ECONOMYEXT – Sri Lanka’s Public Utilities Commission, the power regulator will reject any tariff hike done by the Cabinet of Ministers without going through agency, its Chairman Janaka Ratnayake said.
Sri Lanka’s power minister is expected to seek the go ahead for an average 65 percent tariff hike at this week’s cabinet meeting including for low users, to reduce cross subsidies and get additional revenue by-passing the regulator.
“The tariff methodology on how to revise is in the Electricity Act and the Public Utilities Commission Act,” Ratnayake said.
“There is an initiative to hike tariffs by getting a wrong interpretation from the Attorney General. I have discussed it with the commission members as well. We do not expect to give any approval for that.”
Ratnayake said the proposed tariff hike will increase the bill by 1200 percent for 1.7 million people in the country that uses between 00-30 units.
“This is an unfair tax. Their target is to earn 100 billion rupees from all citizens that uses less than 120 units in 2023 with this hike”. Ratnayake said
“If the decision comes in a wrong way we have decided to reject it, without any hesitation. If the tariffs been revised correctly then it is ok, but even for that this is not the time”.
Sri Lanka’s Ceylon Electricity Board needs extra money in the first quarter to import fuel and banks are unable to fund its losses. Minister Wijesekera said the Treasury is also unable to give any more funds raised from other sources.
The CEB’s losses ballooned in 2022 mostly due to the rupee collapsing to 360 to the US dollar from 200 to the US dollar after the central bank printed money to mis-target rates for two years.
However the regulator has also not increased the tariff from 2012 after prices were cut with a coal plant coming on stream shortly after, despite the rupee falling from 131 to 182 up to 2019.
According to the minister, the price increase is based on 27 of the energy generated from hydro in 2023, 28 percent from coal, 13 percent from CEB’s liquid fuel plants, other private IPPs 12 percent, private renewables including 13 percent and 4 percent from rooftop solar.
The generation and distribution cost will be 48.42 rupees a unit. Last August the Public Utilities Commission had given only an increase of 29.14 rupees, which was insufficient.
If costs fall in the second half of 2022 with rains, tariffs will be brought down, Minister Wijesekera said.
Global energy prices are also expected to ease with US monetary tightening. (Colombo/Jan01/2022)