Identification of Challenges to Attract Public Private Partnerships for Power Generation Infrastructures: A Review

S N Fernando,K G M Nanayakkara

doi:10.4038/kjm.v9i2.7644

Abstract

Although the required capital investments for electricity generation infrastructure from 2018 to 2037 have been projected around USD 14,568 in Sri Lanka, Ceylon Electricity Board is not in a position to meet this requirement due to its negative cash flows. Full private investments are restricted by the law stating that any person to generate capacity above and over of 25 MW, shall Government hold 51% of ownership. Since the funding of power generation is a top urgent priority in the country, this paper investigates the challenges and critical factors involved in going for a public private partnership (PPP) by reviewing the related literature in other countries and identifying main themes that Sri Lanka needs to take into account. Narrative literature review with thematic analysis revealed that 1) Political Instability, 2) State Credibility on policies, 3) Regulatory and legal framework, 4) Transparent and efficient procurement process, 5) Financial Market, 6) Favourable investment environment, and 7) a strong and good private consortium as the mostly influencing macro factors to build PPP for power generation infrastructure projects in Sri Lanka.

Highlights

This paper is a review to identify the challenges and critical factors when attracting Public Private Partnerships (PPP) to the power sector of Sri Lanka
Since the funding of power generation is a top urgent priority in the country, this paper investigates the challenges and critical factors involved in going for a public private partnership (PPP) by reviewing the related literature in other countries and identifying main themes that Sri Lanka needs to take into account
The power sector of Sri Lanka is mainly represented by Ceylon Electricity Board (CEB), a State Owned Entity, with having monopoly on power transmission (Sri Lanka Electricity Act No 20 2009)

Summary

Introduction

This paper is a review to identify the challenges and critical factors when attracting Public Private Partnerships (PPP) to the power sector of Sri Lanka. In most of the countries the power is supplied by the government through a State Owned Entity (SOE) as generation, transmission and distribution of power (Kim & Oh, 2017). The power sector of Sri Lanka is mainly represented by Ceylon Electricity Board (CEB), a State Owned Entity, with having monopoly on power transmission (Sri Lanka Electricity Act No 20 2009). There were 258 numbers IPP which have contributed 27.1% to national power generation requirement of the country at the end of year 2018(Ceylon Electricity Board, 2018b). The PPP has been recognized by law as a model of business in power sector as to deliver public service through development of power generation infrastructures in Sri Lanka. The main motive of Government of Sri Lanka (GOSL) to create PPP was primarily to raise capital rather than as a real commitment and coherent private participation policy (European Commission, 2007)

Objectives

Methods

Findings

Conclusion