Terragen Limited, an independent power producer that accounts for 17% of the country’s energy production and had a contract with the Central Electricity Board, has ceased operations.
In a statement issued this morning, Terragen Ltd said that “this stoppage is not the result of an untimely decision taken by Terragen, which has shown for over 20 years its commitment to provide the best service to the CEB and Mauritians, but the consequences of the impossibility of ordering coal at current prices. It says it hopes that conditions will be met to enable it to continue its industrial mission. It has been incurring losses for months, estimated at between 2 and 3 million rupees per day. The CEB filed an application for an injunction in the Supreme Court on 22 April 2022 to challenge Terragen Ltd’s request to stop its operations. The matter has been set for hearing on the merits on Friday, May 6, 2022.
Terragen also explains that despite meetings with the Prime Minister and other relevant Ministers, there have been no acceptable proposals for a way out of this crisis.
A situation that will create irreparable damage, according to the Central Electricity Board, which implies that all the power plants will be running at maximum capacity with a consequent increase in the cost of electricity.
However, the CEB is reassuring. There will be no immediate blackout, as all measures are being taken to ensure a continuous supply of electricity. For the Labour MP and former President of the CEB, Patrick Assirvaden, Mauritius is under the threat of an electricity shortage. He asks the CEB to settle amicably the problems with Terragen Ltd and to find quick solutions.
Here is the press release of Terragen:
We have taken note of the CEB’s communiqué dated April 29, 2022, and it seems useful to us to make the following clarifications:
- The Terragen plant was commissioned in July 2000 and has, for more than 20 years, provided Mauritians with reliable and competitive energy, representing about 15% of the national consumption.
- Recent international events have significantly impacted the price of coal consumed by independent power producers (IPPs), which has reached unprecedented levels.
- In Terragen’s case, the quadrupling of the coal price can only partially be reflected in the tariff of the sold energy, according to the contract binding Terragen to CEB; this means that the coal price itself is now higher than the selling price of the electricity to CEB, which is likely to jeopardize Terragen’s economic balance.
- Since June 2020 and subsequently in October 2021, Terragen has informed BEC of this contractual anomaly. In early March 2022, faced with a new surge in coal prices, linked to the Ukrainian crisis, Terragen found itself obliged to serve a Force Majeure Notice to the BEC.
- The Force Majeure clause in the contract allows the Party invoking it to suspend its obligations when faced with unforeseeable and insurmountable circumstances. Terragen notified CEB on March 4, 2022 that it would soon be unable to meet its obligation to supply electricity to CEB due to Force Majeure, as it was unable to purchase coal.
- After trying everything possible to continue its operations and after having exhausted its fuel stocks, Terragen was forced to suspend its operations on April 29, 2022.
- This shutdown is not the result of an untimely decision taken by Terragen, which has demonstrated for more than 20 years its commitment to provide the best service to the CEB and to the Mauritian people, but of the consequences of the impossibility to order coal at current prices. Terragen wishes to reiterate that it has been in communication with the CEB on this subject for several months, more particularly since it declared the state of Force Majeure.
- Terragen strongly hopes that the conditions can be quickly met to allow it to continue its industrial mission.
- Out of respect for the ongoing legal proceedings, Terragen is not in a position to make any further comments at this stage.
