Vallibel Power Erathna PLC

1. Brief introduction to the history of Vallibel Power
Vallibel is a diversified conglomerate which has invested in financing, banking, Leisure, Garments, Manufacturing industry and power sector. Under Vallibel Power it develops renewable energy projects to generate electricity and supplies electricity to national grid. Vallibel ventured into power generation business in early 2000 and successfully commissioned its 10MW plant in 2004, which later on went public with the record breaking oversubscribing shares in year 2006, and has generated substantive profit for its shareholders. Since then Vallibel has invested extensively in hydro power sector contributing more and more green energy to the nation.

2. What are the current projects that are in operation and under construction under Vallibel Group?
With installed capacity of professionally engineered 10MW “Erathna” mini hydro project, Simultaneously Vallibel engineering team developed 8.64MW, “Way Ganga” small hydro power project in the same year and 2MW “Barcaple” small hydro power project in year 2007 under Didul (Pvt) Ltd.

Identifying the further potential in the Kuru Ganga, in Rathnapura District, it again successfully commissioned its 6.5 MW “Adawikanda” small hydro power project, under Alternate Power Systems (Pvt) Ltd in year 2009.

Securing the professionalized talents, Vallibel Power Erathna PLC acquired Country Energy (Pvt) Ltd to develop 4.65 MW Kiriwaneliya hydro project and 7.2 MW Denawaka hydro project and tied up with the national grid on Dec 2011 and February 2012 consecutively.

Recognizing the importance of the local value addition and the development of local manufacturing industry, as an essential driver of socio-economic development of the country, Vallibel has taken a strategic decision to develop 850kW pilot wind power project using locally manufactured wind turbines supplied by Vawin (Pvt) Ltd, Sri Lanka.

3. What is the Vallibel Power contribution to the national electricity demand?
CEB has recorded its ever highest daily electricity demand of over 35 GWh recently. With the newly commissioned two power plants Vallibel can deliver 100GWh of electrical energy annually to the national grid, which is equivalent to 03 days electricity consumption.

At present the annual electricity demand will be generated by the total installed hydro power plant capacity of 1600 MW. Out of that total hydro wealth, 1400 MW is belongs to CEB and little over 200MW is owned by small private power producers. Vallibel Group contributes to that by installed capacity of 29MW which accounts to an annual generation of 100GWh electricity annually to the system with 15% market share from the private power producers.

4. Where do you see this number likely to be in the near future?
Sri Lanka has the estimated potential of for small hydropower projects over 500 MW and nearly 50% of the resources are under current development. Vallibel also owns new permits of cumulative capacity of 15MW under its project development companies and constructions of some of the new projects are scheduled to start soon.

5. How far is Vallibel in success to generate electricity from other renewable energy sources?
Our research team has already identified the potential of Wind energy and Solar PV installations in Sri Lanka. We cannot just rely only on hydros and are trying to find out options to make other renewable energy sources affordable to generate electricity in Sri Lanka. In line with that we have set up a pilot wind power project in a complex terrain on the Balangoda central hills. This project is to show the possibility of harnessing the wind resources scattered over the central plains were we have less developed infrastructure which restricts the transportation and installation of wind turbines.

6. How has 2012 been so far?
We are experiencing unexpected dry weather this year in our hydro power plant catchment areas which has adversely affected the power generation. This is the worst year recorded in the last decade. When compared to the last year, power generation has reduced by 22% but we are expecting that to be normalized soon as the monsoon has started.

7. As the CEO of the company, how do you see the sector and what you believe?
A development of hydro power project is a great business which operates in a very attractive market space; fact of never compromising the quality has brought us the confidence that we will make the best out of anything. Managing the hydro power business prudently is not a difficult task but we have to understand the fact that every day market barriers are rapidly growing against the renewable energy sector in Sri Lanka. Our well qualified technical professionals have become increasingly adept in recent years in driving the best available result from uncertain circumstances.

Our chairman, Mr. Dhammika Perera’s guidance of “We should never lose sight of the fundamentals”., makes us not to see any barriers, but only hurdles. That is the core value of Vallibel Power and the philosophy I believe which takes us to success.

8. How do you plan to achieve future growth aspirations of the company?
During the past years we have grown up to a state that we can do work with confidence in renewable energy industry and spread our operation globally. Now we are negotiating with parties to develop hydro power projects in Nepal and African Region. This will bring the international recognition to Vallibel and to our mother land, while bringing in foreign currencies to the country.

9. What do you think about mini hydro and other renewable energy industry in Sri Lanka?
Looking in overall renewable energy industry, I must say that this is one of the best industries which have developed professionals for nearly 02 decades. This is the area where engineers can get hands on experience. Almost all the projects commissioned in Sri Lanka are designed, constructed and managed by Sri Lankans. Technology wise they are not second to the plants running in Europe or any other developed countries.

But as a nation there is a lot to explore in renewable energy in the country. Even though we have estimated 5000MW of wind power potential, our infrastructure has not developed to the adequate level to absorb it. Starting to work on research projects such as solar, will definitely clear the paths.

10. What do you think are the challenges (depreciation of the Rupee and especially the drastic increase in interest rates, tariff, drought etc…) for Sri Lanka’s hydro power industry to achieve its targets?
Normally the cost of the turbines, generators and penstocks alone are 50% of the project cost in case of direct imports. Depreciation of Rupee has increased the direct cost by 15~ 20% and when taking account of the interest rates and the lack of attractive projects, investors will lose interest in this sector. To develop these projects, in such a difficult environment, industry should be given attractive incentive schemes and more assistance from relevant authorities’ in obtaining the necessary statutory approvals.

11. Looking at global trends, in which direction can you see it going and how will this impact on the local industry?
Globally wind industry is growing at 30% and annually and has created employment for more than 400,000 people. World installed capacity is around 120GW and even if we take account of 0.5% of market share of annual incremental demand; it is around 200MW of machinery supplying market. So there is a plenty of opportunities still available for the local manufacturing industries in the international market.

12. What could be the supportive role played by the relevant statutory agencies
To successfully complete one project we have to undergo very strict approval process from the governing institutions and in most cases we have to appreciate in good faith the effective support extended by the institutions such as Ceylon Electricity Board, Sustainable Energy Authority, Board of Investment and also the local communities.

Daily News, Friday, 15 June 2012