be added to the national grid within the next four years,� the GCSPDA chief said