UNITED NATIONS INDUSTRIAL DEVELOPMENT ORGANIZATION

Market and Economic Study of the Biomass Energy Sector in Sri Lanka

P.G.Joseph

Consultant

January 2011

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TABLE OF CONTENT

EXECUTIVE SUMMARY……………………………………………………………………

ABBREVIATIONS……………………………………………………………………………

LIST OF TABLES……………………………………………………………………………

LIST OF FIGURES……………………………………………………………………………

1. INTRODUCTION…………………………………………………………………………..

1.1 Bio Energy Conversion Processes …………………………………………………..

1.2 Bio Energy Usage in Sri Lanka………………………………………………………

1.2.1 Household and Commercial Sectors…………………………………………

1.2.2 Industrial Sector………………………………………………………………

1.2.3 Use of Bio Energy by Transport Sector……………………………………….

2. POLICIES AND INSTITUTIONAL FRAMEWORK……………………………………

2.1 Energy Sector Policy………………………………………………………………...

2.1.1 Energy Sector Master Plan (ESMP)…………………………………………...

2.1.2 National Energy Policy and Strategies: (NEPS) ……………………………...

2.1.3 Haritha (Green) Lanka Programme…………………………………………

2.1.4 National Forest Policy………………………………………………………..

2.1.5 Forestry Sector Master Plan (FSMP)…………………………………………

2.1.6 Other Policy Decisions for Promotion of Bio energy…………………………

2.2 Institutional Framework for Bio Energy Sector…………………………………….

3. MAIN PLAYERS IN BIO ENERGY MARKET…………………………………………..

3.1 Main Players…………………………………………………………………………

3.2 Research & Development……………………………………………………………

3.2.1 The Need for Research and Development ……………………………………….

3.2.2 Technological Advances……………………………………………………...

4. CURRENT SOURCES OF BIO ENERGY IN SRI LANKA……………………………...

4.1 Fuel wood from Dedicated (Gliricidia) plantations…………………………

4.2 Fuel wood from cultivation of Gliricidia as an inter crop…………………………...

4.2.1 Gliricidia as Inter-Crop under Coconut………………………………………..

4.2.2 Gliricidia as Support Crop for Black Pepper………………………………….

4.2.3 Gliricidia as Shade Tree in Tea Plantation……………………………………

4.2.4 Gliricidia as Live Fence………………………………………………………

4.3 Rubber Wood………………………………………………………………………..

4.4 Biomass Fuel from the Coconut Sector……………………………………………

4.5 Fuel wood from Cinnamon Cultivation…………………………………………….

4.6 Pruning from Tea Bushes……………………………………………………………

4.7 Agro-Residues from Paddy Cultivation……………………………………………..

4.8 Residue from Timber Extraction and Use…………………………………………...

4.9 Agro-Residues from auxiliary Crops (Maize etc)…………………………………...

4.10 Residues from Sugar Cultivation and Processing…………………………………...

4.11 Municipal Solid Wastes……………………………………………………………..

4.12 Industrial Solid Wastes……………………………………………………………...

4.13 Industrial Liquid Wastes…………………………………………………………….

4.1.4 Use of Leaves for Biogas Production………………………………………………

5. BIO ENERGY MARKET

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5.1 Bio Energy Producers………………………………………………………………

5.2 Bio Energy Buyers/ Collectors/ Transporters/ Sellers………………………………

5.3 Bio Energy Consumers………………………………………………………………

5.4 Market Systems………………………………………………………………………

5.4.1 Distribution System……………………………………………………………

5.4.1.1 Biomass Fuel Supply Sector…………………………………………

5.4.1.2 Biomass Fuel Buyer/ Sellers Sector…………………………………...

5.4.1.3 Biomass Fuel Consuming Sectors…………………………………….

5.5 Chipped Wood Market………………………………………………………………

5.6 Levels of Trade and Added Value…………………………………………………...

5.6.1 Value Addition………………………………………………………………...

6. MARKET CONSTRAINTS AND OPPORTUNITIES……………………………………

6.1 Market Opportunities…………………………………………………………………

6.1.1 Financial Advantage…………………………………………………………...

6.1.2 Opportunities in the Industrial Sector…………………………………………

6.1.3 Opportunities in the Electricity Generation Sector……………………………

6.1.4 Co-Firing Potential……………………………………………………………

6.1.5 Export Potential………………………………………………………………

6.2 Market Constraints……………………………………………………………………

6.2.1 Negative Incentive…………………………………………………………….

6.2.2 Inaccessibility to land to cultivate fuel wood………………………………

6.2.3 Price Linkages to Petroleum Prices…………………………………………

7. ECONOMIC AND ENVIRONMENTAL IMPACTS OF THE BIO ENERGY SECTOR.

7.1 Conservation of Foreign Exchange………………………………………………

7.2 Local Employment………………………………………………………………..

7.2.1 Employment in establishing plantations………………………………

7.2.2 Employment in harvesting of branches………………………………

7.2.3 Employment in Transporting and Pre-Processing……………………

7.2.4 Employment in the Energy Conversion Sector………………………

7.3 Production of Cattle Fodder for Milk Production……………………………………

7.4 Production of Organic Fertilizer…………………………………………………….

7.5 Increase in Food Production………………………………………………………….

7.6 Reversing Land Degradation…………………………………………………………

7.7 Greenhouse Gas (GHG) Emission Reduction………………………………………

7.8 Local Emission Reductions…………………………………………………………..

7.9 Energy Security………………………………………………………………………

7.10 Electrification of Remote Villages…………………………………………………

7.11 Cleaner Cooking Fuels for the Household Sector…………………………………...

7.12 Introduction of New Technology……………………………………………………

8. ACTION PLAN…………………………………………………………………………...

9. REFERENCES…………………………………………………………………………….

10. APPENDIX 1…………………………………………………………………………...

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EXECUTIVE SUMMARY

Following are a list of aspects discussed in the report:

Technologies available to convert biomass fuels to the desired energy services.

Bio energy is the major energy source for the households, commercial and industrial sectors.

Bio energy is not used for transport application at present. But attempts are being made to

introduce bio energy for the transport sector.

Industrial heat is largely generated from bio energy.

The use of bio energy is on the increase in the industrial sector but is sytatic in the household

sector.

Attempts are being made to use biogas for the household sector.

Many policy initiatives have been introduced to develop bio energy in the country. However, no

single institution has been assigned this function as the primary responsibility.

An attractive feed in tariff has been introduced for all renewable energy based electricity. Bio

energy based electricity is granted a very high tariff.

Development of bio energy is made use to address environmental issues including climate change

mitigation aspects.

The Forestry Sector Master Plan includes a section on bio energy.

Many state, private sector and non-governmental institutions play active positive roles to develop

bio energy.

A negative incentive in the form of a government subsidy for petroleum fuel hampers the

development of bio energy.

Main players in the bio energy sector are the producers, collectors, buyers, transporters, pre-

processors, sellers, consumers and facilitators.

A handful of bio energy based electricity generating facilities have already been established.

Many more are in the pipeline.

Many successful research works in bio energy have been implemented. Further research needs

have been identified.

New bio energy technologies have been introduced in the household and industrial applications of

bio energy.

Bio energy is obtained through many different sources. These are listed and quantified.

All aspects of bio energy market are described.

The enormous opportunity available for bio energy in the country including the availability of

resources such as lands for bio energy cultivation is described. An appendix provides the list of

potential industrial consumers for bio energy.

Export potential for wood pellets is analysed.

Economic, environmental and social benefits of bio energy development are described.

An action plan to address all relevant issues is included.

List references are provided.

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ABBREVIATIONS

ADB - Asian Development Bank

BEASL - Bio Energy Association of Sri Lanka

BOI - Board of Investment

CDM - Clean Development Mechanism

CEA - Central Environmental Authority

CEB - Ceylon Electricity Board

CHP - Combine Heat and Power

CISIR - Central Institute for Scientific and Industrial Research

COD - Chemical Oxygen Demand

CPC - Ceylon Petroleum Corporation

CRI - Coconut Research Institute

EF - Energy Forum

ESMP - Energy Sector Master Plan

FD - Forest Department

FRMSP - Forestry Resources Management Sector Project

FSMP - Forestry Sector Master Plan

GHG - Green House Gases

HS - Harmonized System Commodity Description and Coding System

IDB - Industrial Development Board

IDEA - Integrated Development Association

IFS - Institute of Fundamental Studies

ITDG - Industrial Technology Development Group

LPG - Liquid Petroleum Gas

MSW - Municipal Solid Waste

NCRE - Non-Conventional Renewable Energy

NEPS - National Energy Policy and Strategies

NERDC - National Engineering Research & Development Centre

NGO - Non-Government Organization

OTEC - Ocean Thermal Energy Conversion

PUCSL - Public Utilities Commission of Sri Lanka

RERED - Renewable Energy for Rural Economic Development

RPR - Residue to Product Ratio

R&D - Research & Development

SLSEA - Sri Lanka Sustainable Energy Authority

SRC - Short Rotation Coppice

TSP - Total Suspended Particles

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LIST OF TABLES

Table 1: Standardized Power Purchase Tariff for the Year 2010/2011……

Table 2: Role of Non-Government Institutions in Bio Energy……………...

Table 3: Role of Private Sector Institutions in Bio Energy…………………

Table 4: State Institutions and their Prime Responsibility…………………..

Table 5: Commissioned Biomass Based Electricity Generation Projects…...

Table 6: Planned Biomass/ Municipal Solid Waste Based Power Plants…...

Table 7: Non-Governmental Institutions Promoting Bio Energy…………...

Table 8: Performance of Typical Improved Cook Stoves…………………..

Table 9: Emissions of Various Wood Stoves……………………………….

Table 10: Energy Potential from Industrial Liquid Effluents……………….

Table 11: Summary of the Present Sources of Bio Energy………………….

Table 12: Comparison of traditional and modern methods………………….

Table 13: Loss in weight as % of initial weight due to change in moisture...

Table 14: Details of Biomass Buying and Transporting Operations………

Table 15: Cost of generating 1 MJ of useful heat…………………………...

Table 16: Wood and Land Requirements to meet 5% of the Electricity……

Table 17: Overview of global production and trade in 2008………………..

LIST OF FIGURES

Fig. 1: Energy Conversion Process………………………………………….

Fig 2: Primary Energy Supply: 1978 – 2007……………………………….

Fig. 3: Share of Primary Energy: 1976-2007………………………………..

Fig. 4: Trends in Bio Energy Consumption…………………………………

Fig. 5: Types of Energy Consumed by the Industrial Sector………………..

Fig. 6:Locations of Tea Plantations…………………………………………

Fig. 7 Locations of Coconut Plantations……………………………………

Fig. 8: Location of Rubber Plantations……………………………………...

Fig. 9: Locations of Paddy Land…………………………………………….

Fig. 10: Distribution Systems in the Supply Chain of Fuel Wood………….

Fig.11: Locations of Scrub Lands…………………………………………...

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1. INTRODUCTION

This report is prepared for the United Nations Industrial Development Organization under Index No.

500782; SA No. UR/IND/10/107 (570)

The report analyses the existing policies, practices and potential for developing bio energy to meet Sri

Lanka’s growing energy needs.

1.1 Bio Energy Conversion Processes

Bio energy is the use of biomass produced through photosynthesis. In photosynthesis, atmospheric carbon

dioxide is converted into combustible material such as cellulose. Unlike other forms of solar energy, bio

energy is a stored form of energy. Biomass could be transported from the place of production to a place of

energy conversion. Many conversion processes such as combustion, anaerobic digestion, aerobic

fermentation etc could release the energy stored in such biomass at convenient times and at convenient

places. Different conversion processes, intimidate products, end products and the energy services provided

are shown in Fig.1.

The following six standard processes are used to convert solid biomass to other forms:

o Direct Combustion: In this biomass combusted with air to release the chemical energy stored in

the biomass. This oxidation process, if completed properly, releases heat energy and converts the

carbon and hydrogen in the fuel to carbon dioxide and water vapour. Thus reversing the

processes of photosynthesis.

o Gasification: This is a two-stage process. The first phase is very similar to direct combustion. In

the second phase, the carbon dioxide and water vapour produced in the first phase are made to

react with red/white hot carbon in the fuel absorbing the heat produced in the first phase. The

outputs of this second phase are carbon monoxide, hydrogen, methane and some hydrocarbon.

This second phase is a reduction process. The net result of gasification is that solid biomass is

converted into a mixture of combustible gases. This mixture of gaseous gases could be used as

fuel for further processes.

o Pyrolysis: In this process, solid biomass is directly or indirectly heated. Due to the heat the

biomass decomposes into solid char, liquid and gaseous products. These three kinds of products

could be separated and used as fuel for suitable applications.

o Bio Refinery: In a modern bio refinery, biomass is refined by thermal process to many advanced

chemicals. Usually, these chemicals are used for non-energy purposes.

o Oil Extraction and Esterification: biomass materials containing oils such as seeds of certain

plants are mechanically pressed to bring out the oil. This oil are then filtered and mixed with

chemicals such as alcohols and heated to produce an ester. The ester could be washed used as

fuel in internal combustion engine very similar to diesel fuel. This process also produces some

chemicals such as glycerin.

o Biological Process: easily biodegradable materials could be digested either an aerobically or

aerobically to produce methane or other alcohol fuels.

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Fig. 1 above indicates the process involved in utilizing the out puts of the six primary processes into useful

energy services such as heat (H), light (L), motive energy (M), electrical energy suitable to operate

electrical appliances (E), refrigeration (R) or transport applications (T).

1.2 Bio Energy Usage in Sri Lanka

Traditional biomass fuel, primarily wood fuel, continues to play an important role in the energy balance of

Sri Lanka. About 48% of biomass energy used in Sri Lanka is fuel wood extracted from various sources.

The balance consists of agricultural and wood residues. The national consumption of bio energy in

absolute terms (tonne oil equivalent) Sri Lanka has been increasing marginally over the years. (Fig.2.)

However, the dramatic increase in the use of petroleum fuels for transport application and electricity

generation has resulted in lowering the share (%) of bio energy in the total national energy supply. (Fig.3).

The following changes have been experienced in the use of bio energy in the recent past:

SUN

Photosynthesis

Biomass

Combustion Gasification Pyrolysis

Biological Process

Bio Chemicals

Heat

Thermal Energy

Motive Power

Refrigeration

Bio Refinery

Char Gas Liquid

Oil Extraction/ Etherification

Process Heat

Electricity

Syn Gas

Liquid Bio Fuels

Aerobic Fermentation

Anaerobic Digestion

Methane

H H/L/M/E/R/T H H/L/M/R/T H/L/M/R/T H/L/M/E/R/T

Energy Services: H- Heat; L – Light; M – Motive; E – Electrical Appliances; R – Refrigeration; T - Transport Fig. 1

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1.2.1 Household and Commercial Sectors

The national economic growth of 6 to 8% per annum in the country has resulted all sections of the

population improving their standard of living. One significant change in the household and commercial

sectors is the gradual switch to Liquid Petroleum Gas (LPG) from fuel wood for cooking purposes. This

trend is still continuing. The other important feature in the consumption of bio energy in these sectors is

the improved biomass cooking stoves introduced in the country. This activity has improved the efficiency

of cooking stoves. The Biomass Rice Cooker produced by the National Engineering Research and

Development Centre (NERDC) is able to cook a kg of rice in around 40 minutes and could keep the

cooked rice warm for a period of about 8 hours without any additional fuel. The Wood Gas Stove

developed by NERDC in 2002 has a combustion efficiency of about 35% when compared with less than

8% in traditional 3-stone cook stove. Along with efficiency improvement substantial reduction in harmful

emissions also are achieved (Tables 2.9 & 2.10). However, this technology has not made any significant

penetration amongst the population yet.

For the year 2007, the total bio energy consumed in the country is 3,988,000 tonne oil equivalent. Of this

amount 3,183,000 tonne oil equivalent of bio energy has been consumed by the commercial and

household sectors. In percentage share bio energy for these sectors accounted for 80% of the total energy

supply. The trend of consumption of bio energy in absolute terms has been increasing. (Fig.2 ).

Biomass energy is the most common source of energy in the household sector, and nearly 76% of the

population still depends on fuel wood and other forms of biomass for their household cooking. Fuel wood

and other biomass fuels are the dominating fuels in coking, which consumes most of the energy used by

households. About 72.5% of the national biomass consumption is in the household sector for cooking. The

small commercial and manufacturing applications consume around 20.3% and agro industries consume

about 7.3% of the total biomass consumption

Primary Energy Supply

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Fig 2: Primary Energy Supply: 1978 - 2007

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Percentage Share of Energy Supply

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Fig. 3: Share of Primary Energy: 1976-2007

Bio Energy Consumption

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Fig. 4: Trends in Bio Energy Consumption

Use of Biogas by the Household Sector

Work on biogas in Sri Lanka dates back nearly about two decades. Many governmental and non-

governmental organizations have been active in this area at various periods of time. Practical Action South

Asia (then ITDG) and Energy Forum (EF) started its project on developing and popularizing biogas

technology in 1996 by carrying out a sample survey to find out the status of biogas technology in Sri

Lanka and to learn lessons from the past experiences. This phase was followed by a series of new

activities aimed at widespread popularization of the technology. Practical Action and Energy Forum have

introduced over 60 new biogas schemes, and is now working on setting standards for biogas systems in Sri

Lanka.

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The Practical Action South Asia study “Integrating Energy and Environmental Management through

Biogas – A Country Review” revealed many factors which have directly or indirectly resulted in the

failure of biogas technology in Sri Lanka. Nearly 5000 biogas units constructed throughout the country the

above sample survey results indicated that the functioning rate is as low as 28.5%. However, at the

national level, biogas technology has a number of additional benefits such as:

o Solid waste getting cleared (the environmental management tool)

o A useful fuel gas being generated (the energy generation tool)

o Production of the digestate (effluent) as a by-product, which is considered to be an excellent soil

conditioner and fertilizer.

Biogas technology can play a vital role in solving some of the major problems faced by the Sri Lankan

societies of the present and future. Biogas utilization should happen in a more systematic way, as it is fast

becoming one of multiple end-uses in Sri Lanka.

1.2.2 Industrial Sector

Bio energy accounts for the largest share of energy consumed by the industrial sector in Sri Lanka. As at

2007, bio energy accounted for 72% of the energy needs of the industrial sector. Figure 5 illustrates the

dominance and growth of bio energy in the industrial sector.

Biomass use in industry is growing as a result of price increases in petroleum fuels during the recent past.

Within the industrial sector, Tea industry, which is mainly concentrated mainly in the hill country, is the

largest consumer of fuel wood. It consumed around 455,000 tones/year representing 43% of the total fuel

wood consumption by the industrial sector. However, a significant number of tea processing industries are

switching-over from oil to biomass for their thermal energy requirements. The traditional small and

medium industrial sectors too have been using bio mass energy, particularly fuel wood for their thermal

energy needs. The Brick & Tile and hotel sectors in particular use considerable amounts of fuel wood

from different sources. The rubber processing industries, with more than 1000 factories distributed in the

wet zone of the country is a heavy user of fuel wood. The distribution of various fuel wood consuming

industries is reflected in the regional variation in fuel wood consumption in the country.

According to the estimates made in the Energy Balance of Sri Lank (2007), fuel wood demand for the

industrial sectors has shown a steady increase during the last few years while the demand in the household

sector does not show any significant growth. The demand increase in the industrial sector from 2000 to

2007 had been around 28% or 3.5% per year

Some of the estates have grown their own wood lots to furnish their energy needs. Their major supplies

come from rubber plantations. In the past decades the difficulty of getting fuel wood from such sources

has prompted the tea industry to rely on diesel and other heating oils to fire their dryers.

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Types of Energy Used by the Industrial Sector

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Fig. 5: Types of Energy Consumed by the Industrial Sector

The initiatives taken by the Ministry of Science and Technology (now known as Technology & Research)

and the Ministry of Plantation Industries, Gliricidia sepium has been declared as the 4th

Plantation crop.

As a result of this a new source of fuel wood has been introduced into this country. This Short Rotation

Coppice (SRC) form of fuel wood production is also supplying significant amount of fuel wood to the

industrial sector. Apart from the tea factories, many other industries have recently switched from

petroleum fuels to Gliricidia wood to generate industrial process heat. Some note worthy industries is:

Dipped products, Unilivers, MGT Knitting, Lalan Rubbers, Industrial clothing etc.

Many other industries are in the process of switching from petroleum to bio energy to generate industrial

process heat. Once the subsidy given to petroleum furnace oil is removed, many industries presently using

furnace oil are likely to switch to biomass fuels. Along with this, the cultivation of Gliricidia as an agro-

energy crop will also increase substantially.

Another important factor to be noted is that most of the industries switching from petroleum fuels to

biomass fuels are deploying modem forms of biomass combustion. In these modern systems biomass is

chipped into smaller pieces and blown into the furnace pneumatically. Also the air supply for combustion

is pre heated recovering energy from the flue gas and the combustion air is systematically distributed to

improve combustion efficiency and to reduce undesirable emissions. The flue gas is filtered and scrubbed

before discharged into the atmosphere. These measures are being introduced into the country partly by the

pressure exerted by the Central Environmental Authority (CEA). This authority is in the process of

finalizing the emission standards for stationary devices. Once this is formalized, all industries will be

compelled to adhere to such standards.

1.2.3 Use of Bio Energy by Transport Sector

The use of bio energy for transport applications in Sri Lanka is in the Research & Development stage.

Many universities and research institutions in the country are engaged in the following areas of research:

o Cultivation of bio energy crops suitable for transport applications, such as Jatropha.

o Removal water in hydrous alcohol.

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o Esterification of vegetable oils.

o Treatment of vegetable oils prior to esterification.

o Removal of carbon dioxide and compression of bio methane.

o Operation of agricultural vehicles on neat vegetable oil.

o Conversion of cellulistic biomass, specifically rice straw into butanol.

Of the above options, the use of bio methane as transport fuel merits consideration as this process utilizes

waste materials thus obviating the need to cultivate crops for bio fuel production.

In addition the sate institutions have taken the following actions:

(a) Ministry of Petroleum and Petroleum Resources Development

This Ministry has formulated a set of guidelines for the benefit of those who intend to manufacture bio

fuels for transport applications. According to these guidelines any manufacturer engaged in the production

of bio fuels for transport applications should ensure that such fuels conform to specified standards. The

Ceylon Petroleum Corporation (CPC) will purchase all bio fuels conforming to such standards. The price

payable will be determined by the equivalent landed cost borne by CPC for the corresponding petroleum

fuel.

(b) Ministry of Science & Technology

An inter-ministerial committee constituted by this Ministry has suggested that for energy security and

other local economical and social reasons, the country should produces at least 10% of the transport fuel

needs of the country should be produced locally through bio fuels. In order to make this a reality, it is

proposed that the government of Sri Lanka should provide a subsidy to private sector institutions to

encourage them to manufacture and sell the products to the Ceylon Petroleum Corporation.

Up to date commercial scale production of bio fuels have not commenced. Bio ethanol produced by the

sugar industries from molasses is used entirely by the alcohol beverage industries. At present only about

10% of the national sugar requirements is produced locally. The Government has announced that this

should be increased to 50% within the next 5 to 6 years. When this target is archived, it will be possible to

utilize all surplus bio ethanol as transport fuel. .

2. POLICIES AND INSTITUTIONAL FRAMEWORK

2.1 Energy Sector Policy

2.1.1 Energy Sector Master Plan (ESMP)

The Government of Sri Lanka in April 2004 with the assistance of ADB formulated a master Plan

titled “Energy Sector Master Plan, SRI LANKA, ADB TA No. 4113-SRI”.This plan covered wide aspects

of the energy sector in Sri Lanka. This report covered the petroleum sector and the electricity sector in

great details. Although other sectors such as the renewable energy sector are mentioned in the report, not

many details are included in this aspect. In this report biomass energy by and large is treated as a “Non-

commercial” energy, meaning that most of the biomass fuels are not traded. The above report considered

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that bulk of the biomass fuels are collected and consumed by the users themselves without the intervention

of any market chain.

2.1.2 National Energy Policy and Strategies: (NEPS)

The Government of Sri Lanka in the year 2006 realized that there is need to formulate a fresh national

policy and strategies for the energy sector. Accordingly, the government constituted a team of experts to

draft such a document. The document drafted was discussed with all relevant stakeholders. Most of the

comments and suggestions made at these consultations were incorporated in the revised document. And in

the year 2008 a document titled “The National Energy Policy and Strategies of Sri Lanka” was approved

by the Parliament and came to effect in 2008.

Although this policy document intended to cover all sub-sectors with in the energy sector, very high

emphasis has been placed for the electricity sub-sector.

The policy has addressed the promotion, utilization and development aspects of renewable energy and it

clearly indicates that the biomass energy sector to be developed commercialized level. Specific new

initiatives are included in this policy to expand the delivery of affordable energy services to a larger share

of the population, to improve energy sector planning, management and regulation, and to revitalize

biomass as a significant resource of commercial energy. Institutional responsibilities to implement each

policy element and associated strategies to reach the specified targets are also stated in the policy.

This policy document consists of the following three sections:

(a) “Energy Policy Elements” consists of the fundamental principles that guide the development and

future direction of Sri Lanka’s Energy Sector.

(b) “Implementing Strategies” states the implementation framework to achieve each policy element.

( c) “Specific Targets, Milestones and Institutional Responsibilities” state the national targets, and the

planning and institutional responsibilities to implement the strategies.

(a) The following policy elements in the document are for the development of the bio energy sector in

Sri Lanka.

Ensuring Energy Security: Energy resources used in the country will be diversified and the

future energy mix will be rationalized

The primary and secondary energy sources used in the country will be diversified to maximize

the country’s energy security. To ensure the continuity of supply, the future energy mix will be

optimized considering important factors such as the economic cost, environmental impacts,

reliability of supplies, convenience to consumers and strategic independence.

Promoting Indigenous Resources: Indigenous energy resources will be developed to the

optimum levels to minimize dependence on non-indigenous resources, subject to resolving

economic, environmental and social constraints.

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Minimum dependence on non-indigenous resources and optimum development of local energy

resources will minimize the vulnerability of energy supplies to external factors such as the

international socio-political environment. Further, it also eases pressure on the country’s

balance of payments.

(b) Implementation strategies:

Some of the key implementing strategies suggested in the National Energy Policy for Providing

Basic Energy Needs, Ensuring Energy Security and Promotion of Indigenous Resources are as

follows:

Providing Basic Energy Needs:

o Biomass availability for household use will be ensured by protecting and enhancing

existing resources.

o Dedicated energy plantations will be encouraged.

Ensuring Energy Security:

o The use of biomass will be promoted by elevating its status to a modern, convenient energy

source.

o Fuel diversity in electricity generation will be ensured through diversifying into generation

technologies that do not use oil or fuels of which the price is indexed to oil prices.

o Fuel diversification in the transport sector will be encouraged through rail and road

Transport systems based on off-peak electricity supply, and the promotion of bio-fuels as a

high priority research and development need. Development of bio-fuels for transport will

be encouraged.

Promotion of Indigenous Resources:

o The use of economically viable, environment friendly, non-conventional renewable energy

resources will be promoted by providing a level playing field for developers of non-

conventional energy resources to compete and supply energy at the best price through

transparent procurement processes.

o Concessionary financing will be sought to implement the remaining medium scale

hydroelectric projects, which are economically, environmentally and socially viable, but

not viable under normal commercial terms. Pricing of electricity generated would,

however, be on commercial terms.

o Necessary incentives will be provided and access to green funding including Clean

Development Mechanism (CDM) will be facilitated to develop non-conventional

renewable energy resources to ensure their contribution to the energy supply in special

situations, even if their economic viability is marginal.

16

o A facilitation agency dedicated to the systematic planning and promotion of non-

conventional renewable energy resources will be established.

o Oil and natural gas resources will be explored and commercially exploited; both public and

private sector investment will be promoted in this regard.

o Biomass-based energy projects will be developed in areas where land resources are

available, enabling new industrial activities in such areas, emphasizing on creating rural

income generation avenues.

o Research and development on adopting new and emerging technologies and practices,

particularly in the use of non-conventional renewable energy, to suit local conditions will

be promoted.

o Focused attention will be drawn on development of bio-fuels as an alternative energy

resource for the transport sector.

o Initiatives of other sectors and institutions to enhance biomass supplies, convert biomass

and other waste to energy will be encouraged and supported where appropriate.

(c ) Specific Targets, Milestones and Institutional Responsibilities

A target relevant to bio energy specified in the National Energy Policy and Strategies is the share of

electricity to be generated from non-conventional renewable energy resources. This target has been fixed

as 10% for the year 2015. This target of 10% is expected from all non-conventional resources such as

Biomass, small hydro, wind etc.

According to the Corporate Plan prepared by the Sustainable Energy Authority of Sri Lanka (SLSEA), the

targets for Biomass, Small Hydro and Wind for the year 2015 are:

o Biomass 80 MW

o Small Hydro: 250 MW

o Wind: 170 MW

The government policy is that all non-conventional energy based electricity generation projects should be

implemented by the private sector developers with funds raised by these developers without state

intervention. To facilitate the implementation of this policy and to achieve the above mentioned targets,

the government has introduced the below mentioned feed-in tariffs for the purchase of electricity

generated through non-conventional energy resources. These tariffs are technology dependent and reflect

the anticipated cost of implementing and operating such projects. Under these tariffs, the government

owned electricity utility (called Ceylon Electricity Board) undertakes to purchase all the energy generated

through such projects at the agreed prices for a period of 20 years. The prices applicable for projects

contracted for one year from 25th

November 2010 of electricity generated under different technologies are

given in Table 1 below:

17

Technology All inclusive rate

(LKR/kWh) for years 1-20

Mini-hydro 13.04

Mini-hydro – Local 13.32

Wind 19.43

Wind - Local 19.97

Biomass (Dendro) 20.70

Biomass (Agricultural & Industrial Waste) 14.53

Municipal Waste 22.02

Waste Heat Recovery 6.64

Table 1: Standardized Power Purchase Tariff for the Year 2010/2011

In addition to the above, under general strategies, there are some specific references on renewable energy

as follows:

o Measures will be taken to obtain maximum benefits from international arrangements such as the Clean

Development Mechanism, which would benefit the global environment and in the process facilitate the

financing of energy efficiency improvement as well as renewable energy development projects in the

country.

o A central agency will be empowered to ensure that the prescribed policy measures are implemented in

respect of energy efficiency and non-conventional renewable energy development. (This has now been

achieved by the establishment of SLSEA)

o Research and development addressing energy sector issues will be encouraged and promoted. Existing

research institutions will be supported to undertake research and development on energy, with a view

to creating a specialized national centre for energy studies.

The National Energy Policy and Strategies (NEP&S) has clearly defined the institutional responsibilities

and implementation strategies in order to make more realistic implementation, which could result greater

impacts in achieving the policy implications. Further, the NEP&S defines the strategies to achieve the

target of generating 10% of grid electricity using NRE resources, including assessment of potential and

site identification. According to NEP&S, institutional responsibility to implement this NCRE strategy and

promote biomass based energy sector development to achieve targets shall lie with the Public Utilities

Commission of Sri Lanka (PUCSL) and Sri Lanka Sustainable Energy Authority (SEA).

In order to provide the necessary finance for the development of renewable energy projects, the Ministry

of Finance ahs arranged a scheme to provide such finances through the commercial banks in Sri Lanka.

This has bee done with the assistance of the World Bank through a project titled Renewable Energy for

Rural Economic Development (RERED).

2.1.3 Haritha (Green) Lanka Programme

The National Council for Sustainable Development was formed in 2009 under the chairmanship of the

President of the Democratic Socialist Republic of Sri Lanka. This includes all the Ministries in charge of

18

major economic development programmes. This Council is charged with the responsibility for producing

an integrated policy, and overseeing and guiding the implementation of the Haritha Lanka Programme to

ensure the sustainability of social and economic development programmes.

The guidance for this comprehensive plan was taken from two earlier such plans ie Caring for

Environment and the National Strategy for Sustainable Development which were developed through

extensive deliberations with the relevant ministries and other related key stakeholders institutions. The

National Council for Sustainable Development would oversee the implementation of the Action Plan of

Haritha Lanka Programme. The progress of implementation of this action plan and the secretariat

facilities are being provided by the Ministry of Environment and Natural Resources.

The Haritha Lanka Programme has 10 missions namely, clean air everywhere, saving the fauna, flora and

ecosystems, meeting the challenges of climate change, wise use of the coastal belt and the sea around,

responsible use of the land resources, doing away with the dumps, water for all and always, green cities

for health and prosperity, greening the industries and knowledge for right choices. Of these missions 03

and 09 are briefly described below. The strategies, key performance indicators, baseline scenario, short

term, medium term and long term plans and lead responsible agencies are listed in the Haritha Lanka

Action Plan, 2009 and 2010.

Mission 03: Meeting the Challenge of Climate Change

There are twelve (12) strategies in achieving the above objective. Of these, the following two strategies

refer to renewable energy resources:

o Promote the use of economically viable, environmentally friendly, renewable energy resources

with emphasis on non-conventional energy resources.

o Optimize energy consumption through energy efficiency in enterprises and promoting substitution

of fossil fuels by renewable energies in economic and production sectors.

Also the following six strategies refer to bio energy:

o Promote renewable energy resources such as dendro, wind, waves, solar, ocean thermal energy

conversion (OTEC), wastes to energy, biogas from sewage etc.

o Replace petroleum based fuel by Gliricidia fuel wood for industrial heat.

o Promote the use of wood gasification technology.

o Promote the use of alternate transport fuel technologies that reduce GHG emissions (eg. Bio fuels

in place of petrol and diesel)

o Promote biogas use for household cooking and lighting.

o Adoption of fuel switching to water heating by introducing bio-mass broilers.

Mission 09: Greening the Industries

There are six (06) strategies under this mission in achieving the objective. Of these, the strategy four (04)

is on “greening the supply chain”. Some of the actions in this mission are related to renewable energy

resources. They are as follows:

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o Develop guidelines to facilitate industries to select and procure environmentally friendly raw

materials.

o Encourage industries to apply for carbon credits for their renewable energy projects.

o Encourage the use of renewable materials in industries in place of non-renewable materials

wherever possible.

2.1.4 National Forest Policy

The overall objective of the National Forest Policy is intended to give a clear indication of what the

forestry sector should look like in the 21st century. The National Forest Policy was adopted by the

Government in 1995, and it provides an integrated and coordinated approach to the management,

conservation and sustainable development of forests and provides for their multiple and complementary

functions and use and recognizes the need for participatory approaches and development of partnerships

for forestry activities. The National Forest Policy provides the framework for developing the bio energy

sector.

The policy recognizes that home gardens and other agro-forestry systems, and trees on other non-forest

lands, have a crucial role in supplying timber and biomass resources. The policy does not address energy

issues directly, but it provides a supporting framework for increasing fuel wood production in home

gardens and other agro-forestry systems. The policy covers the need to improve land and tree tenure,

facilitate the transport of forest products, as well as to provide technical assistance and other support

services to the people.

The National Forest Policy provides the framework for developing the bio energy sector. The policy

recognizes that home gardens and other agro-forestry systems, and trees on other non-forest lands, have a

crucial role in supplying timber and biomass resources. The policy does not address energy issues directly,

but it provides a supporting framework for increasing fuel wood production in home gardens and other

agro-forestry systems. The policy covers the need to improve land and tree tenure, facilitate the transport

of forest products, as well as to provide technical assistance and other support services to the people.

The National Forest Policy has proposed policies and strategies to optimize the forestry sector’s role in

national energy supply and assist people in meeting their energy needs. The National Forest Policy

consists of three (03) policy objectives of which the two (02) objectives are directly related to

development of biomass resources and they shown below:

o To increase the tree cover and productivity of the forests to meet the needs of present and future

generations for forest products and services.

o To enhance the contribution of forestry to the welfare of the rural population, and strengthen the

national economy, with special attention paid to equity in economic development.

The following policy statements of the National Forest Policy encourage the promotion of biomass energy

resources:

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Policy on Management of State Forest Resources:

o All state forest resources will be brought under sustainable management both in terms of the

continued existence important ecosystems and the flow of forest products and services.

o For the management and protection of the natural forests and forest plantations, the state will,

where appropriate, form partnerships with local people, rural communities and other stakeholders,

and introduce appropriate tenure arrangements.

o Establishment and management of industrial forest plantations on the state lands will be entrusted

progressively to local people, rural communities, industries and other private bodies, in pace with

institutionalizing effective environmental safeguards.

o Degraded forest lands will be rehabilitated as forests for conservation and multiple-use production,

where it is economically and technically feasible, mainly for the benefit of local people.

Policy on Management of Private Forests and Tree Resources:

o Tree growing on homesteads, and other agro-forestry, will be promoted as a main strategy to

supply wood and other forest products for meeting household and market needs.

o The establishment, management and harvesting of industrial forest plantations by local people,

communities, industries, and others in the private sector will be promoted.

o The state will promote tree growing by local people, rural communities, NGOs and other non-state

sector bodies for the protection of environmentally sensitive areas.

Policy on Wood and Non-wood Forest Products, Industries and Marketing:

o Greater responsibility will be given to local people, organized groups, cooperatives, industries, and

other private bodies in commercial forest production, industrial manufacturing, and marketing.

o The state will facilitate the harvesting and transport of forest products grown on private lands.

Some of the Strategies Proposed in the National Forest Policy for Development of Bio energy Resources

is given below:

State forest lands for multiple-use forestry and agro-forestry:

o State forest land that is not needed for conservation purposes, including degraded and deforested

lands will be leased out, on request to local people user groups, communities and national

industries for growing trees, and managed in accordance with management plans or approved

management principles.

o The state will identify suitable areas for long-term leasing and management, select the leaseholders

according to explicit criteria, prepare management plans in cooperation with the leaseholders, draw

up lease agreements, and monitor the implementation of the agreements and management plans.

Strategies to promote development of private forest and tree resources:

o Home gardens, other agro-forestry systems and plantation forestry will be promoted on

homesteads and other land as the main source of the national timber and fuel wood supply, as well

as to conserve biodiversity, soil and water resources.

21

o Farmers, industries, schools and other non-state sector groups will be motivated to grow trees by

improvements in the security of land and tree tenure, relaxation of restrictions on felling and

transport of timber and fuel wood, and the provision of technical assistance and other support

services. Further encouragement will be provided by way of tax remissions, financial incentives

such as soft loans or producer credits, high quality seeds and plants at cost or at subsidized prices.

The incentive systems will be tailored to meet the needs of the target group.

o Appropriate government agencies will help local people to organize themselves in to tree growers’

associations and cooperatives, and will provide the members with the necessary support services.

o The FD will support the establishment of private nurseries by supplying them with high quality

seeds, providing technical advice and making contracts to by seedlings back from them.

Strategies to support policy on forest products, industries and marketing:

o The state will develop a national wood and fuel wood supply strategy to meet the needs of the

wood users.

o The state will rationalize felling and transport regulations for trees on private lands, so as to

facilitate trade, in line with the institution of measures to prevent illegal harvesting elsewhere.

Strategies to support institutional development:

o The state will provide training and education to strengthen the capabilities of NGOs and other

“grassroots” organizations that are active in forestry and environmental development. Formal

cooperation mechanisms will be developed at field and central levels.

o Forestry research will be coordinated by multi-sectoral National Forestry Research Committee, by

drawing up a research policy and a long-term research programme based on broad forestry policy

priorities, and by a systematic multi-disciplinary assessment of these priorities.

On the whole, the National Forest Policy recognizes that the state agencies alone cannot protect and

manage the forests effectively. People’s participation in forestry development and conservation to be

promoted, and partnerships with local people, communities, NGOs, and other local groups outside the

state sector need to be developed. Farmers, community organizations, NGOs, and small and medium scale

commercial enterprises should all have a role in activities such as protecting the forests, growing trees to

meet household needs, supplying raw material for wood and fuel wood based industries.

2.1.5 Forestry Sector Master Plan (FSMP)

The Forestry Sector Master Plan (1995-2020) was developed in 1995 to implement the National Forest

Policy and is a comprehensive long term development framework for the forestry sector to ensure that the

valuable natural forests, the related wildlife and other biodiversity resources will be conserved and the

forests and agro-forestry systems to provide sustainable environmental services and forest products

including fuel wood to meet the needs of the people sustainably.

The Forestry Sector Master Plan has thirteen (13) development programmes outlining immediate, short,

medium and long term action, and provides a clear framework for detailed project formulation,

implementation and resource allocation. Of these thirteen development programms, one programme is on

bio-energy development, based on the studies carried out in 1993. The plan provides information on future

22

demand and supply of biomass energy, proposed strategies for resolution of main issues, and development

programme including short, medium, and long-term action plans.

The long-term goals of the bio-energy development programme of the FSMP are as follows:

o Areas and particular groups of people such as the rural landless, estate sector, and urban poor

suffering from energy scarcity have access to adequate bio-energy or alternative energy sources.

o Bio energy including firewood is utilized sustainably to meet most of the energy needs in the rural

sector, and alternative energy sources are available to facilitate fuel switching.

o There is optimum efficiency of energy use by the households and firewood consuming industries.

In order to attain these long term goals of the bio-energy development programme, FSMP has formulated

the following four components shown below:

o Conservation of fuel wood and other bio energy, with two sub-components;

Promotion of improved cooking stoves

Energy conservation in fuel wood consuming industries

o Development of biomass resources on homesteads and other non-forest lands

o Development and promotion of alternative energy sources, with emphasis on meeting the energy

needs of fuel wood deficit areas.

o Strengthening of institutional capacity, with two sub-components

Development of information and a monitoring and evaluation system for the bio energy sector.

Development and implementation of bio energy strategies.

FSMP has formulated a Short-term (within 5years) and Medium-term (10 – 15 years) implementation

programmes to attain the long-term goals of the bio-energy development programme. However, as the

priority was on forest conservation, the bio-energy development programme of the FSMP which was

discussed above was not taken up as a priority area for implementation during the 1st implementation

phase of the plan. Hence, not included in the seven year investment programme of the FSMP which was

implemented as the Forest Resources Management Sector Project (FRMSP) funded by the ADB and

implemented from 2001 – 2008.

2.1.6 Other Policy Decisions for Promotion of Bio energy:

In addition to the National Policies discussed above, several ministries and institutions have taken number

of policy decisions for promotion of bio energy. Some of these policy decisions are given below:

(a) Initiatives of the Ministry of Petroleum Industries

In order to improve energy security, enhance the environment and to develop the local economy, the

Ministry of Petroleum Industry developed the "Guidelines to be implemented for the formulation and

usage of alternative fuels in Sri Lanka". According to this guide lines, Bio fuels manufactured in a

sustainable manner will be purchased by the Ceylon Petroleum Corporation (CPC), provided such fuels

conform to international specifications. CPC will pay the equivalent price payable for importing

petroleum based fuels. A group of local experts have recommended to the Government that a reasonable

subsidy/ incentive should be made available to the private sector to ensure that at least 10% of the

23

transport fuel needs of the country are met from bio fuels by the year 2015. This group also has

recommended that this share should be increased to 20% by the year 2010. The Government has not yet

accepted these recommendations

(b) Initiatives by the Ministry of Technology and Research (formerly known as Science and

Technology) and the Ministry of Plantation Industries

The Ministry of Science and Technology with the assistance of the European Union and in collaboration

with relevant Government institutions in Sri Lanka conducted a systematic study to determine the

optimum parameters for Short Rotation Coppice (SRC) energy plantation during the period 1999 to 2004.

This study revealed that Gliricidia sepium is the best species which could be grown as an agro-energy

crop in the degraded marginal lands in Sri Lanka. This Ministry also purchased two sets of biomass

gasifiers from India to and demonstrated the technical feasibility of using Gliricidia wood to replace

petroleum fuels used in the generation of heat for industrial applications and for the generation electricity.

Based on the success of this study, the Ministry of Plantation Industries in June 2005 submitted a

memorandum to Cabinet of Ministers and obtained approval to designate Gliricidia sepium as the 4th

Plantation Crop (Tea, Rubber and Coconut are the first three plantation crops) in Sri Lanka.

Following the above decision, the Coconut Cultivation Board took a decision to grant a subsidy of Rs.

4000 per acre of coconut plantations inter cropped with Gliricidia. Each acre of land should have at least

900 Gliricidia trees. The extent of land planted with Gliricid under this scheme is given below:

Year 2006: 226 acres

Year 2007: 120 acres

Year 2008: 186 acres

Year 2009: 250 acres

Year 2010: 250 acres

In addition the coconut cultivation Board has planted over 444 acres of land with Gliricidia.

Also other Government institutions such as CRI, Chilaw Plantations etc. have planted over 120 acres of

coconut lands with Gliricidia. .

The Ministry of Technology and Research have been campaigning to promote the cultivation and use of

Gliricidia for industrial heat generation. Their efforts have resulted in over25 factories have switched from

petroleum fuels to biomass fuels. Some of these factories consume over 50 tonnes of biomass per day.

Also 4 power plants operating on biomass are generating electricity and either feeding it to the national

grid or using it for their internal use. The largest biomass based power plant connected to the grid is 10

MW. Many other power plants are planned to be commissioned I the near future.

(c ) Negative Impact of Scheme Implemented by the Ceylon Petroleum Corporation

Based on the information provided in the Sri Lanka Energy Balance (prepared by the Sri Lanka

Sustainable Energy Authority) for the year 2007 and data provided by the Ceylon Petroleum Corporation

(CPC), the industrial sector consumes approximately 350,000 toe of petroleum-based fuels and 1,500,000

toe of biomass fuels to generate process heat. For the year 2009, the industrial sectors consumed nearly

175,000 toe of furnace oil for this purpose. The Ceylon Petroleum Corporation (CPC) sells this amount of

24

furnace oil to the industrialists at half the imported cost. The total annual loss to the CPC as a result of this

subsidy amounts to Rs. 7 billion. If this subsidy is extended for the year 2011, it amounts to 13% of the

annual budget deficit for the year 2011.

This above subsidy scheme introduced by the CPC has serious negative impact on the cultivation of

Gliricidia wood and use of biomass fuels for industrial heat applications. The lowering of the price of

furnace oil resulted in the industrialists using biomass fuels lowering the price of biomass fuels in

sympathy with the price of furnace oil. More over some of the industries that switched to biomass fuels

from petroleum fuels decided to switch back to petroleum fuels in view of the low furnace oil prices. And

those industries that were planning to switch from petroleum fuels to biomass fuels also decided to delay

the switch over until the prices of furnace oil is increased to the previous values.

This matter ahs been discussed with the relevant authorities including representatives of the Ministries of

Finance and Petroleum. It is understood that the subsidy given to furnace oil will be removed in the near

future.

2.2 Institutional Framework for Bio Energy Sector

For the past many years, bio energy has been the largest single source providing the primary energy needs

of Sri Lanka. For the year 2007 biomass provided 47% of the national energy requirements. (Fig. 2). For

the same year petroleum fuels accounted for 43% of the total primary energy. For the year 2009, electrical

energy provided 10.1% of the final energy use in the country.

In spite of the dominant role played biomass energy, the responsibility of developing and managing bio

energy has not been assigned to any Government institution as its primary function. Instead, this function

has been distributed to many institutions as an auxiliary function to develop or manage bio energy in Sri

Lanka Table 4.

On the other hand, although petroleum sector provides laser share of the nation’s primary energy

compared with biomass, the petroleum sector has a separate Ministry and a very large institution (Ceylon

Petroleum Corporation) to manage this sector.

Like wise, the electrical sector accounts for only 10.1% of the final energy use in the country. To serve

this sector there are two large institutions (Ceylon Electricity Board and Lanka Electricity Company) have

been established to serve this sector. In addition the Ministry of Power and Energy devotes most of its

time and effort on the electricity sector.

I additional to the state institutions mentioned in Table 4, the following non-state institutions also play a

role in the promotion of bio energy: Institution Activity

Bio energy Association of Sri Lanka (BEASL) Promotion and Consultancy Practical Action Dissemination & technology transfer Lanka Biogas Association Promotion of Biogas Technology Energy Forum Policy advocacy & technology transfer Integrated Development Association (IDEA) Promotion of cooking stoves Green Movement Promotion & Dissemination

Table 2: Role of Non-Government Institutions in Bio Energy

25

The following private sector organizations are engaged in various activities in the bio energy sector. These

details are given in Table 3 below:

Institution Activity

EnerFab (Pvt) Ltd.

www.efpl.org

info@efpl.org

Total bio energy provider including Biomass Gasifier-Generator System supply,

installation, operation, maintenance, biomass fuel supply. Cultivation and

purchase of biomass fuel.

Lalan Rubbers (Pvt) Ltd. Total bio energy provider including Biomass Boilers, Thermic Fluid Heaters,

supply, installation, operation, maintenance, biomass fuel (including wood chips

and briquettes) supply. Cultivation and purchase of biomass fuel. Consumer of

biomass fuels. Manufacture of briquettes.

ConserveShakthi

Desilva.nalin@gmail.com

Grower, purchaser and supplier of biomass fuels. Collaborator in biomass power

generation projects.

Silver Mill Ventures (Pvt) Ltd.

suresh@silvermillgroup.com

Installation, operation and maintenance of biomass boilers. Purchaser and supplier

of biomass fuels.

Sonak Lanka (Pvt) Ltd.

www.sonaklanka.com

md@sonaklanka.com

Grower, purchaser and supplier of biomass fuels

Mahathma Gandhi Centre

www.gandhiswaraj.com

power2people@gandhiswaraj.com

Facilitator out growers, purchaser and seller of biomass fuels

Spectra Industries

www.spectra.lk

info@spectra.lk

Improved Cook Stoves Manufacture & supply

Cimplus Lanka (Pvt) Ltd

www.cimplus.com

Consultancy and construction of biogas systems.

Eco Engineers

www.athulajayamanne.com

eco.engineer@yahoo.com

Consultancy and construction of waste management and biogas systems

United Dendro (Pvt) Ltd.

07773884000

Grower, facilitator of our growers, purchaser and supplier of biomass fuels.

Developer of a 4 MW biomass power project

Total bio energy provider including Biomass Boilers, Thermic Fluid Heaters,

supply, installation, operation, maintenance, biomass fuel (including wood chips

and briquettes) supply. Cultivation and purchase of biomass fuel. Consumer of

biomass fuels.

Pennent Penguin Plantation (Pvt) Ltd.

ppholdings@sltnet.lk

Purchaser and supplier of biomass fuels. Developer of biomass power projects.

Lanka Bioenergies (pvt) Ltd.

bioenergies@sltnet.lk

Developer of biomass based cogeneration projects. Total bio energy system

provider including installation, commissioning, operation and maintenance of

steam boilers with or without co generation. Purchaser and supplier of biomass

fuels.

Nature Solutions (Pvt) Ltd.

www.naturesoltions.org

info@naturesolutions.org

Complete solutions for biomass based industrial heat applications and electricity

generation projects.

Carbon asset Management Services for biomass based projects

Professional Met Consultancy

Services (Pvt) Ltd. promet@slt.lk

Equipment supply, installation and commissioning for all bio energy conversion

needs. Buyers and sellers of biomass fuels.

Mechmar Cochran Lanka (Pvt) Ltd.

mechmar@slt.lk

Equipment supply, installation and commissioning for all bio energy conversion

needs.

Table 3: Role of Private Sector Institutions in Bio Energy

26

No. Institution Prime Responsibility Responsibility in Bio Energy

1 Ministry of Power and Energy Development of the Energy Sector Regulatory, Planning and Policy Development

2 Ministry of Environment Preservation of Environment Regulatory & Development of Standards

3 Ministry of Technology and Research Management of Technology and Research Policy, Development, Demonstration &

Promotion of Bio Energy Technologies

4 Ministry of Plantation Industries Management of Plantation Industry Policy & Promotion of Agro-energy

plantations

Ministry of Petroleum Industries Management of Petroleum Sector Policy & Guidelines on Alternative Fuels

5 Public Utilities Commission of Sri

Lanka(PUCSL)

Regulation of Electricity, Water Services and

Petroleum Industries

Regulation of Biomass related tariffs

6 Sri Lanka Sustainable Energy Authority

(SLSEA)

To move towards Energy Secure Sri Lanka Policy, Promotion, Research and &

Approvals of Bio energy projects

7 Ceylon Electricity Board (CEB) Providing electricity service Implementation of Bio energy based tariffs

and project approvals

8 Board of Investment (BOI) Central facilitation point for investors Facilitation of Bio energy Projects

9 Petroleum Corporation of Sri Lanka Providing petroleum service Bio-fuel – purchase and marketing

10 Central Environmental Authority To ensure a clean and green environment Regulation of bio energy projects

11 National Engineering Research and

Development Centre (NERDC)

R & D, Demonstration & Promotion of

solutions to engineering problems

R & D, Demonstration & Promotion of

technical solutions to bio energy problems

12 Forest Department Conservation of Forest National focal point for bio energy

13 Department of Agriculture Development of improved agricultural

technology

Promotion & Implementation of Scientific

solutions to agro-bio energy problems

Ministry of Coconut Development and Janatha

Estate Development

Management of Coconut development and

Janatha Estate Development

Facilitation of agro-energy Gliricidia

plantations

14 Coconut Research Institute Research on coconut sector Promotion of Gliricidia as an intercrop

15 National Science Foundation To initiate, facilitate and support basic and

applied scientific research

To initiate, facilitate and support basic and

applied research on bio energy

Universities of Colombo, Moratuwa,

Peradeniya, Ruhuna, Sri Jayawardenepura and

Uva

Providing higher education R&D on Bio energy

21 Industrial Development Board (IDB) Development, Encouragement and Promotion

of Small & Medium Enterprises

Transfer of bio energy related technologies

through regional network

22 Institute of Fundamental Studies (IFS) To initiate, promote and conduct basic

research in Science and Philosophy.

To initiate, promote and conduct basic

research in Bio energy

Table 4: State Institutions and their Prime Responsibility and the Responsibilities in Respect of Bio Energy:

27

3. MAIN PLAYERS IN BIO ENERGY MARKET

3.1 Main Players

Main players in the bio energy market could be sub divided into the following groups:

Group 1: Biomass producer/ grower/residue generator

Group 2: Biomass collector/buyer/transporter/processor/biomass seller

Group 3: Biomass fuel to energy converter/ consumer

Group 4; Equipment supplier/ service provider

Group 5: Promoters of bio energy application

Group 6: Facilitator/ regulator/ policy maker/ research

Group 1: Biomass producer/ grower/residue generator

All primary producers of biomass fuel come under this group. The following category of players

would come under this group:

o Cultivators of dedicated Agro-energy SRC plantations.

o Cultivators of Gliricidia as an inter crop/ support crop/ shade crop or live fence.

o Cultivators of Rubber trees (Rubber trees are uprooted and replanted after about 33 years

of planting).

o Cultivators of Coconut trees. (Coconut trees are uprooted and replanted after about 60 -75

years. More over coconut plantations produce many other forms of biomass. These too

are used as fuel.)

o Cultivators of cinnamon. (1 kg of cinnamon bark gives 5.67 kg of fuel wood).

o Cultivators of rice. (1 kg of rice produces kg of straw and kg of husk)

o Forest Department/ State Timber Corporation (These institutions are responsible for

cultivating and supply of logs for the structural and furniture sector. This activity

generates significant quantities of fuel wood, in the form of thinning and branches)

o Homesteads that provides timber for the structural and furniture sector. (This activity too

generates significant quantities of fuel wood, in the form of branches).

o Cultivators of auxiliary crops such as maize (This sector also generates agro-residues

which could be used as fuel).

o Cultivators of sugar cane. (At present all the bagasse – sugar can residue- produced in the

sugar factories are fully utilized in the factories itself for the generation of energy

required for the factory. But in all modern efficient sugar mills, significant amount of

surplus bagasse generated is used to generate electricity and exported to the national

grid).

o Households (Most households generate solid wastes. These need to be disposed. This

could be used to generate energy).

o Industries (Most industries generate solid wastes. These wastes too need to be disposed.

One way of disposing is to generate energy. Saw mills and furniture manufacturers are of

prime importance in this category).

28

Group 2: Biomass collector/buyer/transporter/processor/biomass seller

Producers of biomass do not have the resources to transport and deliver the biomass to energy

producers. Intermediate agents carry out this task. Following categories of people are engaged in

this activity:

o Full-time biomass buyers and sellers. The following companies included in Table 3 are

engaged in this activity: EnerFab (Pvt) Ltd., Lalan Rubbers (Pvt) Ltd., ConserveShakthi,

Silver Mill Ventures Ltd., Sonak Lanka (Pvt) Ltd.,Pennent Penquin Plantation (Pvt) Ltd.

These companies are employing full-time staff to visit places of biomass availability and

load and transport the fuel to the point of use. Usually and advance payment is made at

the time of removal of biomass at the loading site and the balance settled after unloading

at site. Purchase is done either on volume basis or on weight basis. Weighing is done

using a dial balance at the time of loading or in a weighbridge.

o Part-time operators. In this category, truck operators make use of an empty journey to

load and transport biomass on their way. An example is trucks used to transport cement

from cement factories, in their forward journey, they load biomass, particularly paddy

husk or saw dust, and deliver this to the Cement Factory to be used as fuel either for

cement manufacture or for electricity generation. In this instance the actual cost incurred

in transporting the biomass is almost zero.

o The third category of transporters is the Local Authorities. It is the responsibility of the

Local authorities to collect and dispose in an environmentally acceptable manner all the

refuse (Municipal Solid Waste or MSW) from the households and small food outlets in

the country. There are a total of 311 such local authorities are in the country. They

collect and transport a total of 2,800 tonnes of MSW daily. The average composition of

this wastes is 90% organic and 10 inorganic. Average Moisture content is 60% (wet

basis). If the easily combustible materials could be separated, then these materials could

be used as fuel in solid fuel combustion facilities. Also if the easily biodegradable

materials could be sorted out these could be anaerobically digested to generate biogas,

which could be used as a fuel.

o The fourth category of transporters is the contractors engaged in uprooting rubber trees.

Older rubber trees are uprooted and replanted on a systematic manner in the country.

After uprooting the trees, the main trunk of the tree is separated and sold to saw mills for

conversion into planks. These planks are usually treated with boron before made into

useful products.

o The last category in this group is the individual households which collects and transport

their own requirements of biomass fuels. These people belong to the poorest segment of

the society. This category of people does not make any payment for the fuel wood

collected by them. In certain districts, these people need to travel long distances to

collect such fuel wood.

29

Group 3: Biomass fuel to energy converter/ consumer:

The following categories of people that consume biomass as fuel at present coming under this

group are given below:

o Households: Though each consumer consumes very little, due to the large number of

consumers this category dominates the use of biomass in the country. Vast majority of

these consumers reside in rural areas of the country. Most of this consumption is used for

cooking purposes. Even in the areas, although a significant number of households

consume other forms of fuels such as LPG or electricity for cooking purposes most of

these households consume biomass also as a fuel for cooking purposes.. Hence this

category of people should be considered as widespread across the country. Out of the 4

million households in the country, at least 3.2 million households are believed to be using

biomass as a fuel for cooking purposes. About 72% of the biomass fuels consumed in this

country are used for household cooking.

Most of the households using fuel wood use the improved stoves with the provision to

use two pots simultaneously. These stoves are made of clay and are manufactured and

marketed in many parts of Sri Lanka. An institution called Integrated Development

Association (IDEA) has been promoting this for many years in many parts of Sri Lanka.

This version of stoves is a much better version of the traditional “Three-Stone” stoves

used by the rural communities for many years. These stoves have reduced the

consumption of fuel wood and improved the indoor air quality significantly.

A small section of the population is using the modern wood gas stove developed by

National Engineering Research and Development Centre. This device is extreamly

efficient, practically smokes free and causes minimal amount of indoor emission.

However, this is batch type stove. Once charged with wood pieces, it cannot be stopped

until all the wood in the stove are combusted. More over, the thermal out put of the stove

cannot be controlled.

o Commercial Institutions: Most of the food outlets in the country, excluding large hotels,

use significant quantities of biomass fuels for cooking food. Some of the institutions are

gradually shifting towards LPG. Reliable data on the total number of institutions under

this category consuming biomass as fuel for cooking and the consumption of biomass are

not available. But according to Leelaratne, 2005, 430,000 tonnes of biomass fuels are

consumed by this sector.

o Industrial Sector: As per the energy balance 2007 the industrial sector in Sri Lanka

consumed 3,807,000 tonnes of biomass fuels in the 2007. The types of industries

consume biomass fuels include brick, tile, lime, agro industries, notably tea, coconut,

rubber, particularly rubber processing, garment etc. reliable data on the list, types and

actual consumption by each types of industries are not available. However, Leelaratne

2005, gives the following breakdowns:

Tea: 610,000 tonnes/ y

Rubber: 92,000 tonnes/ y

30

Coconut: 120,000 tonnes/ y

Brick: 950,000 tonnes/ y

Tile: 630,000 tonnes/ y

Lime: 280,000 tonnes/y

Numbers and sizes of these factories vary very widely. Most of the tea and rubber

factories are located in the hill country. Coconut factories mostly located with in an area

declared as the “Coconut Triangle”. The brick and tile industries are located mostly in the

area North of Colombo.

Industries such as rice processing, desiccated coconut, sugar manufacturing etc. use agro-

residues generated within the factories. These would include rice husk, coconut shells and

baggase. Most of the other industries purchase the biomass fuels from fuel wood

suppliers.

In the recent past industries purchasing new biomass burning equipment are opting for

biomass combustion systems with the following improved facilities: (a) Furnaces

designed to wood chips instead of wood logs. (b) Filters and scrubbers to clean flue gases

to conform to stipulated emission standards.

o Electricity Generation Sector: -Under the scheme introduced by the power sector in Sri

Lanka, a few private sector institutions have established biomass operated electricity

generated power plants. A list of such power plants and the fuel used are given in Table5

below:

Name/ Place Fuel Used Capacity MW

Haycarb Ltd. Madampe Waste gas from Activated Carbon 0.35 (Co-Generation)

Recogen Ltd. Badelgama Waste Gases from Coconut Shell

Pyrolysis

1.0

Tokyo Cement, Trincomale Paddy husk, saw dust, Gliricidia wood 10 MW

Nipuna Rice Mill,

Polonnaruwa

Paddy Husk 2 MW (co-generation)

Walapane Gliricidia 1 MW (Not in

operation)

Table 5: Commissioned Biomass Based Electricity Generation Projects

Although a number of private sector institutions applied and obtained approvals to establish

Municipal Solid Waste based electricity generating facilities, not a single such facility has got

off the ground.

Members in this group are constantly changing. The following features should be noted:

o Households: Sri Lankan economy is growing fast. The poorest segment of the society is

also benefited from this growth. With the increase in the household income, these

households are switching from cumbersome biomass fuel to more convenient fuels like

31

LPG. In fact in spite of a small increase in the population in the country, there is no

corresponding increase in the consumption of biomass fuel by the household sector.

o Industry: About 2 years ago when the petroleum prices reached a value of around US$

60-70 per barrel, a number of industries decided to switch from petroleum fuel to

biomass fuels to generate their thermal energy. When the international prices dropped to

around US$ 30 per barrel, the Sri Lanka Government reduced the local price of furnace

oil considerably. This reduction in furnace oil prices discouraged the industrialists to

switch from petroleum to biomass fuels. At present, in spite of international price

climbing to US$ mid 90s, furnace oil is marketed at halve the price in the international

market. This subsidy granted for furnace oil is acting as a barrier for the development of

bio energy in the industrial sector. If this subsidy is removed, we could expect a

substantial increase in the biomass fuel consumption in this sector.

o Electricity Generating Sector: In addition to the power plants listed in Table 5, the

following biomass based power plants given in Table 6 are in various stages of planning.

These power plants are expected to be commissioned in the future.

Location Fuel Capacity (MW) Status

Hingurana Paddy Husk 2.00 Energy Permit Issued

Galparuyaya, Mahiyangana Gliricidia

0.95

Dodangoda, Kalutara 4.00

Buttala, Monaragala 5.00

Thirapane, Anuradhapura 1.50

Ellawela, Polonnaruwa 10.00

Ninthavur, Ampara Paddy Husk 2.00

Monaragala Gliricidia

10.00

Embilipitiya 5.00

Mahingamuwa, Kegalle Cashew Shell 0.50 Provisional Approval

Issued

Avissawella Gliricidia

0.90

Tunkama, Hambantota 10.00

Keliyapura, Hambantota 10.00

Trincomale 5.00

Loggal Oya, Mahiyangama 2.00

Nedunkulam, Vavuniya 5.00

Anuradhapura 10.00

Bathalayaya, Mahiyangama 5.00

Ampara 10.00

Bloemendhal, Colombo Municipal Solid

Waste (MSW)

10.00 x 4

Kurunagala 0.625

Gohagoda, Kandy 10.00

Pothunilkumbura, Colombo 20.00

Kaduwela 6.00

Kerawelapitiya 40.00

Table 6: Planned Biomass/ Municipal Solid Waste Based Power Plants

32

In addition to the above mentioned projects, the Ministry of Power and Energy is exploring the

feasibility of using biomass as a supplementary fuel (co-firing) at the coal fired power plants in

Sri Lanka. If this option is found to be technically and economically feasible, then it will be able

to generate the equivalent of 900 MW of electricity from biomass through this option.

Group 4: Equipment supplier/ service provider

Private sector companies providing these services are already included in Table 3.

Group 5: Promoters of bio energy application

Members of this group are professional associations or non-governmental institutions engaged in

promoting the development of bio energy as at least one of their activities. List of these

institutions are given in Table 7 below:

Institution Activity

Bio Energy Association of Sri Lanka (BEASL)

www.bio energysrilanka.org

info@bio energysrilanka.org

o Promotion of cultivation of Gliricidia as an

agro-energy crop

o Promotion of the use of Gliricidia wood as

fuel for household, industry and electricity

generation

o Promotion of the use of Gliricidia leaves as

cattle fodder or as organic fertilizer

o Representing the bio energy sector at

relevant Government forum.

Energy Forum/ Practical Action

www.efsl.lk

eforum@sltnet.lk

http://practicalaction.org.uk

paracticalaction@practicalaction.org.org.uk

Sri Lanka Energy Manager’s Association

(SLEMA)

www.slema.org.lk

slema@sltnet.lk

o Promotion of energy efficiency in biomass

energy conversions.

o Promotion of fuel switching from fossil fuel

to bio fuels.

o Promotion of biogas to meet Sri Lanka’s

energy needs. Lanka Biogas Association

www.lankabiogas.org

secretariat@lankabiogas.org

Institution of Engineers, Sri Lanka (IESL)

www.iesl.lk

es@iesl.lk

Sri Lanka Association for the Advancement of

Science (SLASS)

www.slaas.org

hqslaas@gmail.com

Table 7: Non-Governmental Institutions Promoting Bio Energy

Group 6: Facilitation/ regulation/ policy/ research

State institutions responsible for facilitation, regulation, policy and research are given in Table 4.

Of these institutions, the Sri Lanka Sustainable Energy Authority is entrusted with wide powers

33

and responsibility in respect of all Non-Conventional Renewable Energy Resources including

Biomass Energy through Act no 35 of 2007

Following are the objectives:

Sri Lanka Sustainable Energy Authority (SLSEA) is the organization vested with authority for

developing renewable energy resources in the country, and biomass is identified as one of the

potential resources for power generation and heat applications.

Objects of SLSEA covering the area of biomass energy are given below.

1. Identify, assess, develop, conserve and manage biomass energy resources including the

preparation, maintenance and updating of an inventory of resources indicating

geographical location of sites, exploitable potential, land ownership and existing

infrastructure facilities, with a view to enhancing energy security and thereby derive

economic and social benefits to the country

2. Identify and manage appropriate conversion technologies, conversion and utilization

norms and practices including the preparation, maintenance and updating of an inventory

of technologies, indicating their level of maturity for commercial deployment and typical

performance data

3. Development of guidelines on biomass energy project development and disseminating

them among prospective investors, and entertainment of applications for carrying out

such projects

4. Development of guidelines in collaboration with relevant state agencies on evaluation

and approval of on-grid and off-grid biomass energy projects

5 Providing assistance to investors by formulating project proposals in new types of

biomass energy technologies

6 Exploring avenues and facilitating the process of overcoming technical or any other

limitations that retard the growth of biomass energy development, in accordance with the

national policy on energy

7 Analyse and recommend policies and prepare plans aimed at promoting and developing

biomass energy resources

8 Preparing long-term development plans with interim targets for specific technologies and

promotion and facilitation of the implementation of such plans

9 Devising incentive mechanisms based on principles of competitiveness and specific

technologies based on actual energy production

34

10 Promotions of programmes to mobilize funds for biomass energy development through

credit enhancement and other facilities

11 Provisions of funds including subsides and seed capital for pilot projects in biomass

energy development

12 Conduct preliminary studies and investigations in any geographical area to ascertain the

biomass energy potential

13 Obtaining relevant data required for biomass energy planning and assessment from any

public or private institution or any other source, and carrying out of the resource planning

and assessment

14 Monitor, refine and follow up the approval process of on-grid and off-grid biomass energy

projects in consultation with relevant agencies and to provide technical and other

logistical assistance and facilities to such agencies to simplify the procedural

requirements and to accelerate the project approving mechanism

15 Facilitate the access to green funds for investors in on-grid and off-grid biomass energy

projects

16 Provide funds and design, develop and implement credit enhancement facilities such as

loan guarantee schemes and access to commercial credit for investors in on-grid and off-

grid biomass energy projects

17 Render professional services and undertake projects connected with the development of

biomass energy resources

3.2 Research & Development

3.2.1 The Need for Research and Development

As the fossil fuel was dominating as a primary energy source, not much attention has

been paid to develop technologies to develop and utilize biomass for energy. Another

factor that contributed towards lack of focus on research and development on biomass

energy technologies was that the biomass was available very cheap then, and sometimes

even free. It has not been produced formally for the purpose of using as an energy source.

For instance, biomass has always been a byproduct of other activities such as agro based

industry, replanting, pruning, etc. and in the manufacturing industry such as off cuts in

timber industry, waste from wood working industry, construction industry, etc and as

waste generated from forestry sector - fallen trees & branches, natural waste from trees,

leftovers from foresting etc. Therefore, there was no demand for improved technologies.

The most of the existing biomass energy technologies in the country are traditional and

therefore, inefficient and resulting in environment and health problems in addition to the

wastage of energy. The technologies used in the domestic sector for cooking and tea,

brick and tile industries for converting biomass into useful energy are very old and

35

inefficient and have not undergone substantial improvement for decades, especially in the

industrial sector (Leelaratna, 2005). There has been growing commitment worldwide for

R&D in exploiting renewable energy technologies since the oil crisis in 1970s. Therefore

there is a considerable potential for biomass conservation and mitigation of GHG

emissions through improvement of efficiency by developing modern biomass energy

technologies.

3.2.2 Technological Advances in the Household and Industrial/Commercial Sectors:

a) Household Sector – Wood Stoves:

The household sector being the largest consumer of fuel wood, cook stoves have been the

main focus of R&D by many research organizations. In addition to large amount of fuel

wood consumed for cooking, the environmental impacts, especially on health, associated

with inefficient combustion of fuel wood has been a major concern towards research on

improved cook stoves. The traditional 3-stone hearth, which is of widespread use in Sri

Lanka, not only is highly inefficient but also associated with emissions detrimental to the

health. Continuous improvement to domestic cook stoves resulted in achieving better

efficiencies and reduced emissions. As result of R&D activities implemented during the

last several decades efficiency of wood stoves have been improved remarkably. The

NERD Wood Gas Stove (Lanka Shakthi) is the most efficient wood stove reported in the

literature. This stove uses fuel wood as fuel, and it is a good alternative to the traditional

firewood stove and is also a close competitor to LPG cookers. This stove has achieved

consistent overall efficiencies up to 35% when compared with less than 8% in traditional

3-stone cook stove. Along with efficiency improvement substantial reduction in harmful

emissions also achieved. Table 8 shows the performance of the wood gas various types of

stoves and Table 9 shows the emissions associated with those stoves.

Type of Stove Efficiency (%) Fuel Type

Three-stone stove 8.0 Fuel wood, agri-residues

Single and two-pot mud stove 13.0 Fuel wood sticks, agri- residues

Anagi stove – 1 & 2 18.0 Fuel wood sticks

Ceylon charcoal stove 30.0 Charcoal

Sarvodaya two-pot stove 22.0 Fuel wood Sticks

CISIR single-pot stove 24.0 Fuel wood sticks

IDB stove 20.0 Fuel wood sticks

NERD stove 27.0 Fuel wood sticks

NERD Biomass Rice Cooker NA Coconut shells

NERD wood gas stove (Lanka

Shakthi)

35.0 Fuel wood pieces

Table 8: Performance of Typical Improved Cook Stoves

36

Device Emission factor ( g/kg of air-dried fuel wood)

CO2 CO CH4 TSP SOx NOx

Three-stone stove (TCS) 1151.35 46.64 7.60 7.60 0.44 1.29

Semi- enclosed stove (TCS) 1104.91 74.84 8.69 8.80 0.44 1.25

ICS (e.g. Anagi-2 Average 1056.66 103.64 9.77 10.00 0.44 1.20

NERDC wood gas stove (ICS) 500-600ppm 7-30

ppm

Table 9: Emissions of Various Wood Stoves

4. CURRENT SOURCES OF BIO ENERGY IN SRI LANKA

The most common forms of bio energy resource available in Sri Lanka are the following:

o Fuel wood from dedicated Agro-energy SRC (Gliricidia) plantations.

o Fuel wood from cultivation of Gliricidia as an inter crop/ support crop/ shade crop or live

fence.

o Fuel wood from rubber replanting programme (Senile rubber trees are uprooted and

replanted on a 33-year cycle).

o Fuel wood from coconut replanting programme (Senile coconut trees are uprooted and

replanted on a 60-year cycle).

o Leaves of coconut palms.

o Fuel wood from cinnamon cultivation.

o Pruning from tea bushes

o Residue from paddy cultivation (Straw and husk)

o Residue from timber extraction. Forest Department/ State Timber Corporation/

Homesteads.

o Agro-residues from cultivation of auxiliary crops such as maize.

o Residue from cultivation of sugar cane.

o Municipal Solid Waste from households.

o Solid and liquid Wastes from industries.

o Animal wastes (Used for bio gas production).

Estimated quantities of each of the above categories are discussed below:

4.1 Fuel wood from Dedicated Agro-Energy SRC (Gliricidia) plantations.

Reliable data on this sector is not available. Gliricidia has been established in about 100

hectares of lands as a dedicated mono culture in abandoned marginal lands. This is

expected to yield 3,000 tonnes of (dry) wood annually.

37

4.2 Fuel wood from cultivation of Gliricidia as an inter crop/ support crop/ shade crop

or live fence.

In this category Gliricidia has been cultivated as an inter crop in coconut lands, as support

tree for black pepper or beatle leaf cultivation, as a shade tree in tree plantations, as live

fence etc.

4.2.1 Gliricidia as Inter-Crop under Coconut

Coconut Cultivation Board has been granting a subsidy of Rs. 4000 per acre of

coconut land with a Gliricidia population of 900 trees per acre. But the takers for

this subsidy are very poor. Notable exception is the 150-acre Kohombe coconut

plantation in Madampe, Chillaw. Coconut Research Institute has established

many demonstration plantations extending to a few hundred hectares.

The total about 1000 hectares are estimated to have been planted under this

category. The number of Gliricidia trees under this category is estimated as 2

million. The annual yield of wood is estimated as 8000 tonnes of wood (dry

weight).See Fig. 7

4.2.2 Gliricidia as Support Crop for Black Pepper or Beatle leaf

According to the Department of Export Agriculture (www.exportagridept.gov.lk

) an extent of 30,506 hectares has been cultivated with black pepper (in the year

2009). The Density of plantation is 1700 plants per hectare. Hence there is a total

of over 51 million Gliricidia trees have been established to support these pepper

palms. The annual yield of wood from these trees is estimated as 204,000 tonnes

(dry weight) per annum.

4.2.3 Gliricidia as Shade Tree in Tea Plantation

Gliricidia is cultivated as a shade tree in the low and

medium elevation plantations. These two types of tea

lands account for about 80% of the total tea

production covering an extent of 440,000 hectares of

land. Based on an estimate of 0.1 tonne of dry wood

per hectare per year, the yield of wood from this

category is estimated as 144,000 tonnes (dry) of

wood per year.

Fig. 6: Locations of Tea Plantations

38

4.2.4 Gliricidia as Live Fence

Gliricidia is cultivated as live fence in most of the rural homesteads in the dry

zone and intermediate zones. Out of a total of 5 million households around 3

million households are located in the rural areas of dry and intermediate zones.

An average homestead is estimated to have 10 Gliricidia trees along its fences.

Thus the annual yield of Gliricidia wood from this category is estimated as

120,000 tonnes of wood per year.

4.3 Rubber Wood

There is reasonably accurate data is available for the production of fuel wood from this

category. There are around 119,000 hectares of rubber plantations in the country with a

plantation density of 350 trees per hectare. These trees are uprooted and re-planted on a

33 year cycle. Each year 1,249,500 trees are uprooted. The dry weight of each tree is

around 668 kg. Of this amount 40% is sold to saw mills to be converted into planks.

Hence the annual weight of balance 60% is 1,249,500 X 0.668 x 0.6 = 515,794 tonnes /

year (dry weight). (Source: Dr. Lalani Samarapuli: Ruber Research Institute/ Mr.

Sumedha Gunewardene, Lalan Rubbers Ltd).

Fig. 7. Locations of Coconut Plantations Fig. 8: Location of Rubber Plantations

39

4.4 Biomass Fuel from the Coconut Sector

In this sector too, there is reasonably accurate data on the biomass yield.

There are three primary sources of biomass fuels from this sector. Firstly, every month

a leaf (fond) is produced from each tree. Each fond is 2.5 kg. (dry weight). The total

number of coconut trees in the country is estimated as 44 million. Hence the annual

yield of biomass through this mode is 44,000,000 x 2.5 x 12 = 1.32 million tonnes.

The second source of biomass from the coconut sector is through coconut trunks from

senile palms. The average productive life of a coconut palm is 60 years. Annually

1.67% of the coconut palms are felled and tree planted. The dry weight of each trunk is

503 kg. Hence the annual yield is: 44,000,000 x 0.0167 x 503 = 413,868 tonnes/ year.

(Source: Dr. Jayantha Gunathilake, Coconut Research Institute)

The third source of biomass fuel is coconut shell. For the year 2009 the number of

coconuts produced in the country is around 2700 million. Each pair of coconut shell has

a dry weight of 160 grams. Hence the total weight of coconut shells produced in the

country is: 2,700,000,000 x 0.16 = 432,000 tonnes. Of this amount a part is used to

make charcoal for activated carbon production. Also in the process of carbonisation a

part of the energy is recovered.

4.5 Fuel wood from Cinnamon Cultivation

Here again we have reasonably accurate data. The annual production of cinnamon bark

is 11,000 tonnes. The bark to wood ratio is Bark 15: Wood 85. Hence the annual wood

yield is: 11,000 x 85/15 = 62,333 tonnes (dry weight)/y.

4.6 Pruning from Tea Bushes

Tea bushes are pruned on a 3 to 5 year cycle. The weight of these pruning is estimated

as 2 tonnes per ha. On an average about 2 tonnes woody pruning is generated per

hectare year. Hence the total area of 200,000 hectares of tea plantation is expected to

produce 400,000 tonnes of woody biomass per year. Most of this quantity is consumed

by the estate workforce for their household needs. However, action is being taken to

recycle these pruning as organic matter in the tea plantations.

4.7 Agro-Residues from Paddy Cultivation

The annual production of paddy for the year 2009 is 3,652,000 tonnes. (Central Bank

Annual Report, 2009). The Residue to Product Ratio (RPR) for paddy husk as quoted

by the University of Moratuwa is 0.2. Hence the estimated husk production is:

3,652,000 x 0.2 = 730,400 tonnes (Rice Processing Institute, Anuradhapura). Of this

quantity 66% is used for processing paddy. The balance 34% is available as surplus for

energy application else where. This amounts to: 248,336 tonnes/ year. Only a part of

40

the rice husk is used for energy production. 12 MW for

electricity generation and also by limited number of

industries for industrial process heat generation

The RPR for paddy straw is 1.757 (University of

Moratuwa). Hence the national production of paddy

straw is 3,652,000 x 1.757 = 6,422,000 tonnes per year.

However, the use of paddy straw for energy

applications in Sri Lanka is very rare.

Also, paddy straw is used as a cattle feed in the dry

zone in the country. In view of the Government drive to

increase milk production by 5 fold, it is assumed that all

the straw would be used as cattle feed.

Fig. 9: Locations of Paddy Land

4.8 Residue from Timber Extraction and Use

The total annual use of saw logs is 1.6 million cubic meters. Of this amount 60% is

utilized as useful timber products. 25% ends up as off-cuts and 15% as shavings and

saw dust. Hence the volume of biomass fuel from this sector is 1,600,000 x 0.4 =

640,000 cubic meter = 256,000 tonnes of biomass fuel (dry weight). (Source:

Department of Forest). Most of these residues are used by industrialists to raise process

heat.

4.9 Agro-Residues from auxiliary Crops (Maize etc)

The estimated quantity of residues (maize stalks and maize cobs) produced from this

sector is: 48,000 tonnes (dry weight) (University of Moratuwa, 1999).

4.10 Residues from Sugar Cultivation and Processing

Sri Lanka in the 2009 produced 54,000 tonnes of sugar. For this 675,000 tonnes of

fresh cane was used. It produced 202,500 tonnes of bagasse at 50% moisture. 80% of

which could be in a modern mill to meet the in-house energy requirements. The balance

20% (40,500 tonnes at 50% moisture is equivalent to 81,000 tonnes of wood at 20%

moisture. This is the net solid bio fuel produced per year.

41

The process also produced 8.1 million litres of 95% ethanol. This is equivalent to 2.62

million litres of gasoline.

4.11 Municipal Solid Wastes

Solid wastes produced by the households and small commercial institutions are

collected by the respective local government authorities (such as the Municipal

Council, the Urban Council) and disposed of in suitable manner. Most of this waste at

present is dumped in landfill sites. Most of these landfills do not conform to

acceptable sanitary criteria. So far no successful landfill gas recovery projects have

been commissioned in Sri Lanka. A part of these wastes are converted into compost

to be used as soil conditioner for agricultural or horticultural purposes.

The total amount of Municipal Solid wastes produced in Sri Lanka is estimated as

2658 tonnes per day. 80 to 85% of these are organic in nature and the average

moisture content is around 60%.

4.12 Industrial Solid Wastes

The industrial wastes produced in the timber industry and coconut industry has

already been covered in the respective section. A part of the industrial wastes are sold

to the recycling sector. The other parts are incinerated and disposed in the respective

industries in the respective factory premises.

4.13 Industrial Liquid Wastes

Details provided by University of Moratuwa in respect of liquid effluents from the

industrial sector along with the potential for energy production are given in Table 10

below:

Industry COD

Loading

(million

kg/y)

COD

Removal

(million

kg/y)

Bio gas

Production

(million cu.

m. /y)

Energy

(TJ/y)

Fuel wood

equivalent

(tonnes/y)

Food &

Beverages

4.502 3.601 1.801 48.62 3038.8

Distilleries 0.830 0.706 0.353 9.53 595.63

Tanning 2.946 2.356 1.178 31.81 1988.1

Desiccated

coconut

2.628 2.102 1.051 38.38 2398.8

Rubber

Processing

10.600 8.480 4.240 114.48 7155

Total 21.506 17.245 8.623 242.82 15176.25

Table 10: Energy Potential from Industrial Liquid Effluents

42

Most of the above quantities of biogas are either produced or has the potential to

produce it. However, practically very little are captured and used for energy

applications.

4.14 Use of Leaves for Biogas Production

Large quantities of leaves are generated in the home gardens and plantations. All

of these are either allowed to decay releasing CO2 and some times methane or are

collected and incinerated in open piles with the emission of smoke and other

pollutants. These leaves could be used as feedstock for biogas production. The

quantity of such material generated annually is estimated as equivalent to the total

amount of biomass used for energy production. This works out to 12,000,000

tonnes per annum.

Summary:

Source Energy Equivalent in tonnes of Fuel Wood

Agro-Energy SRC Plantations 3,000 (fully utilized)

Gliricidia as an Inter-crop under Coconut 8,000 (fully utilized)

Gliricidia as a Support Crop 204,000 (Only partly used)

Gliricidia as Shade Tree in Tea Plantations 144,000 (Only partly used)

Gliricidia as Live Fence 120,000 (Only partly used)

Rubber Plantations 515,794 (fully utilized)

Coconut fond 1,320,000 (Only partly used)

Coconut Stem 413,868 (fully utilized)

Cinnamon 62,333 (fully utilized)

Pruning from Tea Bushes 400,000 tonnes (used by tea workers)

Paddy Husk 248,336 (only Partly used)

Timber Extraction 256,000 (fully utilized)

Auxiliary Crops 48,000 (Only Partly used)

Sugar bagasse (surplus) 81,000 (presently nil)

Leaves 12,000,000 (presently nil)

Sugar – Alcohol 2.62 million litres (presently nil)

Table 11: Summary of the Present Sources of Bio Energy

5. BIO ENERGY MARKET

The three key players in the bio energy market in Sri Lanka are:

o Bio energy Producers

o Bio Energy buyers/ collectors/ transporters/ seller

o Bio Energy Consumers

5.1 Bio Energy Producers

The following are the main bio energy producers:

43

o Dedicated Agro-energy SRC (Gliricidia) plantations.

o Gliricidia as an inter crop/ support crop/ shade crop or live fence.

o Rubber Plantations.

o Coconut Plantations.

o Cinnamon Plantations.

o Paddy cultivation

o Timber Extraction. Forest Department/ State Timber Corporation/ Homesteads.

o Agro-residues from auxiliary crops.

o Sugar cane.

o Municipal Solid Waste.

o Solid and Liquid Wastes from industries.

o Animal wastes (Used for bio gas production).

5.2 Bio Energy Buyers/ Collectors/ Transporters/ Sellers

The key players coming under this category are as follows:

o EnerFab (Pvt) Ltd.

o Lalan Rubbers (Pvt) Ltd.,

o Silver Mill Ventures (Pvt) Ltd.

o Sonak Lanka (Pvt) Ltd.

o Mahatma Gandhi Centre

o United Dendro (Pvt) Ltd.

o Pennent Penguin Plantation (Pvt) Ltd

5.3 Bio Energy Consumers

The categories of bio energy consumers in Sri Lanka are as follows:

o Household sector

o Commercial Institutions (mostly small scale food sellers)

o Industrialists (small, medium and large)

5.4 Market Systems

5.4.1 Distribution System

The distributions systems operational in the fuel wood supply chain are shown in Fig. 6:

The following features are to be noted:

5.4.1.1 Biomass Fuel Supply Sector

o Home Garden

Households in the rural areas obtain most of their fuel wood requirements from home

gardens. The occupants of households collect their requirements themselves free of

44

charge. For this reason this part of fuel wood consumed by the households is classified as

“Non-Commercial” energy.

Home gardens provide the following types of fuel wood:

Gliricidia sticks

In home gardens Gliricidia trees are cultivated along the fence as live fences, as

support trees for vines such as black pepper or beatle leaves, as shade trees and as

fodder for cattle. Branches of these trees are periodically harvested and sold to

Gliricidia stick buyers.

Coconut Leaves

Most home gardens in the rural areas have a few coconut trees to supply at least a part

of the needs of coconuts for cooking purposes. Each coconut tree produces 1 coconut

leaf weighing 2.5 kg (dry weight) per month.

Dead Branches of Trees

In rural home gardens many variety trees are planted to provide fruits, vegetable etc.

Periodically some of the branches of these trees die. Householders harvest these dead

branches and use them as fuel wood.

o Integrated Agro-Energy SRC Plantations

These are SRC Plantations such as Gliricidia planted as inter-crop, or as support tree or

for cattle fodder. Unlike in a home garden these plantations are much larger in extent and

usually limited to one type of primary crop such as coconut. In home gardens usually a

variety of trees are planted. Branches of Gliricidia trees in these plantations are

periodically harvested. These branches are 10 mm to 50 mm in diameter. These branches

are cut to 1 meter long pieces before selling these to the fuel wood buyers. The foliage is

usually used as organic fertility material.

o Dedicated Agro-Energy SRC Plantations

These plantations are similar to the previous category of plantations, but the major

difference is that here the primary intentions is to obtain foliage and sticks of Gliricidia.

Other types of trees in these plantations, if any, are very small. These are only very few

cases of this type of dedicated agro-energy plantations at present. But with the

commissioning of new biomass based power generation projects and the commissioning

of new biomass based heat generating units in the industrial sector, this type of dedicated

agro-energy plantations are emerging.

Gliricidia wood harvested periodically from these plantations is usually contracted to be

supplied to one pre-identified buyer or end user.

45

o Traditional Wood Lots

These fuel wood plantations have been established in close proximity or as an integral part of

tea plantations to provide the fuel wood requirements for the associated tea factories. The

following fast growing fuel wood species are planted in these wood lots:

Acacia auriculiformis

Acacia decurrens

Acacia melonoxylon

Albizia lebek

Azadiracta indica

Calliandra callothyrsus

Cassia siame

Casuarina equisetifolia

Eucalyptus grandis

Eucalyptus terrticornis

Eucalyptus robusta

Gliricidia sepium

Grevillea robusta

Leuceana leucocephela

These trees are planted at a spacing of 2 meters apart. After a maturing period of about 12 to

15 years, these trees are completely felled and all the wooden components of the trees are cut

to 1 meter long pieces and transported to the storing areas of the respective tea factories. In

some instances such as Eucalyptus, the remaining stem in the ground after felling is allowed

to re-grow as second coppice crop. The productivity in the second crop is usually lower than

the first. The productivity in the subsequent coppice is very poor and not practiced.

Usually the activities in a wood lot are carried out by the workers and staff attached to the tea

factory. As such no separate monetary transactions are carried out for the activities in the

wood lot. This is taken as a part of the tea factory operation.

Felling of trees is usually carried out using handsaw and axe. Some of the factories have

recently introduced gasoline-operated chain saws. Transport from the wood lot area to the

factory premises is carried out in Tractor-Trailers.

In the case of tea production, the average consumption of fuel wood per kg of made tea is

approximately 1.78 kg (Sri Lanka Sustainable Energy Authority). For the year 2007, the

annual production of tea was 304.6 million kg. The annual fuel wood consumption in the tea

sector from these wood lots is estimated as 455,000 tonnes. The total extent of such wood

lots supplying fuel wood for the tea sector is estimated as 20,000 hectares. This accounts for

about 9% of the land area utilized for the cultivation of tea.

o Agricultural / Industrial Residues

This topic is described in details in Chapter 4. Current Sources of Bio Energy in Sri

Lanka.

From the agricultural sector the following types of residues are generated:

46

Rubber Plantations:

515,794 tonnes of fuel wood generated from the annual replanting programme of

senile rubber trees. This quantity is directly purchased by the fuel wood buyers and

sellers and sold to industrial or bulk fuel wood consumers.

Coconut fronds (leaves):

1,320,000 tonnes per annum (dry weight) of biomass is generated from the coconut

plantations. Most of this are picked up by the rural households to be used as biomass

fuel for cooking purposes.

Coconut Stem:

A total of 413,868 tonnes of coconut stem is generated as fuel wood from old old

coconut trees. These are purchased by fuel wood buyers and sellers and sold to end

users such as brick and tile manufacturers.

Cinnamon Cultivators:

The estimated quantity of cinnamon stick generated from cinnamon cultivation is

estimated as 62,333 tonnes per annum. These are purchased by fuel wood buyers and

sold for house hold consumers or commercial consumers such as bakery product

manufacturers.

Pruning from Tea Bushes:

As an agricultural cultural practice, tea bushes are periodically pruned. The woody

biomass generated from these pruning is collected by the estate workers to be used as

fuel for cooking or heating water for bathing (in the very cold climate region). This

biomass does not enter the proper market chain. The annual quantity of tea pruning is

estimated as 100,000 tonnes.

Paddy Husk:

The surplus paddy husk generated by the paddy sector to be utilized for applications

other than processing paddy is estimated as 248,336 tonnes. In the past most of the

excess paddy husk were dumped in suitable locations as wastes. However, with the

development of biomass fuels for industrial heat electricity generation, most of this

residue is now collected or purchased by biomass fuel buyers and transported and

sold to bulk consumers.

Residue from Timber Extraction and processing:

This category forms most of the residue from the industrial sector presently used as

fuel. Apart from the quantity incinerated by the industrial sector or used for recycling

47

applications, a total of 256,000 tonnes of wood wastes are generated annually. In the

past only the solid portions such as timber off-cuts were utilized for energy

generation. But in the recent past all wood wastes generated in the timber industry are

purchased by fuel wood buyers and transported to some times long distances and sold

to industrial or electricity generating institutions.

Other Auxiliary Crops

Auxiliary crops such as maize also generate biomass residues used for energy

generation. Such residues are mostly consumed by the population associated in these

cultivation as fuel for household cooking. The total quatity involved is estimated as

48,000 tonnes per year.

5.4.1.2 Biomass Fuel Buyer/ Sellers Sector

o Fuel Wood Buyer/ Processors/ Sellers

The following types of institutions / personnel play intermediate roles in the distribution

of fuel wood:

Tree Up-rooters and Sellers

These personnel under take contracts for up-rooting of senile trees such as rubber

trees from rubber estate owners or other trees such as Mango, Kadju etc. from

homesteads. The up-rooting operation involves felling of the trees, removing of the

main part of the tree below the ground level and removing all parts of the tree from

the land concerned. Usually, the contractors cut the stems and branches into 1 meter

long billets and load these into trucks and transport these to a buyer’s premises.

In some instances, the main trunk of the tree is not transported without cutting into 1

meter pieces. These are used to make planks or other components for various

structural applications.

Traditionally, an axe or hand saw is used for felling and bolting operations. Some of

the contractors are using gasoline / kerosene driven chain saws for this operation.

Cinnamon Stick Buyers/ Sellers

In cinnamon growing areas (mostly the southern coastal region of the country),

cinnamon sticks, and typically 30 mm in diameter and 1.5 meters in length are

produced as a by-product of cinnamon cultivation, after the removal of the bark from

the stems. (The bark is the main product of cinnamon cultivation). These sticks are

used by households, commercial institutions and industries as fuel wood to generate

heat. A group of individuals specialize in the purchase of these sticks from cinnamon

cultivators, transport these to fuel wood consumers and sell these sticks. Bullock carts

48

or small trucks are used for transporting these sticks. Usually the consumers of these

sticks are also located in the cinnamon growing areas of the country.

Gliricidia Stick Buyers / Sellers

With the introduction of Gliricidia as the 4th

Plantation Crop by the Ministry of

Plantation Industries and by the promotional activities of the Ministry of Science and

Technology, a number of individuals and institutions ventured into the purchase and

sale of Gliricidia sticks from Gliricidia growers. All these buyers excluding one, buys

Gliricidia sticks of 1 meter in length. The diameters of the sticks vary from 10 mm to

50 mm. In the beginning, attempt was made to make payment based on the moisture

level of the sticks. However, this procedure became very time consuming. This

method has been discontinued. The moisture level varies from 55% to 25% (wet

basis). One buyer purchases Gliricidia sticks cut to approximately 100 mm long

pieces. This form of cut pieces is suitable for use in biomass gasifiers.

The capacity of the trucks used to collect and transport vary from 1- tonne (2-wheel

tractor) to 20-tonne (40 feet-container). Prior to start of journey, these collectors

ensure that for each trip, there is enough material to fully load the truck.

Forestry / Agricultural Residue Buyers and Transporters

This category of operators specialize in the buying or simply collecting biomass fuel

at almost zero cost and transport these to the fuel consuming centers and sell the fuel

to the consumers. Types of biomass fuel handled by this group are as follows: (a)

Timber off-cuts (from saw mills) (b) Saw dust and wood shavings (also from saw

mills and furniture manufacturing units) (c) Paddy Husks (from rice mills).

Most of these collectors/ transporters make use of the forward/ return journey of

trucks operating to transport other goods. An example is the trucks travel to Cement

Factories to purchase cement. As the cement factories are located in isolated locations

in the country (Puttalam amd Trincomalee), these trucks usually travel without any

load in the forward journey. These trucks have recently resorted to collect and carry a

load of sawdust or paddy husk in their forward journey and this fuel to the Cement

Factory to be used as fuel for cement manufacture or for electricity generation.

Chipping / Preprocessing Stations

Some of the biomass buying and selling institutions have introduced chipping/-

preprocessing stations. In these stations, fuel wood is received or purchased and

processed into chips or cut to smaller sizes. Chipping machines are manually fed. The

machines are electrically driven. Chipped wood is mechanically or pneumatically

loaded into trucks and transported to the destination. If necessary, the chipped wood

is weighed. The electrical energy consumption for chipping is measured to be 7 kWh

per tonne of wood.

49

Purchased wood is some times cut into 100 mm long pieces to match the need of

biomass gasifiers.

5.4.1.3 Biomass Fuel Consuming Sectors

o Household Sector

Most rural households in Sri Lanka are engaged directly or indirectly in agriculture. These

households residing in the agricultural areas collect their fuel wood requirements from

nearby lands free of charge. In the urban and semi-urban areas, fuel wood is available for sale

in small bundles ready for use in households. Fuel wood suppliers purchase fuel wood in

bulk mostly from rubber wood suppliers and chop the wood into sizes suitable for household

cooking and distribute such wood to wayside shops. These are transported from such “Fuel

Wood Chopping Centres” (In the local language these centers are called “Thara Maduwa”).

Improved versions of cooking stoves are being developed and introduced into the markets.

However the penetration is very small. To match the need of the “Wood Gas Stoves”

introduced by the National Engineering Research and Development Centre, theses pieces are

further cut to smaller pieces of 25 mm in lengths. These pieces are made into 1 kg pack and

marketed.

For transport purposes following types of vehicles are used: Bullock carts, two-wheel

tractors, small trucks (1 to 2-tonne capacity) and larger trucks 5-tonne capacity. Households

buy their requirements from the wayside shops in small quantities, approximately in 5 kg-

bundles. These are sold at prices varying from Rs. 6 per kg to Rs. 12 per kg in some areas

where there is a shortage of fuel wood (notably in the Eastern Province). Even at the higher

end of this scale, biomass fuel is very much cheaper than LPG. Even after compensating for

the low efficiency of biomass stoves compared to LPG stoves, on an equivalent energy basis,

LPG is 2.6 times more expensive than fuel wood.

60 to 80% of the population is living in areas classified as “Rural” sector. However over 85%

of the households in Sri Lanka are already provided with grid-connected electricity. Another

10 to 12% will be provided with this facility in the next few years. Even the balance 3% will

be provided with off-grid electricity. Most of the urban areas are provided with pipe-borne

water. All most all other households have either localized wells or have access to nearby pipe

water. Only a small fraction of the population needs to transport water. Land–line

telecommunication or mobile telecommunication facility is available right across the country.

Petroleum based fuels are readily available in all parts of the country. The vendors have

aggressively promoted liquid Petroleum Gas (LPG) to all parts of the country.

With the National per capita income doubling in the last 5 to 6 years from US$ 1000 to over

US$ 2000 at present, the national poverty level too has declined from over 27% in 2000 to

15% in 2007. However, in some selected areas such as the estate sector, this level is in the

region of 27 to 34%. With the economy growing at around 8% per annum, and the per capita

income reaching the target of US$ 4000, the poverty level is expected to reduce drastically.

50

A survey carried out by Practical action has revealed that the choice of fuels used for cooking

in the household is very much linked to the income level. The more affluent households

switch to LPG as soon as they could afford this commodity. LPG is an elegant fuel.

Practically with no smoke and the ability to control the heat out put of the stove at desired

levels almost instantaneously. Fuel wood, on the other hand is a cumbersome fuel when it

comes to small scale and non-steady applications. Even the most advance fuel wood cooking

stove emits smoke at some stage. Hence, in the future, we could expect the share of fuel

wood used in the households continue to decline in line with the economic growth of the

country. This share of decline is expected to be absorbed by the LPG market.

The present use of biomass fuel in the household sector is estimated as 72.5% (Leelaratne,

2005) of the total biomass consumption on this basis a total of 9 million tones of biomass

fuels are used by the household sector (for the year 2007).

Research is being done to promote the use of biogas and liquid bio fuels such as bio ethanol

for household cooking. However, the progress made in this sector is very slow.

Hence for future planning of bio energy market the house sector will play a negative role.

The present consumption, particularly the sector in the urban and semi-urban areas presently

purchasing fuel wood for household cooking will gradually decline.

o Commercial Sector

This sector purchases wood for the production food on a larger scale than each household.

The types of stoves and cooking appliances used are much larger than the ones used by the

household sector. Hence the fuel wood pieces are also slightly larger. Unlike the household

sector, the fuel wood sellers usually transport the fuel wood to the place of consumption. For

transporting of wood to these places handcarts, two-wheel tractors or small trucks are used.

Usually fuel wood is sold in “One Hundred Weight” basis. This is essentially equivalent to

50 kg in weight.

o Industrial Sector

This is the most important sector in respect of bio energy development in Sri Lanka. As per

the 2007 data provided by the Sustainable Energy Authority, the industrial sector consumed

350,660 tonnes of petroleum products and 3,963,368 tonnes of biomass fuels. In energy

content the petroleum fuels accounted for 19% and biomass 89% of the thermal energy needs

of the industrial sector. According to the data provided by the Ceylon Petroleum Corporation

for the year 2009, the industrial sector has consumed 173,908,794 liters of furnace oil.

Accurate data on the consumption of other petroleum products such as dieseline, LPG etc. by

the industrial sector are not available. However, this consumption, compared with the

consumption of furnace oil is considered to be insignificant. It appears the consumption of

petroleum-based fuels by the industrial sector has declined in the past2 years. This may be

attributed to the impact from global recession on the local industry manufacturing goods for

exports such as rubber products.

51

Based on the data provided by the Ceylon Petroleum Corporation for the year 2009, there is a

large potential to expand the use of bio mass fuel in the industrial sector for the generation of

process heat. On the initiatives of the Ministry of Technology and Research and the Bio

Energy Association of Sri Lanka, a number of industries have already switched from

petroleum fuel (mainly furnace oil) to biomass fuels. Total potential in this category is

175,000 tonnes of petroleum fuels or 700,000 tonnes of fuels wood. A reasonable target for

the next 5 years would be 50% of the above target.

The industrial consumers purchase their requirements of biomass fuels from biomass fuel

suppliers. However, some of the large consumers have established their own organizational

arrangements to purchase biomass fuels. Usually, these institutions that have organized such

capability also sell biomass fuels to other industrial consumers. Industries requiring biomass

fuels are not limited to purchasing their requirements from one single biomass fuel supplier.

Instead they are opting to purchase their requirements from any supplier who brings fuel to

their place of consumption.

Modern industries with wood chip combustion systems, purchase chipped wood from wood

chip suppliers.

o Electricity Generation Sector

This is a new sector emerging in Sri Lanka. As shown in Table 5 and Table 6 there are a few

biomass based electricity-generating projects already commissioned and operating and many

other projects are in various stages of development.

All fuel wood based biomass generation projects in Sri Lanka are depending on “Out-

Grower” model of obtaining their fuel wood. However, most of these project developers are

in the process of establishing dedicated SRC plantations. These electricity generators are

also planning to establish a few satellites chipping and storing stations to ensure regular

supply of fuel.

Combustion Systems in the Industrial Sector

(a) Traditional Systems

In the traditional systems, feeding to the furnace is done manually. These furnaces are

provided with a pair of front doors. These doors are opened and kept in the open position

while the feeding operation is in progress. Although furnace operators have been advised to

load the furnace in small amounts of wood at a time, these operators tend to fill the furnaces

as much as possible at a time. After a batch of fuel wood is loaded into the furnace, the front

doors are closed. This form of feeding large quantities of wood at a time into the furnace

leads to poor combustion efficiency resulting in soot and smoke. These in turn lowers heat

transfer thus compounding the issue. All these lead to higher consumption fuel wood.

52

Manual feeding of fuel wood into the furnaces is a very strenuous task. These workers are

exposed to smoke and heat. Lifting and throwing chunks of wood for 10 hours a day and 6

days a week is a tough task. Workers do not like to perform this task.

(b) Modern Systems

Modern biomass combustion systems introduced in some of the industries use chipped

wood instead of large chunks of wood. Wood is usually chipped in a central location and

transported to the consuming site in trucks. The combustions systems using wood chips

utilize a mechanized feeding device. These systems are very elegant and regulate the

combustion air depending on the feeding rate. Combustion air is admitted to the combustion

chamber at appropriate locations to ensure complete combustion and to minimize the

admission of excess air into the combustion chamber. In some systems, the combustion air is

preheated using heat recovered from the flue gas. To conform to the emission requirements

of the Central Environmental Authority, these systems also provide cyclone separators and

water scrubbers to arrest particulates in the flue gas. These modern combustion systems are

much more efficient and consume significantly less fuel wood.

(c ) Biomass Gasifier Systems

In the year 2000, the Ministry of Science and Technology imported a 600 kWth. Biomass

Gasifier from India and installed it in an industrial establishment to demonstrate the

feasibility of converting a petroleum oil fired boiler to biomass firing. Following this

successful demonstration, many biomass gasifiers have been installed in the industrial sector

Sri Lanka. The local engineering company responsible for these installations is now

constructing such gasifiers locally under a license from the Indian manufacturer.

5.5 Chipped Wood Market

As explained in the previous section, a number of private sector institutions have purchased

biomass energy conversion systems that deploy chipped wood or granular form of biomass

the fuel. These systems are more energy efficient and produce much less environment

damage. Hence these systems should be promoted. However, for the private sector to invest

in such systems they must be confident that the correct type of fuel will be readily available

in the country. Hence it is the duty of the state to promote the ready availability of chipped

wood in the country.

As per data provided by the Ceylon Petroleum Corporation, the total consumption of furnace

oil by the industrial sector in the year 2009 is over 175,000 tonnes. All these institutions have

the potential to install biomass-based heat generating equipment A list of these institutions is

given in Appendix 1. These institutions should be advised to install chipped wood based

combustion system along with modern controls to operate at maximum efficiency and

minimum environmental impacts

53

Fig. 10: Distribution Systems in the Supply Chain of Fuel Wood

Home

Garden

Integrated

Agro-Energy

SRC Plantations

Dedicated

Agro-Energy

SRC Plantations

Traditional

Wood Lots

Agricultural /

Industrial

Residues

Forestry

Residues

Households

Sector

Commercial

Sector

Industrial Sector

Chipping /Pre-Processing Stations

Biomass Fuel Buyer / Processor/ Seller

Electricity Generation

Sector

T

T

T

T

T T T T

T

T

T T

T

T = Transport

54

5.6 Levels of Trade and Added Value in Biomass Energy Market

The industrial sector and the electricity generation sectors are the most promising sectors for the

development bio Energy in Sri Lanka. At present bio energy for the electricity-generating sector

is in an early stage. How ever, the industrial sector has been in operation for over a century and

has been using bio energy as the major energy source.

As explained earlier, the tea sector has been obtaining their biomass fuel requirements from

dedicated fuel wood plantations known as “Wood Lots”. However, with the introduction of Short

Rotation SRC plantation concept, there is consideration to switch to the modern systems.

The merits of the modern SRC plantations over the traditional system of Wood Lots are given in

Table 12 below:

Issue Traditional Modern

Cash-Flow Remains negative for the

first 12 years, until the first

harvest.

Becomes positive in 15 months time.

Economic

viability

Due to the long gestation

period, when the cash flow is

discounted, the economic

viability is very marginal.

Due to the very short time interval from

planting to the first harvest and the regular

inflow of cash afterwards, the operation is

economically very attractive.

Fuel

preparation

Needs to be chopped to

appropriate size using

extensive manual labour and

dried before feeding to fire

place.

Diameter of fuel wood appropriate for

combustion. May need cutting lengthwise.

This requires very little labour. Being smaller

in diameter, natural drying is adequate.

Soil

protection

Harvesting and removal of

large logs cause considerable

soil erosion. Needs heavy

weeding in the initial stages

until a closed canopy is

formed.

Due to the very high density planting, a closed

canopy is formed in a short time. As only the

mature branches are harvested, a closed

canopy is permanently maintained. The closed

canopy gives total protection against soil

erosion. Harvesting branches less than 50 mm

does not disturb the soil.

Fertilizer

requirements

As non-nitrogen fixing trees

(such as eucalyptus) are

used, fertilizer application is

essential.

Only nitrogen fixing trees are chosen. Also the

leaves and ash from combustion are returned to

the soil. Fertilizer application is usually

unnecessary.

Intercropping

possibility

Feasible only in the initial

stages.

With proper harvesting regime adjustments, it

is possible to intercrop on annual basis. Leaves

could also be used as fodder.

Table 12: Comparison of traditional and modern methods of wood production

55

In fact some of the tea factories have already established SRC plantations and are obtaining their

requirements of fuel wood from such plantations.

5.6.1 Value Addition

The list of activities involved in the cultivation and use of bio energy is given below:

1. Bio energy producer cultivates and produce the biomass fuel either as the primary product

(SRC plantation) or as a by-product associated with other products (cinnamon, rubber, paddy

husk).

2. Biomass producer harvests the fuel and transports it to a convenient place for a biomass fuel

buyer to purchase the fuel.

3. Biomass fuel buyer purchases the fuel and loads it to a truck.

4. Biomass fuel is transported to an intermediate station if necessary for preprocessing

(chipping or cutting into smaller pieces).

5. At the preprocessing station wood is unloaded and processed. Processed biomass fuel is

loaded into trucks and dispatched.

6. Processed biomass fuel is received, if necessary weighed and unloaded.

Details obtained from 6 biomass buyer/ sellers are given in Table 14.

The following points should be noted:

The price paid to biomass producers at source varies from Rs. 0.75 per kg to Rs. 2.90. The

variation depends on (a) the place of purchase and (b) the form of the biomass.

The price of fuel wood sold to consumers varies from Rs. 3.20 per kg to Rs. 7.37 per kg.

Moisture content plays an important part on the economic viability of the use of biomass

fuels. Loss in weight expressed as a percentage of the initial weight due to moisture loss is

given in Table 13.

The present prices prevailing in the country depends very much on the price paid for furnace

oil. This is due to the fact some of the industrialists have switched from furnace oil to

biomass fuels. If the furnace oil price is decreased, they are willing to pay only a reduced

price for the purchase of biomass fuel.

Transport cost varies from Rs. 9 to Rs. 12 per tonne-km. For 100 km distance this would be

Rs. 1200 per tonne. If wood is purchased at Rs. 3000 per tonne, the transport will increase

the cost by 40% of the initial purchased cost.

Initial Moisture (%)

60 50 40 30 20 10 0

Fin

al M

ois

ture

(%

) 60 0.00

50 20.00 0.00

40 33.33 16.67 0.00

30 42.86 28.57 14.29 0.00

20 50.00 37.50 25.00 12.50 0.00

10 55.56 44.44 33.33 22.22 11.11 0.00

0 60.00 50.00 40.00 30.00 20.00 10.00 0.00

Table 13: Loss in weight as % of initial weight due to change in moisture content.

56

No. Of Fuel wood Supplier

Purchase Price At Farm Gate Rs.

Purchasing Unit kg/cu.m.

Moisture and form when Purchased Wb %

Selling Price At Factory Gate Rs.

Selling Unit (kg) or cu.m

Moisture When Selling %

Primary Transport Cost Rs./kg

Secondary Transport Cost Rs. /tkm

Average Transport Distance km

Quantity Purchased Per Year t/y

No. of Factories Servicing

Processing Cost Rs./Kg Finished Product

Remarks

1 2.90+ 0.10 to Coop

Kg Bundled onto 10 kg -Loaded into Lorry

m.c. Not Considered. 1 m long sticks

Only sells at farm gate

2 1.75 – 2.00

Kg-Hand held spring balance

45 to 50 1 m long sticks

6.80 Kg. Cut to 4” to 6” pieces

20% 0.50 for 10 km

0.6 to 0.65 cts per kg for 80 km

8 to 80 km

720 2 2.50

450-500 Cu. m.

3 2.20 Kg Min. dia. 1”

1 meter long pieces. 40-55% mc

3.20 In addition agent is paid Rs. 100 per tonne

kg 35 to 40 Rs. 9/tonne –km (Rs. 9000 for 10 tonne lorry for 100 km)

100 15,000 t/y Planting cost: Rs. 12/ tree (@Rs. 500 per md)

Has established 20 ac of G plantation 200,000 G trees

4 0.75 Kg 0.5 to 2”dia. 1 m long pieces

40-55% 100 Expected: 50,000 t/y

Proposed: 1

For a 4 MW power Plant.

5 3.75 0.5 to 2” dia. Kg.

40-50% Self use

100 73,000t/y 3 15% Glirici 15% Sawdust /wood shavings 70% rubber

6 1.63 kg 60% 7.37 kg 20% Rs12/tkm 30 420t/y 8

Table 14: Details of Biomass Buying and Transporting Operations

57

6. MARKET CONSTRAINTS AND OPPORTUNITIES

6.1 Market Opportunities

6.1.1 Financial Advantage

The financial advantage of using biomass fuels for the generation of heat or electricity depends

primarily on the cost of generation of heat using biomass fuel compared with the traditional fuels

like furnace oil or coal. Table 15 gives the cost of generating 1MJ of useful heat with the

following options:

(a) Furnace oil at a price of Rs. 42 per kg. this price includes a nearly 50% subsidy granted

by the Ceylon Petroleum Corporation.

(b) Furnace oil at a price of Rs. 80 per kg. This will be the actual price if it is marketed

without any subsidy. It is reported that the Government has decided to remove the

subsidy soon.

(c) Coal at a price of Rs. 13.00 per kg. This is the price being paid by Sri Lanka users of

imported coal. The Government has waived the usual import duties chargeable for coal.

If this duty is imposed, the price will be higher.

(d) Wood at a market price of Rs. 4.00 per. This is slightly higher than the prevailing prices.

Calorific values and efficiencies used are given in the table. Even if the price of biomass fuels

increases by 50% from Rs. 4 to Rs. 6 per kg, biomass energy remains very competitive.

Fuel

Price per

kg

Rs./kg

Calorific

Value

kJ/kg

Efficiency of

Combustion (%)

Cost of Useful

Energy

(Rs./MJ)

Furnace Oil

(With Subsidy) 42 42,000 80 1.25

Furnace Oil

(Without

Subsidy) 80 42,000 80 2.38

Coal 13 26,000 70 0.71

Biomass 4 16,000 60 0.42

Biomass Future 6 16,000 60 0.84

Table 15: Cost of generating 1 MJ of useful heat

Sustainably produced biomass fuel is an appropriate fuel for industrial heat electricity generation

purposes. In Sri Lankan context, it is much cheaper than fossil fuels.

Transport cost:

The cost of Rs. 4 per kg for biomass given in Table 12 is the prevailing price including

transport. If additional transport cost is to be included, it may be assumed to be Rs. 12 per tonne-

kilometer as experienced by fuel wood transporters.

58

6.1.2 Opportunities in the Industrial Sector

In the year 2007, the industrial sector in Sri Lanka consumed a total of 350,000 tonnes of

petroleum-based fuel for industrial heat generation. I addition to this sector also consumed

1,506,000 tone-equivalent of biomass fuels for the same purpose. As shown in Table 12 the cost

of generation of heat using biomass is very much lower than that of generation of the same

quantity of heat either by furnace oil or by coal.

Based on a campaign carried by the Ministry of Science and Technology and the Bio Energy

Association of Sri Lanka, some of the industries, which were using furnace oil, have now

switched to biomass fuels. If the level of consumption of petroleum based fuels by the industrial

sector is continued in the future there is scope to replace at least 150,000 tonnes of petroleum-

based fuels with biomass fuels. To achieve this target, a total of 600,000 tonnes of biomass has to

be additionally produced. This additional amount is about 3% of the present national

consumption of biomass-based fuels. This additional amount also represents an increase of 40 %

of the biomass fuels consumed by the industrial sector at present.

If the government removes the subsidy being granted for furnace oil, this target is achievable.

The list of industries presently consuming furnace oil, sorted out according to the level of

consumption is given in Appendix 1.

Some of the installations in the industrial sector could be cogeneration plant generating heat and

power simultaneously. These plants are much more efficient than any other system. Serious

consideration should be given for such systems.

6.1.3 Opportunities in the Electricity Generation Sector

The present daily generation of electricity in Sri Lanka is 28 GWh per day. According to

Government forecast, the electricity demand would increase by 8% per annum. The present

generation and the expected future daily demands are shown in Table 16.

Year

Expected

Daily

Demand

GWh/d

5% of the

Demand

Wood

requirements

(t/y)

Plantation

Land

ha

2010 28 1.40 2100000 70000

2011 30 1.51 2268000 75600

2012 33 1.63 2449440 81648

2013 35 1.76 2645395 88180

2014 38 1.90 2857027 95234

2015 41 2.06 3085589 102853

2016 44 2.22 3332436 111081

Table 16: Wood and Land Requirements to meet 5% of the Electricity Generation

59

According to the Government policy on Renewable Energy at least 10% of the electricity

generated are to be met from Non-Conventional Energy Resources such as mini-hydro, biomass,

wind etc. Assuming that 50% of this share of energy to be met through biomass based electricity,

the amount of biomass required and the corresponding extent of land required achieving this

target.

As regard to the case of generating electricity using biomass fuels, the Government has agreed to

pay a price of Rs. 20.70 per kWh for biomass based electricity generation. (Please see Table 1).

The Bio Energy Association is of the opinion that this price is very reasonable. More over, the

Government has agreed to increase the above tariff accordingly, if the cost electricity generation

based on renewable energy increases.

6.1.4 Co-Firing Potential

A 300 MW pulverized coal fired power plant has been installed in the West Coast of Sri Lanka.

Soon this plant will be commissioned and will operate as a base load power plant. In the near

future, an additional 600 MW of power plants will be installed adjacent to the already installed

power plant. Another 1000 MW Coal fired power plant is being contemplated in the East cost of

Sri Lanka.

A proposal has been made to explore the feasibility of using biomass as a supplementary fuel

along with coal in these power plants. Three options have been suggested:

(a) Chip and grind wood in a new mill to meet the requirements of these boilers and blend

such wood fuel along with pulverized coal in the existing boilers. Experts in such

conversion have indicated that up to 30% of energy input could be met in this manner.

No modifications are need to the boiler system.

(b) Install a set of suitable biomass gaifiers and generate producer gas using biomass fuels.

Replace some of the coal burners with producer gas burners and use producer gas as a

supplementary fuel. It may be possible to achieve 60% fuel substitution.

(c) Install a set of new biomass boilers to generate steam at the same temperature and

pressure as the steam generated by the coal fired boiler. The steam thus generated to be

sent to a header to couple the steam supply from the coal boiler and the biomass boilers.

If this proposal is accepted, it will be possible to generate a much larger percentage of our

national electrical energy requirements.

6.1.5 Export Potential

Sri Lanka at present imports large quantity of petroleum oil, LPG and very soon will import

large quantities coal to meet the national energy demand. To ensure some degree of energy

security, the Government is providing. Many subsidies to promote indigenous resources based

energy generation. Hence it will be counter productive to embark on an export venture for our

biomass fuels. However, if the prices offered for our biomass fuels are adequately high, it may

be possible to justify the export of our biomass fuels with high value addition.

60

In the past years, the international trade of various bio energy commodities has grown rapidly,

yet this growth is also hampered by a number of barriers. There are three internationally traded

bio energy commodities: (a) bioethanol, (b) biodiesel and (c ) wood pellets. Logistics are seen

as a major obstacle, for wood pellets. Development of technical standards was deemed more as

an opportunity than as a barrier for all three commodities.. Most important drivers for

international biomass trade were high (and strongly fluctuating) oil prices, and strong global

policies on (a) greenhouse gas emission reductions, (b) the use of biomass for heating and

electricity. An overview of global production and trade of the major biomass commodities in

2008 is shown in Table 17.

As a first step, import tariffs for biofuels could be reduced or abolished, linked to multi-national

trade agreements and harmonization (including provisions on technical standards and

sustainability requirements), which might provide the necessary preconditions for further,

sustained growth of international bio energy trade.

Bioethanol Biodiesel Wood pellets

Global

production in

2008 (tonnes)

52.9 10.6 11.5

Global net trade

in 2008 (tonnes)

3.72 2.9 Approx. 4

Main exporters Brazil United States,

Argentina, Indonesia,

Malaysia

Canada, USA, Baltic

countries, Finland

Russia

Main importers USA, Japan,

European Union

European Union Belgium, Netherlands,

Sweden, Italy

Table17 : Overview of global production and trade of the major biomass commodities in 2008

Wood pellets

Wood pellets are a type of wood fuel generally made from compacted sawdust. They are usually

produced as a byproduct of saw milling or other wood transformation activities. In past years,

increasingly also round wood and wood chips are used as feedstock. Wood pellets typically have

a low moisture content (below 10%) and a high energy density compared to many other solid

biomass types. These properties allow efficient storage and long-distance transport. Wood pellets

can be used on various scales, ranging to combustion in stoves for heating of households to co-

firing for electricity production in plants with over 100 MW electrical capacity.

Production mainly takes place in Europe and North America. As a rough estimate, approximately

630 pellet plants produced about 8 million tonnes of pellets in 30 European countries for the year

2008. The average Europe utilization rate of pellet production capacity in 2008 was about 54%.

The 2009 pellets production in Europe is estimated at about 8.3 million tonnes (Sikkema et al.,

2009).

61

The North American production has grown from 1.1 million tonnes in 2003 to 3.2 million tonnes

in 2008. Wood pellet production in the United States in 2008 amounted to 1.8 million tonnes,

which represented 66% of capacity. In Canada, the estimated production was 1.4 million tonnes

(81% of capacity). Indications are that both production capacity and actual production have

increased during 2009, especially in the US and several European countries. This production

volume has been built up within the last decade. Before 1998, pellets were only used on a

marginal scale, mainly in Scandinavian countries and Austria.

Consumption is high in many EU countries and the US. Following Sikkema et al. (2009), the

European consumption for 2009 is expected to be about 8.5 million tonnes. Countries having a

high consumption level are Sweden, Denmark, the Netherlands, Belgium, Germany and Italy.

Sweden is by far the largest user of pellets (1.8 million tonnes), whereas the other countries cited

have estimated consumption levels around one million tonnes. End-uses can vary widely: from

small-scale residential heating systems (heating single houses), to medium-scale district heating

and CHP systems to co-firing in large-scale coal power plants. Use for domestic heating is

especially common in Austria, Italy, Germany and the US. Use of pellets for mainly co-firing is

currently occurring in the Netherlands, Belgium (Marchal et al., 2009; Ryckmans et al., 2006)

and the UK. In Sweden, Finland and Denmark, pellets are used on all scales.

Global trade has been growing exponentially for the past ten years. The first intercontinental

wood pellet trade has been reported in 1998, for a shipment from British Columbia (Canada) to

Sweden. Since then, Canada has been a major exporter of wood pellets, both to Europe

(especially Sweden, the Netherlands and Belgium), but also to the US. In recent years, the US

has also started to export wood pellets to Europe, and Canadian producers have started to export

to Japan. For 2007, it is estimated that about 495,000 tonnes were exported to the US (primarily

by train), 740,000 tonnes were shipped from Canadian producers to European consumers,

another 110,000 tonnes to Japan (Bradley et al. 2009). Regarding European trade, in 2009, total

imports of wood pellets by European countries were estimated to be about 3.4 million tonnes, of

which about half of it can be assumed to be intra-EU trade. Total export is estimated at 2.7

million tonnes, predominantly intra –EU trade.

Large pellet markets (larger than 500,000 tonnes) can be found in Austria, Belgium, Denmark,

Germany, Italy, the Netherlands, Russia and Sweden (Sikkema et al., 2009). Total 2009 export is

estimated at 2.7 million tonnes, mainly intra trade. Some large markets, such as Germany and

Austria, are largely self-sufficient, other markets depend on the import of wood pellets, like the

Netherlands, Belgium and Denmark. Rotterdam is one of the major hubs for imported pellets,

St.Petersburg and Riga those for export.

Main trade routes of European pellet volumes are from North America to the Netherlands and

Belgium, having average overseas shipments of 20,000 to 30,000 tonnes per freight, and from

Baltic States and Russia to Scandinavia by coasters, having average loads from 4,000 to 6,000

tonnes There are also important route by truck (average loads: 24 tonnes) from Austria to Italy

(Sikkema et al., 2009).

62

Unfortunately, there is not (yet) a dedicated code for wood pellets in the Harmonized System

Commodity Description and Coding System (HS). They are generally traded under HS code

4401300000 (440130 Sawdust and wood waste and scrap, whether or not agglomerated in logs,

briquettes, pellets or similar forms), most frequently under 44013090 (wood waste, non

sawdust). However, since the 1st of January 2009, official export and import figures on pellets are

published by Eurostat using the CN product code “44.01.3020”, defined as “sawdust and wood

waste and scrap, agglomerated in pellets” (Sikkema et al., 2009).

6.2 Market Constraints

6.2.1 Negative Incentive

As indicated in Table 12, the cost of generation of heat energy using biomass fuel in Sri Lanka is

lower than any other fuel. Accordingly, the Ministry of Science and Technology and the Bio

Energy Association of Sri Lanka carried out a campaign to convert some of the industries that

have been using furnace oil to switch to biomass fuel. A number of factories made such change

over. List of some of these factories are given below:

Industrial Clothing, Seethwake Industrial Zone

Lalan Rubbers (Pvt) Ltd., Seethawake and Biyagama.

MGT Knitting Factory, Horana

Unilevers (Pvt) Ltd., Colombo

Dipped Products, Kottawa, and Weliweriya

However, from 2008 onwards, the Ceylon Petroleum Corporation (CPC) introduced a subsidy

scheme for furnace oil purchased by industrial consumers. Since 2008 CPC has been selling

furnace oil nearly at half the cost of importing it. This reduction in price has made the above list

of companies reduce the price of biomass fuel significantly. This in turn resulted in Gliricidia

cultivators getting a much lower price for their produce. This negative incentive has resulted in

inadequate quantities of biomass fuels available for new industries that wish to switch from

petroleum fuels to biomass fuels.

On the initiative of the Ministry of Science and Technology, the Government has now agreed to

remove this subsidy soon. If this is done many industries presently consuming furnace oil will

switch to biomass fuels.

6.2.2 Inaccessibility to land to cultivate fuel wood

In order for the industrialists to switch from petroleum fuels to biomass fuels, there must be

adequate biomass fuels in the market. If a price is offered, many land owners who have land

suitable for Gliricidia cultivation would cultivate Gliricidia.

Although vast extent of land belonging to the state in Sri Lanka remains under utilized, access to

these lands to establish agro-energy plantations have been denied. As per report published by the

former Director of Land Use Policy Planning Division (Mr. J Jayasinghe),Prof. Percy Silva and

63

Prof. Mathuma Bandara an estimated 1,600,000 hectares of land could be converted into agro-

energy plantations. But these lands still remain under utilized. Fig.10.

A number of fuel wood suppliers are willing to establish agro-energy plantations in such under

utilized lands. If some kind of arrangements is made to convert these lands into Gliricidia

plantations, the following triple problems could be addressed:

o Increase in the availability of cattle fodder to increase milk production.

o Increase in organic fertilizer production from animal dung

o Increase in fuel wood supply to replace imported fossil fuels.

Fig. 11: Locations of Scrub Lands

( c) In access to funds for the establishment of Agro-energy plantations

Some of the fuel wood suppliers have been able to gain access to some private lands for the

establishment of Agro-energy plantations. But they have not been able to raise the finances

needed to convert these lands. The primary cause of this difficulty is that although access to

lands has been gained, there aren’t any valid documents to support such access. Hence financial

institutions are reluctant to release funds for this activity. It is essential that a suitable fund be

made available for this purpose. Such funds should be accessible to developers who wish to

engage in this activity.

(d ) Lack of Government Drive

Although the Government has declared Gliricidia as the 4th

Plantation crop, there had been no

drive by any of the Ministries that have access to lands. Many state institutions are in possession

of many thousands of acres of land that could be inter planted with Gliricidia to increase

productivity and to obtain other economic benefits. It is essential that the Government should

establish an institution with its sole function as the development of bio energy, including the

establishment Gliricidia plantations in all state owned lands suitable for such cultivation and to

64

provide necessary incentives to the private sector to engage in the establishment of such

plantations in private lands.

6.2.3 Price Linkages to Petroleum Prices

In the past the price of fuel wood had been linked to the price of furnace oil and diesoline. These

variations have been arbitrary and unpredictable. In order for fuel wood cultivators and fuel

wood consumers arrive at long-term contracts, it is desirable to establish a formula linking the

price of fuel wood with those of furnace oil and dieseline. A suggested formula based on 80%

weightage on furnace oil 20% weightage on dieseline is given below:

Wn = new price of wood (Rs./ kg)

Wo = old price of wood (Rs./ kg)

Fn = new price of furnace oil(Rs./ l)

Fo = old price of furnace oil(Rs./ l)

Dn = new price of dieseline (Rs./ l)

Do = old price of dieseline (Rs./ l)

The proposed formula is: Wn = Wo X (0.8 X Fn/Fo + 0.2 X Dn/Do)

7. ECONOMIC AND ENVIRONMENTAL IMPACTS OF THE BIO ENERGY SECTOR

In order to discuss the economic and environmental issues, it is assumed that 1.6 million hectares

of Scrub Land identified in this country will be converted into Agro-Energy plantations.

7.1 Conservation of Foreign Exchange

The 1.6 million hectares of Agro-energy SRC plantations would generate 40 million tonnes of

wood equivalent to 10 million tonnes of oil. At the present (January 2011) price of US$ 95 per

bbl of crude oil this is valued as US$ 7,767 million per annum.

7.2 Local Employment

The following employment opportunities will be created:

7.2.1 Employment in establishing plantations

The estimated worker-days needed to establish 1.6 million hectares of Agro-energy

plantation is estimated as 256 million worker –days. This works out to providing

employment for 160,000 workers for a period of 5 years.

7.2.2 Employment in harvesting of branches

The 40 million tonnes of wood produced annually would require 100,000 workers

deployed on a permanent basis to harvest and stack the wood in the plantations.

65

7.2.3 Employment in Transporting and Pre-Processing

The number of workers required to transport and pre process 40 million tonnes of

wood are estimated as 9,000 workmen on permanent basis.

7.2.4 Employment in the Energy Conversion Sector

40 million tonnes of wood generated from the 1.6 million hectares of land is adequate

to generate 4000 MW of power on a continuous basis. This would require 40,000

workers on permanent basis.

7.3 Production of Cattle Fodder for Milk Production

. 1.6 million hectares of agro-energy plantations will be able to generate 6 million tonnes

dry cattle fodder valued at Rs. 60 million.

7.4 Production of Organic Fertilizer

The liquid effluent from cattle deploying the foliage from each hectare of agro-energy

plantation is equivalent to 1 tonnes of urea valued at Rs. 45,000. Hence the total value of

the 1.6 million hectares of plantations estimated as Rs. 72 billion per annum.

7.5 Increase in Food Production

The establishment of agro-energy plantations will provide opportunities for the

establishment of cash food crops as auxiliary crops under the alley cropping system. The

extent to which this could be practiced depends on Government policies and drives.

7.6 Reversing Land Degradation

The 1.6 million hectares of scrubland in this have been created by unsustainable land

practices deployed. The establishment of agro-energy plantations would reverse this

process and re-establish the greenness prevailed prior to degradation.

7.7 Greenhouse Gas (GHG) Emission Reduction

As sustainable biomass is carbon neutral, the use of bio energy would mitigate the

equitant emissions from fossil fuels. The 40 million tonnes pf wood equivalent to

20 million tonnes of coal would off set 58 million tonnes of CO2. This should be valued

at US$ 15 per tonne of CO2. Hence this has a value of US$ 885 million.

7.8 Local Emission Reductions

As wood has negligible amount of sulphur and the combustion of wood produces

insignificant quantities of NOX, these emissions that would have been generated from an

equivalent quantities of coal would have been avoided.

66

7.9 Energy Security

Dependence on imported fossil fuels compromises the countries energy security. The

present rate of expansion of coal utilization in countries such as China, India, Brazil,

Indonesia etc. is expected to create an acute shortage of coal in the world market.Hence

coal based electricity generation plan in Sri Lanka is detrimental to the national energy

security. On the other hand the use of indigenous biomass for energy production would

strengthen energy security in the country.

7.10 Electrification of Remote Villages

The Government of Sri Lanka has embarked on a household electrification programme to

provide electricity to all households in the country. It is estimated that 95% of the

households will be connected to the national grid soon. Already 85% have been

connected. The balance 5% of the households, which are not going to be connected to the

grid, will be provided with off-grid electricity. Remote villages in the dry zone could be

provided with electricity using bio energy.

7.11 Cleaner Cooking Fuels for the Household Sector

Development of bio ethanol or biogas would enable the households to use an indigenous

fuel that is totally free of smoke. This will eliminate the many health hazards experienced

by the household communities presently using wood as the fuel for cooking.

7.12 Introduction of New Technology

The expansion of the bio energy programme in the country will introduce many new

technologies, which have spin-off benefits. Some of these technologies are: Gasification

for high temperature applications, biogas based fuel cells, adsorption based methane

storage etc.

8. ACTION PLAN

Following actions needed for the development of bio energy sector in Sri Lanka are suggested:

Establishment of a Government Institution with the sole task of developing bio energy in

Sri Lanka.

.Remove the subsidy granted for industrial consumers of furnace oil.

. Develop a National Approach for Development of Bio energy in the country based on

its potential and the national priority in the energy sector. As an indigenous resource

which has a tremendous potential to replace imported fossil fuel particularly for the

thermal energy applications need to be given priority as a national policy

67

The current incentive available for fuel planting covers only intercropping of Gliricidia in

Coconut plantations. No other incentive scheme is available for establishment of energy

plantations elsewhere or plant any other suitable fuel wood species. An effective

incentive scheme should be introduced to encourage establishment of energy plantations

in suitable locations

The current funding availability for R&D is highly inadequate. To resolve this issue,

R&D activities on bio energy should be given priority in allocating funds and R&D

organizations should go beyond donor supported project level assistance. Such

programmes should be properly institutionalized.

Suitable lands for establishment of energy plantations should be identified through land

resource assessments and preparation of land inventories for which unused lands

available with government institutions or private organizations need to be identified.

Suitable institutional arrangement and land tenure arrangement are prerequisites for this

process

Despite many attempts for the promotion of dendro power projects, high initial cost, high

risk involved, resource supply issues, past experience of poor recovery of loans, and lack

of experience in evaluating technically oriented projects due to their less awareness and

understanding etc. makes credit providers to look for higher returns, and they are

reluctant to provide credit. Until such time the market is developed and matured to

operate on its own, concessionary credit facilities should be made available at least

during their early years. The government initiatives and guarantee are vital to resolve this

issue. In addition, awareness and capacity building on bio energy will create more

acceptability for these projects to provide credit facilities.

One of the main constraints to the development of the biomass energy sector is the

fluctuation and uncertainties of the fossil fuel prices. Suitable pricing formula needs to be

develop for bio energy sector to protect both suppliers and consumers.

9. REFERENCES

1. Amerasekera, 1991, Sri Lanka stoves programme: Progress. Issues and Future Directions,

Integrated Development Association (IDEA)

2. APCTT, 2009, Renewable Energy Report, Sri Lanka, Asian and Pacific Centre for

Transfer of Technology of the United Nations – Economic and Social Commission for

Asia and the Pacific (ESCAP).

3. Bandaratillake, H.M, 1995, Efficacy of Removing Natural Forests from Timber

Production as a Strategy for Conserving Forests, FAO, Regional Office for Asia and the

Pacific, Bangkok.

68

4. Bandaratillake, H.M. 1997, Review of Provenance Research in Eucalyptus and Acacia

species in the Dry Zone of Sri Lanka, Food and Agriculture Organization of the United

Nations (RAS/91/004) Field Document No. 30, Los Banos, Philippines.

5. BEASL , Why Biomass (Web Site of the Bio Energy Association of Sri Lanka)

6. BEASL, 2007, Bio Fuels Vs Food, (Web Site of the Bio Energy Association of Sri

Lanka).

7. D/C&S, 2010. Agriculture and Environment Statistics Division, Department of Census

and Statistics, Sri Lanka, 2010.

8. DME/UM, 1999, Biomass Energy in Asia: A Study on Selected Technologies and Policy

Options, Department of Mechanical Engineering, University of Moratuwa, Sri Lanka.

9. Fernando, W.J.N. & Upul Kumara, M.A.S. (1999), Power Generation from Producer Gas

Based on Biomass in Sri Lanka: A Technical and Economic Study. Quoted in Biomass

Energy in Asia: A Study on Selected Technologies and Policy Options, Department of

Mechanical Engineering, University of Moratuwa, Sri Lanka, 1999.

10. Firewood Crops, 1980, Shrub and Tree Species for Energy Production, National

Academy of Science, Washington, DC.

11. Gangoda, J, 2003, The role of energy Management for a sustainable future in Sri Lanka,

MSc-Degree Program, Sustainable Energy Engineering, Department of Energy

Technology,

12. Gliricidia, 2008, Grow Gliricidia and Revive the Nation, Ministry of Science and

Technology, Alternative Energy Division, Colombo, Sri Lanka.

13. Gunasena,H.P.M, 1997, Gliricidia in Sri Lanka, A Publication of the University of

Peradeniya – Oxford Forestry Institute (UK), Forestry Research Link.

14. Gunathilake, H. A. J, Joseph P.G, Peiris, T. S. G, 2008, Sustainable Biomass Production

in Sri Lanka and Possibilities for Agro-forestry Intervention, Coconut Research Institute,

Sri Lanka.

15. Jayasinghe, J, Report on Land Use Planning, 2003

16. Jayasinghe, P, 2003, The biomass energy sector in Sri Lanka - Successes and Constraints,

(Bio Energy Association of Sri Lanka)

17. Junginger, M., van Dam, J., Zarrilli, S., Ali Mohamed, F., Marchal, D., Faaij, A.,

Opportunities and barriers for international bio energy trade. Manuscript submitted for

publication in Energy Policy, May 2010

18. Leelaratne, M.W, 2005. Some Recent Technological Advancements in the Efficient Use

of Biomass as an Energy Source in Sri Lanka, Paper presented at the International

Conference on “Issues of the Sustainable Use of Biomass Resources for Energy”

National Engineering Research and Development Centre of Sri Lank, August 2005.

19. M/AL&F, 1995. Forestry Sector Master Plan. Ministry of Agriculture, Lands and

Forestry, Battaramulla, Sri Lanka

20. M/P&E, 2006, National Energy Policy and Strategies of Sri Lanka, Ministry of Power

and Energy Government of Sri Lanka, 2006

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energy and Food Security Project, December, 2007. (www.fao.org/NR/ben/befs)

22. Munasinghe, S, 2000. Biogas Technology and Integrated Development, Experiences

from Sri Lanka, Practical Action (formerly ITDG), 2000

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23. NCSD, 2009, National Action Plan for Haritha Lanka Programme, National Council for

Sustainable Development, Presidental Secretariat, Colombo 01

24. PISCES, 2008. Scoping study into the impacts of bio energy development on food

security Prepared for Policy Innovation Systems for Clean Energy Security (PISCES) by

Practical Action Consulting, November 2008.

25. PISCES, 2009, Policies and Regulations Affecting Biomass Related Energy Sector

Development in Sri Lanka, Policy Innovation Systems for Clean Energy Security

(PISCES) Policy Brief No. 3 June 2009.

26. SEA, 2007, Sustainable Energy Authority - Sri Lanka Energy Balance 2007

27. Sugathapala, A.G.T, 2002, Policy Analysis to Identify the Barriers to the Promotion of

28. WFP, 2007, Sri Lanka Food Security Assessment, Final Report, World Food Programme,

June, 2007

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30. Silva,P Land Availability and Land Tenure, Asia Pro-Eco Project, 2005.

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APPPENDIX 1: List of potential industrial consumers for bio energy

Bulk Consumer (Furnace Oil) 2009 1 Address

Quantity/Year

(Liters)

OCEAN LANKA PVT LTD MALWANA BIYAGAMA EPZ 10,177,200

HAYLEYS MGT KNITTING MILLS LTD. NEBODA, NARTHUPANA ESTATE, 9,794,400

TEXTURED JERSEY LANKA AVISSAWELLA SEETHAWAKKA 9,042,000

PRIAMAL GLASS CO LTD P.O.BOX 28, MT.LAVIN 8,659,200

ANSELL LANKA B E P Z MALWANA 8,012,400

NESTLE LANKA LTD. Col 10 440, Darley Road 5,398,800

SOUTH ASIAN TEXTILE INDUSTRIES COLOMBO - 02 4,884,000

TRELLEBOBG MAKOLA.SAPUGASKANDA 2,732,400

PREMIUM EXPORTS CEYLON LTD AGRAPATANA 2,613,600

BRANDIX FINISHING LTD RATMALANA, 7/3 Mayura Mw 2,547,600

CEYLON HEAVY INDUSTRIES & CONSTRUCTION CO, LTD 2,475,000

LOAD STAR PVT LTD KOTUGODA, 2,415,600

INDUSTRIAL CLOTHING - Prime Polymers AVISSAWELLA D :17 Seethawake Ind Park 2,296,800

HAYCARB PLC LTD. MADAMPE FACTORY 2,178,000

LION BREWERY (CEYLON) PLC BIYAGAMA 2,059,200

MELBOURNE TEXTILE WASHING PLANT MABOLE 1,894,200

PELAWATTE SUGAR COMPANY, Col - 04 2B,Melbourne Avenue 1,854,600

STRETCH LINE BIYAGAMA EPZ 1,841,400

MILCO (PVT)LTD., AMBEWELA 1,815,000

LALAN RUBBER PVT LTD COL 14, 344 Grand Pass Road 1,782,000

DIPPED PRODUCTS LTD COL 10 400, DEANS ROAD 1,716,000

BRANDIX TEXTILES LTD KURUVITA 1,702,800

HANWELLA RUBBER PRODUCTS LTD. "HANWELLA ESTATE" 1,636,800

ORIT APPAREL SEETHAWAKA, AVISSAWELLA 1,610,400

CONFAB STEEL PVT LTD GAMPAHA, MUDDARAGAMA, 1,557,600

UNILEVER SRI LANKA LTD COL 15, 25B,GRANDPASS ROAD, 1,425,600

QUEENSBY LANKA AVISSAWELLA 1,399,200

72

LATEX GREEN PVT LTD AVISSAWELLA 1,306,800

CEAT KELANI INTERNATIONAL TYRES( PVT NUNGAMUGODA, 1,240,800

IND-SRI INDUSTRIAL CO R,(PVT) LTD, 249/3 WAKEYAWATTE RD KADUWELLA 1,161,600

BHUWARKA STEEL INDUSTRIES MADAMPE 1,161,600

SMARTSHIRTS LTD KATUNAYAKE 1,122,000

HOLCIM LANKA LTD., PALAVI LEVEL 3-HEMAS HOUSE, 1,082,400

ESKIMO FASHION KNITWEAR LTD.(LANKA) COLO 9 44/16,BESLINE ROAD 1,003,200

SWADESHI MARKETING (PVT) LTD. 57,COLOMBO ROAD 1,003,200

ELASTOMERIC TECHNOLOGIES PILIYANDALA 950,400

LINEA INTEMATE PVT LTD MALWANA 937,200

ASHOK STEEL INDUSTRIES EKHITA ROAD,n WATTALA 924,000

HIRDRAMANI MERCURYAPPAREL (PVT)LTD., SEETHAWAKKE 924,000

SAMSON RUBBER INDUSTRIES (PVT) LTD. KADAWATTE 924,000

RANAMALU FASHIONS PVT LTD MALWANA BIYAGAMA EPZ 924,000

COATS THREAD EANKA (PVT) LTD,, P.O.BOX 250, 910,800

G T B COLOMBO CORP INDUSTRIAL PARK, MAKANDUWA 897,600

CENTRAL RUBBER PVT LTD MALWANA BIYAGAMA EPZ 884,400

PRIMA CEYLON LTD TRINCOMALEE 805,200

OSPREYCLOTHING COL-03 79/3 Fifth Lane 792,000

CHINA OVERSEAS ENGINEERING GROUP CO LTD COLOMBO -05 50/5 Siripa Road 778,800

MAS FABRIC PARK THULHIRIYA- KURUNEGALA ROAD 765,600

CEYLON AGRO INDUSTRIES SEEDUWA 765,600

AMERICAN & EFFIRD LANKA KADUWELA.. 67 Avissawella Rd Weliwita 726,000

NARATHA AGRO IND PVT LTD NUGAPE, 400 Nugape Junction 726,000

GLOBAL RUBBER INDUSTRIES COL 5, 65/3 D S Fonseka Road 712,800

ORIT APPAREL SEETHAWAKA AVISSAWELLA 712,800

TRELLBORG WHEELS SYSTEMS MALWANA BIYAGAMA EPZ 699,600

NOYON LANKA WALGAMA BEPZ 699,600

M.Y.HEMAcHANDRA & CO. TALAwAKELLE 686,400

COCA-COLA BEVERAGES SRI LANKA LTD., TEKKAWATTE, 660,000

HOTEL GALADAR[ COL - 01. 64, Lotus Road 646,800

EU-RETEC INDUSTRIAL TYRE TECHNOLOGY KALUTARA, 349/5 Palathota, Nalgda 633,600

73

COLOMBO MILK FACTORY NARAHENPITA, 45 Nawala Road 633,600

ELASTOM ERIC TECHNOLOGIES HORANA, iNDUSTRIAL ESTATE 620,400

TEXPRO INDUSTRIES COL 11, 267 Sea Street 620,400

NORTHERN POWER COMPANY COLOMBO-03,18 St Michels Road 594,000

MAPA LALAN COL 34, 344 GRANDPASS ROAD 594,000

ASIA PACIFIC BREWERY LANKA RAJAGIRIYA. 46 Welikad Watte 587,400

HILTON HOTEL, COLOMBO - 01 587,400

ASIAN HOTELS & PROPERTIES LTD. 77-83 STEUART PLACE 580,800

KUMAGAI GUMI CO LTD BADDEGAMA 53Baddegama Rd, Indigasketiya 574,200

BIECO LINK CARBONS COLOMBO 567,600

RICHARD PIERIS NATURAL FOAMS MALWANA, BiYAGAMA EPZ 554,400

FUJI CBMRNT TRINCOMALEE 554,400

EX PACK CORRUGATED CARTONS KBLANIYA, 79 PatNwela road Gonawila 541,200

KOREAN SPA PACKAGING (PVT) LTD PANADURA. 9 Moderamuila I Z 541,200

FUJI CEMENT COMPANY TRINCOMALEE 528,000

MERBOK MDF LANKA HORANA, INDUSTRIAL ESTATE 528,000

BRANDIX CASUAL WEAR LTD. SEEDUWA 309, Colombo Road 521,400

WHEEL WORKS BIYAGAMA BEPZ 514,800

DOGIEFA PVT) LTD- Thulhiriya MALWANA BIYAGAMA EPZ 514,800

SAMSON RECLAIM RUBBER LTD., BOGAHAGODA, 514,800

TOKYO SUPER CEMENT CO COL- 03 469/1 Galle Road 508,200

G,O,B.U,OF CEYLON COLD STORES LTD, RANALA, 481,800

POLYTEX GARMENTS {pVT) LTD MINUWANGODA RD YAKALA 475,200

VECHENSON(PVT) LIMITED GAMPAHA, UGGALBODA, 475,200

WATAWALA PLANTATION LTD. ABBOTSLEIGH ESTATE 462,000

GOLD COINFEED MILLS COL 15 VYSTWYKE ROAD 448,800

GC LANKA CLOTHING AVlSSAWELLA 429,000

SEVANAGALA SUGER PRO EMBILIPITIYA. 422,400

RPC POLYMER (PVT) LTD NAWINNA 415,800

PACKWELL PVY LTD RATMALANA. 26, 2nd Lane off Kandewella Rd 409,200

LANKA POLYMER WATALA 409,200

SAMSON RUBBER INDUSTRIES (PVT) LTD. KADAWATTE 402,600

74

NATIONAL PAPER CORPORATION VALACHCHNAI 396,600

SIGIRI KATUBEDDA 396,000

BO SLANG CEY LATEX KATANA 396,000

HOLDENT EXTRACTS COLOMBO - 10 396,000

EDNA CHOCOLATES COLOMBO B. iRO.Baudhaloka Maw 389,400

ALAIRE APPARELS KATUNAYAKE EPZ 369,600

LINEA INTEMATE PVT LTD MALWANA 369,600

MOUNT LAVlNIA HOTEL MT. LAVINIA, HOTEL ROAD 356,400

CEYLON PETROLEUM STORAGE TERMINALS KOLONNAWA 356,400

LOAD STAR PVT LTD KOTUGODA. 356,400

SAMSON COMPOUNDS PVT LTD BATADUWA 343,200

RICHARD PEIRIS EXPORTS LTD,, COL -02, BB,HYDE PARK CORNER, 343,200

NATIONAL PAPER CO.LTD. EMBILIPITIYA 343,200

ALUMEX (PVT) LTD., MAKOLA, SAPUGAsKANDA 343,200

ALT FRESHTEX GARMENT FINISHING COLOMB MORATUWA 336,600

A P S K NITfERS PVT LTD MAHARAGAMA 330,000

DISTILLERIES COMPANY OF SRI LANKA (Seeduwa) 110, NORTH CANEL ROAD 323,400

STAR PACKAGINNG NAWAGAMUWA 316,800

TAJ SAMUDRA COL- 01_,25,GALLE FACE, 316,800

MILK INDUSTRIES OF LANKA, DIGANA 316,800

MILCO (PVT)LTD. NARAH6NPtTA 45, NAWALA ROAD, 303,600

AGREFEED LTD NEGOMBO, KIMBULAPITIYA 303,600

BATA SHOE CO OF CEYLON LTD RATMALANA AIRPORT ROAD 290,400

CBL FOOD PVT LTD RANALA 290,400

H.J.S.CONDIMENTS LTD BLOCK 61,62 & 63, 290,400

HEMAS MANUFACTURING PVT LTD WELISARA 277,200

MICRO PACKAGING MALABE 277,200

DAINTEE LTD RATMALANA, 720 Kandawala Road 277,200

LANKA CANNERIES LTD. COLOMBO 5. 264,000

ASS. BATTERY MANUFACTURERS-CEYLON- P O BOX 42 264,000

CARGILS QUALITY DAIRIES MIRIGAMA, BanduraGoda 264,000

FANTASIA PLASTICS RATMALANA 264,000

75

PYRAMID LANKA COLOMBO- 14 264,000

VECHENSON(PVT) LIMITED GAMPAHA, UGGALBODA, 264,000

ACL CABLES COLOMBO- 10 21 Norris Canal Road 264,000

BISCHOFF GAMMA LANKA AVISSAWELLA, Seethawakka Ind Park 257,400

PATHMA WEAVING MILLS EKALA MinuwanBoda Rd KotuBoda 257,400

BAIRD WEAR INNER FASHION NUWERA ELIYA PO Box 15 257,400

STATE TIMBER CORP RATMALANA 257,400

TEXTPRINT LANKA THULHIRIYA- KURUNEGALA ROAD 250,800

MIDLAND BREEDERS(PVT)LTD., GAMPOLA 250,800

MERBOK MDF LANKA HORANA, INDUSTRIAL ESTATE 250,800

HOTEL RIVERINA BERUWALA 250,800

ECONOPACK INDUSTRIES BORALEsGAMUWA 250,800

SAMSON RECLAIM RUBBER LTD., BOGAHAGODA, 250,800

FONTERRA BRANDS LANKA PVT LTD BIYAGAMA 244,200

LANKA CORRUGATED INDUSTRIES PANADURA, 11 Moderawella Zone 244,200

TRANS ASIA HOTEL COL-01, 115, SIR CHI'I-rAMPALA 244,200

COUNTRYSTYLE FOOD KADAWATI E 237,600

CRYSTAL SWEATER LANKA (PVT) LTD MALWATTE, NITTAM BUWA 237,600

UNI DIL PACKAGING DEKATANA, Narampala Rd, Moragala 237,600

EX PACK CORRUGATED CARTONS KELANIYA, 79 Pattiwela road Gonawila 237,600

POULTRY INGREDIENTS PVT LTD COL 07 224,400

CEYLON AUTO INDUSTRIEsLTD., 358 SRI SANGARAJAH 224,400

CEYLON KNIT TREND LTD., MAHARAGAMA, 55,LAKE ROAD 217,800

BRANDIX INTIMATE APPARELS WEEISARA, Elapitiwala Ragama Road 217,800

SWISS CHEESE PVT LTD MULLERIYAWA 211,200

NARATHA AGRO IND PVT LTD NUGAPE, 400 Nugape Junction 211,200

NUTERENA (PVT) LTD. COLOMBO 04. 211,200

TOKYO CEMENT CO.(LANKA)LTD CODBAY, TRINCOMALEE 211,200

HIRDRAMANI MERCURYAPPAREL (PVT)LTD., SEETHAWAKKE 211,200

RICHLIFE LTD. PIRIVENA ROAD, 211,200

MARANGACHI TYRES MALWANA, BiyagamaEPZ 204,600

HOTEL SERVICES (CEYLON)LTD, 48, JANADHIPATHI MAW 198,000

76

C IC RATMALANA 198,000

YKK LANKA PVT LTD COL 3 198,000

CAPITAL CONSOLIDATED LANKA WATALA 711 Negombo Road Mabola 191,400

CEYLON TOBACCO CO LTD P.O BOX t8, 191,400

A T G CEYLON LTD KATUNAYAKE I P Z SPUR RD 7 Phase 2 191,400

TAJ SAMUDRA COL - 03.,2B,GALLE FACE, 184,800

SAMSON INTERNATIONAL GALLE, Bataduwa, D Samson Rajapakse Maw 184,800

MIDAYA PACKAGING INDUSTRIES PVT LTD MEEGODA 171,600

VANGUARD IND COL 13, 240 PARAMANANDA MW 171,600

OLE SPRING BOTTLERS COL 2, 3.46 Dawson St 171,600

SUMMIT INDUSTRIES (PVT) LTD., COL- 14 JAYANTHA WEERAsEKERA 171,600

GODREJ SERA LEE KELANIYA 171,600

PRISON INDUST ,WELIKADA PRISON COLOMBO- 08 171,600

MELWlRE ROLLING PVT LTD JAELA 165,000

INDUSTIAL CLOTHING PVT LTD COLOMBO - 14 158,400

U C A LANKA PVT LTD MATTAKULIYA 158,400

HARISCHANDRA MILLS MATARA 158,400

UNI DIL PACKAGING DE KATANA, Narampala Rd, Moragala 158,400

SAMSON RUBBER PRODUCTS {PVT) LTD GALLE 158,400

NAWAM LANKA MIRIGAMA 158,400

ACME LANKA DISTILLERIES 158,400

SAMSON COMPOUNDS PVT LTD BATADUWA 158,400

GODAKANDA HERBALS WEWELDENIYA 158,400

CEYTRA LTD, 36, D.R.WlJEwARDANA 158,400

CEYLON GOVT RAILWAYS RATMALANA 158,340

ORIENTGARMENTS LTD WELIGAMA, Mirigama 151,800

RICHARD PE1RIS TYRE CO LTD KANDY 151,800

H ETTIGODA GROUP RATMALANA 151,800

HIRDERAMANI GARMENTS KATU NAYAKE 145,200

SRI LANKA AYURVEDIC COLOMBO- 15 145,200

BROWNS BEACH HOTEL NEGOMBO 145,200

PRYM INTIMATES MALWANA, WALGAMA, 145,200

77

TREND SETTIER PANADURA Modarawila 145,200

CEYLON LEAF SPRINGS(PVT) LTD, COL- 14 JAYANTHA WEERASEKERA 145,200

MILCO (PVT)LTD., NARAHENPITA 45, NAWALA ROAD, 145,200

J L INDUSTRIES WADDUWA 145,200

STAR GARMRNTS LTD IPZ KATUNAYAKE 145,200

STATE TIMBER CORP KEPETTIPOLA 145,200

CRYSTAL MARTIN GARMENTS KATUNAYAKE., E P Z 138,600

SRI JAYAWARDENAPURA HOSPITAL NUGEGODA 138,600

NATIONAL HOSPITAL OF SRI LANKA COLOMBO - 10 138,600

? 132,000

ARPITALIAN COMPACT SALES MALWANA,Zone 2 BIYAGAMA 132,000

HENFOLD ESTATE LINDULA 132,000

CEYLON TOBACCO CO LTD KANDY, Lady Havelock Drive 132,000

NATURE EXPORT INT PANADURA 105/:1 Madupiriya Rd Mahawila 132,000

BRANDIX CASUAL WEAR LTD. SEEDUWA 309, Colombo Road 132,000

STATE TIMBER CORP BOOSA 132,000

CONVENIENCE FOODS (LANKA) PLC RATMALANA, 133, 7th Lane off borupana Rd 125,400

QUALITY LATEX PRODUCTS PVT LT HANWELLA EST, PAHATHGAMA 118,800

PALMA LTD COL 3`0 400, DEANS ROAD 118,800

RANAMALU FASHIONS PVT LTD MALWANA BIYAGAMA EPZ 118,800

STERLING LANKA APPAREL KATUNAYAKE I P Z 118,800

DISTILLERIES COMPANY OF SRI LANKA (Seeduwa) 110,NORTH CANEL ROAD 118,800

ANUPAMA APPARELS EMBILIPITIYA 118,800

OACIANIL KNITTERS (PVT) LTD, 4,KANDAWALA MAWATHA 112,200

KNITFIN PVT LTD COLOMBO- 10 112,200

DYNAWASH PVT LTD BIYAGAMA 112,200

PREMIUM EXPORTS CEYLON LTD AGRAPATANA 105,600

AITKEN SPENCE HOTELS HERITANCE AHUNGALLE 105,600

B. D.V. PROCESSI NG(PVT)LTD., NO.11, 105,600

PEGASUS REEFHOTEL P O BOX 2 105,600

HOLIDAY INN HOTEL, GALLE FACE, COL- 02 105,600

C I C POULTRY FARMS LTD COLOMBO -02 99,000

78

DELMAR LANKA (PVT) LTD ALADENIYA, WERALLAGAMA 99,000

NEW EDINBOROUGH PRODUCTS, RAJAGIRIYA. 99,000

LANKA STAR STEEL KURUNEGALA, WELLAWA 92,400

CARBONS PRODUCTS LANKA NATHANDIYA 92,400

STAR GARMRNTS LTD IPZ KATUNAYAKE 92,400

PRASARA WASHING PLANT WAIKKALA, Thambarawila, Negombo road 92,400

SAMSON INTERNATIONAL GALLE, Bataduwa, D Samson Rajapakse Maw 92,400

VANGUARD IND COL 13, 140 PARAMANANDA MW 92,400

LANKA WALLTILES LTD., BALANGODA 92,400

INNOVATIVE KNITWEAR SEEDUWA, 55 Kotugoda Road 92,400

JAYA CONTAINER TERMINALS LTD COLOMBO- 01 19 Church Street 85,800

M D K FOOD PRODUCTS (PVT)LTD., HORANA 4B,ARAMANAGOLLA, 85,800

CEYLON SPECIALITY FATS (PVT) LTD BIYAGAMA BEPZ 85,800

J B CARBON ACRIVATORS COLOMBO - 14 150, St Josephs Street 85,800

STAFFORD ORIENT LTD AKURESSA Pitabeddera 79,200

3A12 79,200

CREASY FOODS EKALA, INDUSTRIAL ESTATE, 79,200

MRF PVT LTD DANKOTUWA 79,200

KAVIN POLYMERS (PVT) LTD. KUDUGALA ROAD, 79,200

SAMSON RUBBER PRODUCTS (PVT) LTD GALLE 79,200

CREATIVE POLYMERS PVT LTD DANKOTUWA, Bujampola 72,600

LANKA ALUMINIUM INDS JA-ELA. 72,600

ALEXANDER INDUSTRIES -CEYLON- LTD., 76, MINUWANGODA ROAD 72,600

LANKA LUBRICANTS LTD. COLOMBO -03,113,GALLE ROAD, 72,600

UNI - GLORY LANKA PVT LTD COLOMBO - 05 72,600

LUCKY AND OMPANY MATARA, UYANGODA 72,600

CHERUBIUM (PRIVAT0 LTD PAMUNUGAMA 72,600

LANKA CANNERIES LTD. COLOMBO 5. 72,600

MACSONS PAINTS LANKA(PVT)LTD., PANADURA 72,600

? 66,000

CEYLON GALVANIZING INDUSTRY LTD MTLAVINIA 66,000

GROSSART LTD COL 10 400, DEANS ROAD 66,000

79

UPALI D/D MILLS MARAWlLA, THALAWlLA 66,000

USWATTE CONFECTIONARY WORKS RATMALANAN, 437 GALLE ROAD 66,000

LANCOR RUBBER INDUSTRIES KANDANA 59,400

WAYAMBA INDUSTRIAL LTD WENNAPUWA, Noorani Ind Zone,Waikkal 59,400

CONVENIENCE FOODS (LANKA) PLC RATMALANA, 133, 7th Lane oft borupana Rd 59,400

RANMALU FASHIONS PELIYAGODA., 81/41 NEGOMBO Road 59,400

SNT ENTERPRISE PANADURA, 19 Miriyawatte Keselwatte 59,400

PRARA TEX INDUSTRIES PILIYANDALA, 144 Polhena madapatha 59,400

M D K FOOD PRODUCTS (PVT)LTD., HORANA 48,ARAMANAGOLLA, 59,400

JAFERJEE BROS.(EXPORTS) LTD, COLOMBO -15, 150, St Josephs St 59,400

CEYLON LEATHER PRODUCTS LTD NO 141,CHURCH ROAD 59,400

? 52,800

RICHARD PIERIS TYRE CO MAHARAGAMA.310 Hi Level Rd Navinna 52,800

STATE TIMBER CORP KEPETTIPOLA 52,800

TANGAKELLE ESTATE LINDULA 52,800

HINGURANA DISTILLERIES THITHAPATHARA 52,800

LANKA TRICOI-IING INDUSTRIES EKALA Industrial Estate 52,800

ADAMJEE LUKMANJEE & COLOMBO 14 52,800

STAR GARMENTS LTD. KOGGALA 52,800

PRASARA WASHING PLANT NATHANDIYA 52,800

CRYSTAL MARTIN CEYLON PVT LTD KATUNAYAKE 52,800

NORITAKE LANKA PORCELAIN LTD. P.O. BOX 30, 52,800

DEPT OF PRISON - MAHARA RAGAMA 52,800

KEEN APPAREL SERVICES PITAKOTTE, 167 Thalawathugoda Road 46,200

JANATHA FINANCE & INVESTMENTS THALANGAMA 46,200

STAR GARMENTS LTD. RING ROAD, 46,200

SINWA INDUSTRIES 15,SIRIWARDHANA ROAD 46,200

LANKA TYRE RE-TREADERS MORATUWA Sarikkamulla 41,600

LANKA INDIAN OIL CORPORATION COLOMBO- WTC Level 20 41,054

COCO LANKA LTD COL-2, 69 Jinarathna rd WATHUPITIWALA 39,600

C&A SILICATES (PVT) LTD. 130, WEWELDUWA, 39,600

S G I LANKA KATUNAYAKE, IPZ 39,600

80

ASIAN FABRICS WATTALA 39,600

KUMAGAI GUMI CO LTD BADDEGAMA 53Baddegama Rd, Indigasketiya 39,600

SAMSON MANUFACTURERS LTD KADAWATTE 39,600

NORTON LANKA GARMENTS MAHARAGAMA 39,600

LANKA PRINTING & PACKAGING PVT LTD WELLAMPITIYA 27A Sedawatte Road 39,600

? 39,600

DEVl TRADING CO COLOMBO - 11,125 Bankshall St 39,600

TUFFLINE LTD MEEGODA, 180 High Level Road 39,600

? 39,600

PACKWELL PVT LTD RATMALANA, 26, 2nd Lane off Kandewella Rd 39,600

AMRITA APPARELS COL 06 39,600

INOKA PACKAGING HOMAGAMA 39,600

LANKA FASHION CLOTHING PVT LTD COL 05 39,600

CEYLON BISCUITS LIMITED MAKUMBURA, PANNIPITIYA 39,600

APOLLO FOODS (PVT) LTD KOLONNAWA,68A WlJAYA RD, 33,000

PACKSERVE pVT LTD KELANIYA. 130 Wewelduwa 33,000

HIRDRAMANI INDUSTRIES MAHARAGAMA 33,000

ORU MIX ASPHALT COLOMBO - 09 33,000

SERENDIB FLOUR MILLS COLOMBO -15, 256 Sri Ramanathan Maw 33,000

OGEL SHOE NAWALAPITIYA Ullapane 33,000

VOLANKA EXPORTS LTD., NO.193, 33,000

S G I LANKA KATUNAYAKE, IPZ 33,000

HUSSAIN DYING HOUSE WATTALA,37Thelagapatha Road 32,400

DSR EXPORTS KURUNEGALA 29,800

HAQUGHTON TEA COMPANY KATAWARA 26,400

SRILANKA CO-OP INDUSTRIES FEDARATION CEYESTA HOUSE, 26,400

ECONOPACK INDUSTRIES BORALESGAMUWA 26,400

VINIGROS LTD COL 10, 400 DEANS ROAD 26,400

RARA STEEL MILLS COLOMBO -14 26,400

CRYSTAL MARTIN CEYLON PVT LTD KATUNAYAKE 26,400

DAYA APPAREL EXPORT PVT LTD BORALESGAMUWA 26,400

SERENDIPOL BORALESGAMUWA,5, Ambalgahapura 26,400

81

MIAMI EXPORTS SERVICES COL - 07 52 Sir Marcus Fdo Maw 26,400

MICRO PACKAGING MALABE 26,400

? 26,400

MEGA PAPER BOARD PVT LTD HOMAGAMA 19,800

EOM INTERNATIONAL RATMALANA 19,800

CLIFTEX INDUSTRIES LTD, HENDELA 3.8, Weriyamuna Road 19,800

3A36 19,800

PAN ASIA COLOURED YARNS MABOLA 19,800

EOM INTERNATIONAL RATMALANA 19,800

MA'S TROPICAL FOOD COL - 08, GOTHAMI ROAD 19,800

COSMIC POLY PLAST POLGAHAWELA PEPZ LOT 4 19,800

PACKSERVE PVT LTD KELANIYA. 130 Wewelduwa 19,800

U S S ENGINEERING P VT LTD GANEMULLA 19,800

GLAXO WELLCOME CEYLON LTD MT. LAVINIA. 19,800

MAG AUTO SPRINGS (PVT)LTD. PALLEKELLE. 19,800

TOYO CUSHIONS COL 14, 19,800

KINDAI KAGAKU LANKA HORANA, INDUSTRIAL ESTATE 19,200

AA 18,000

S S STEEL EXPORT PVT LIMITED JAELA Industrial Estate Unit 3 16,400

CHERUBIUM (PRIVAT) LTD PAMUNUGAMA 13,200

STEVENSON LANKA PVT LTD B E P Z WALGAMA 13,200

D & W FOODS GONAWlLA Makandura, Ind Estate 13,200

UNION METALS NUGEGODA, 3/B Jeswell PI, Mirihana 13,200

PIRAMAL GLASS CO LTD NATHANDIYA 13,200

SUMMIT INDUSTRIES (PVT) LTD., COL - 3.4 JAYANTHA WEERASEKERA 13,200

ASIABIKE INDUSTRIAL PVT LTD PANADURA. 13,200

TOYO CUSHIONS COL 14, 13,200

STATE TIMBER CORP BOOSA 13,200

WATAWALA PLANTATION WELIOYA 13,200

KESELWATTE AGENCIES & IN PANADURA, KESELWA~-FE, 13,200

MICROcELLS LTD PILIYANDALA MAMPE KOSKANA~-I'E 13,200

NElL MARINE FOAM (PVT) LTD MAKOLA, IND ESTATE SAPUGAsKANDA 13,200

82

MJF BEVERAGES (PVT) LTD PELIYAGODA, 111 NEGOMBO ROAD 13,200

NALURUB ACCEESSORIES PANADURA, 105/1Madupitiya Rd, Makawita 13,200

LANKA INDIAN OIL CORPORATION COLOMBO - WTC Level 20 13,200

HEMNETTE ALUMINIUM EXTRUSIONS CO NEGOMBO 13,200

ORAN FOOD PRODUCTS PVT LTD NAULA, Nalanda industial park 13,200

HANDS INTERNATIONAL COL- 04, 9 Ramya road 13,200

B.C.C LANKA LTD, HULTSDORF HILLS 13,200

C&A SILICATES (PVT) LTD., 130, WEWELDUWA, 13,200

J.B.FISHING INDUSTRIES LTD., WELLAMPITIYA, :133,MEETOTAMULLA RD 13,200

DISTILLERIES COMPANY OF SRI LANI(A (Waduwa) 110,NORTH CANEL ROAD 13,200

CEAT KELANI INTERNATIONAL TYRES(PVT KELANIYA 13,200

KELANI VALLEY COLOMBO 4. 13,200

ASIA PACIFIC BREWERY LANKA RAJAGIRIYA. 46 Welikad Watte 13,200

DAYA CONSTRUCTION KALUBOWlLA, DEHIWELA 13,200

JAELA GLASS WORKS JA ELA 6,600

SOLEX ENGINEERING PVT LTD PELIYAGODA 39 NEW NUGE RD 6,600

J B CARBONS COLOMBO- 14 6,600

SOLEX ENGINEERING PVT LTD PELIYAGODA 39 NEW NUGE RD 6,600

C D P LANKA PVT LTD Col 14 79 Mahawatte Road 6,600

KELANI FABRICS PVT LTD KELANIYA Singaramulla, 49/27 Sugatarama Rcl 6,600

RICHARD ROBERTS KANDY COLOMBO -05,25 Eli Bank Road 6,600

FAGA TYRES BANDARAGAMA, 2 Udugalle Estate Paragasth 6,600

NARAHENPITA CANNERY COLOMBO 5. 6,600

ASSOCIATED MOTORWAYS LTD., KALUTARA 6,600

KALUTARA CO-OP DISTILARIES SOCIETY LTD PAIYAGALA 6,600

WONDERLIGHT CONSUMER PRODUCTS CO LTD MALABE 10th Mile Post Ahurugiriya Road 6,600

DURO SYNTHETIC TEXTILE MILLS LTD P.O.BOX NO 5 6,600

OXFORD DYEING (PVT) LTD KADAWATHA 6,600

AA 6,600

SRI JAYAWARDENAPURA HOSPITAL NUGEGODA 6,600

CENTRAL PROVINCIAL COUNCIL HARAGAMA 6,600

MEDI TEXTILE (PVT) LTD ALUBOMULLA, 59 Mahabellana 5,600

83

BIO EXTRACTS PVT LTD COLOMBO 03. 5,000

? 400

Total 173,908,794

84