CT Power & Energy Democratisation

There have always been good economic – not at all epidermic — reasons to seek to achieve a diversification of the production base in the energy sector. Politicians had called it by another name, and had gone as far as to subsume this economic imperative into their ‘democratisation of the economy’ agenda, itself built up as their electoral plank almost nine years back. Except for the SARAKO, Aerowatt and Suzlon projects, recently initiated or still in the pipeline, the Central Electricity Board’s dependency on the sugar sector’s Independent Power Producers (IPPs) for almost 60% of electricity produced locally does not point to significant progress on the economic democratisation scorecard/agenda.

The coming into operation of a Malaysian entrepreneur-backed project, CT Power, to produce some 100 mw out of the local power demand of 446 mw would have provided some comfort to the CEB and eased away the IPPs’ gridlock on the energy sector. But it now seems that we may have a long way to go before this can be achieved in the country’s best interests.

The CT Power project has been surrounded by a maze of controversy since 2007. Firstly, it was alleged that the Malaysian promoters of this coal-based power generation project were not publicly solicited and therefore the project ought not be considered. Secondly, views were expressed about its potential to cause pollution in the Pointe aux Caves region. The project was then moved to Albion, but it met with the same objection of the pollution risk it represented to the area.

Thereafter, the EIA committee which considers the environmental impact of projects, turned it down as it presumably did not satisfy its criteria. The promoters referred the matter to the Environment Appeal Tribunal (EAT) for a decision. That case had been dragging on in the absence of valid counter-arguments by the EIA committee to those put up by the project’s promoters. In July 2012, the Tribunal made known its decision in favour of the project in view of the “lack of any proper evidence” to support the objection that had been raised at an earlier stage by the Ministry of the Environment. It follows that the Tribunal must have been convinced about the non-polluting character of the project.

If there was any danger of environmental pollution due to the use of coal in power generation, that should have applied equally to the half dozen IPPs which have been given authorisation to produce electrical power from a mix of bagasse and coal but most of which finally end up producing electrical power almost exclusively on coal, especially during the intercrop season. We have not been informed nor has it been canvassed by those who have opposed the CT Power project whether the IPPs have put in place better performing technologies to mitigate the coal pollution they would be causing. It can be safely presumed that CT Power, coming on the market much later than the first generation of local power producers, would be better equipped with finer technologies of coal pollution control.

The Environment Appeal Tribunal’s determination in favour of CT Power has not signalled the end of the many hurdles faced by its promoters. Another legal challenge has been made before the Supreme Court and this case has yet to be determined by the highest legal authority of the country. But in the wake of the environmental risks challenge brought before the EAT, there has been a build-up putting in doubt the financial capacity of the promoters as well as the source of their funding. The Prime Minister has also raised this issue and has more or less implied that he would want to be reassured of the financial viability of the project. Rightly so.

On the other hand, the Leader of the Opposition, seeking support from an African Development Bank’s report, has raised the alarm as regards the risk of “blackout” in 2015 should the CT Power not go through and which would be compounded by the CEB’s delay in installing additional power capacity by next year. (Deputy PM Dr Beebeejaun, in his reply to the Leader of the Opposition’s PNQ, Friday 11 July, ruled out any such risks, and so has the National Energy Commission earlier – at least not until 2017.) Mr Berenger has suggested that a joint World Bank-African Development Bank team should be called to undertake a thorough study of the energy needs of the country, and if necessary international tenders launched to cater for any shortfall in electricity supply in view of his perceived 2015 blackout scenario. In the meantime, he added, negotiations could be initiated with Terra and Omnicane for the combined production of 110 MW.

We would like to think that Mr Berenger has surely the interests of Mauritius at heart and we would therefore not liken his concern for the energy security of the country to the perverse lobbying against CT Power and which would be allegedly bankrolled by private interests that may have a stake in defeating the Malaysian project before it materialises. But there is a twist to this long-drawn episode: a few of the IPPs’ contracts will expire in 2015, and in the absence of alternative and competing electricity producers in the market, the CEB will find its dependency on electricity produced by the IPPs becoming more pronounced and therefore powerless to challenge their cost structures.

We have said it earlier, that we do not carry any brief from CT Power. We consider rather that it would be fair to share business in a transparent and accountable manner among a larger number of stakeholders than what the current legacy of wealth-owning has permitted in this country. We would expect that CT Power will offer a competitive pricing structure as well as abide by the stringent environmental norms imposed by the European Union on such ventures, and that the government will ensure that the same norms be followed by the existing and future operators. The financial viability of the CT Power project as well as its source of funding and its shareholding structure need to be thoroughly examined, and the PM is right about this. He will also no doubt ensure that CT Power, if it meets all the criteria required from a responsible and dependable operator, will not be sacrificed on the altar of political exigencies.

* Published in print edition on 25 July 2014