(Colombo) –
A severe crisis in the renewable energy sector is threatening to trigger a domino effect in Sri Lanka’s banking system, putting customer deposits at risk, internal sources warn.
The Debt Trap Reports indicate that nearly 70% of funds used for rooftop solar panels and mini-hydro projects are bank loans. Over 150,000 individuals and investors who took these loans are now facing massive defaults due to sudden and drastic policy changes by the authorities.
Prices Slashed, Incomes Vanish Following the appointment of Power and Energy Minister Kumara Jayakodi, the purchase price for a solar unit has been ruthlessly cut down:
- Initial Price: Rs. 37/-
- Dropped to: Rs. 27/-
- Current Price: Rs. 17/-
Adding fuel to the fire, the CEB has reportedly stopped purchasing electricity from these plants on weekends and public holidays, leaving producers with zero income on those days despite the sun shining.
The “Diesel Mafia” Paradox The most shocking revelation is the price disparity. While the CEB refuses to pay a fair price for green energy (offering only Rs. 17), it is reportedly paying a staggering Rs. 85 per unit for electricity generated using fossil fuels during peak hours. Investors question the logic behind suppressing low-cost renewable energy while pumping money into expensive diesel power.
Banks on the Edge With around 360 major investors and thousands of small-scale solar owners unable to service their debts, banks are staring at a mountain of non-performing loans. Experts warn that if these projects collapse—with investments costing up to Rs. 350-500 million per megawatt—the banking sector could face instability, indirectly threatening public deposits.
IMF Eyewash? Although the Sustainable Energy Authority recently approved a plan to reach 70% renewable energy by 2030, industry insiders claim this is merely a show to secure the next IMF tranche. “There is no genuine interest on the ground to promote renewable energy; investors can’t even get an appointment with the Minister,” a frustrated investor told Sri Lanka Mirror.