Sri Lanka to raise electricity tariff next week

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Sri Lanka’s long overdue electricity tariff revision is expected to be implemented within the next week, a top ministry of energy official told Finance Today.

According to the prevailing situation, in order to reduce the losses of the Ceylon Electricity Board (CEB), the existing tariffs will have to be increased by 70-80 per cent for commercial and industrial users.

“Domestic rates have yet to be decided, but prices will go up by 70 to 80 per cent for commercial and industrial users,” he predicted.

The electricity sector regulator, Public Utilities Commission of Sri Lanka (PUCSL) concluded the public consultation on the proposed tariff revision on the 28th.

“The opinion of the majority is that according to the current situation in the country, the electricity tariffs should be increased at a level that will bring the minimum impact to the general public. Some parties have given arguments against the proposed revision”, he said.

The debt – ridden CEB is currently facing severe financial difficulties in getting fuel for its power generation activities. According to the current situation, all banks and other financial institutions have refused to give loans to the CEB.

The CEB lost Rs 65 billion in the first quarter of this year and sought an 835 percent price hike for the heavily-subsided smallest power consumers, the PUCSL stated in June. Currently, anyone using less than 30 kilowatts a month pays a flat Rs 54.27, which the CEB sought to raise to Rs 507.65.”A majority of the domestic consumers will not be able to afford this type of steep increase,” PUCSL chairman Janaka Ratnayake said last month.

It has also been recommended by the International Monetary Fund (IMF) that Sri Lanka’s fuel and electricity sector should adopt a cost-reflective pricing policy in order to reduce the debt burden on the State budget.

Accordingly, in order to reach a staff-level agreement with the IMF, it will be mandatory to fulfil these pre-conditions.

Meanwhile, a progress review meeting with the CEB and Sri Lanka Sustainable Energy Authority was held on 28 July at the Ministry of Energy.

According to the Ministry of Power and Energy statement, it has been revealed that large-scale power projects have not been implemented since 2014 and the progress that should be made in the implementation of renewable energy projects has not been achieved. Therefore, the Minister has instructed the officials to accelerate the process.

“Progress review meeting of the Power sector was held on Thursday (28). CEB has not initiated or commissioned any new Major Power Plants since 2014. Renewable Energy is the way forward to revive the Power Sector but the attitudes towards facilitating such projects are appalling” the Minister of power and energy Kanchana Wijesekera twitted.

He emphasised at this meeting that this will be only possible through a massive CEB restructuring process. For this, through the necessary restructuring plans, electricity generation, transmission and distribution should be separated into three parts. The Minister is expected to get the necessary Cabinet approval and parliamentary approval for this.

“CEB needs restructuring and I hope to get the approval of the Cabinet to commence the unbundling of CEB with Generation, Transmission and Supply to be separated. While tariff adjustments are also needed, it has to be with a plan to reduce Generation cost with more Renewable Energy”, the Minister twitted.

It also revealed that Sri Lanka Sustainable Energy Authority had given temporary permits for renewable energy projects of around 1400 megawatts, but so far the CEB has not provided the necessary facilities to carry out those projects.

“The country cannot depend on coal and fuel in the future and renewable energy projects should be planned with priority,” he asserted.

Sri Lanka imposed 13-hour power cuts a few months ago, but blackouts have been reduced to about three hours a day as rains filled hydropower reservoirs.

By Ishara Gamage