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Tuesday November 29th, 2022

CEB customers need to pay only what they paid in February for March, April and May – Cabinet

ECONOMYNEXT- Electricity consumers facing huge bills after the COVID-19 lockdown are to be given further relief at a loss of Rs 3bn to the Ceylon Electricity Board (CEB), the Cabinet spokesman has said.

Media Minister Bandula Gunawardena said the cabinet has approved the relief to be given to the electricity consumers for the months of March, April and May.

Consumers will pay whatever they were billed in the month of February for the months of March, April and May, he told reporters at the regular Cabinet briefing today July 16.

“For example, if the bill of the month of Pre-COVID-19 February is Rs 1,000, then the amount that should be paid for the months of March, April and May should also be Rs 1,000 each,” Gunawardena said.

The officials were also instructed to deduct the amount already paid by the consumers accordingly from the coming month’s bills.

Further, he said the subject Minister, Mahinda Amaraweera, informed the Cabinet that he appointed a committee to look into whether there was any computer-related problem in preparing the electricity bills after COVID-19 and do recalculations accordingly.

Last week, the Cabinet decided to reduce electricity bills by 25% where electricity consumers have consumed electricity units between 0-90 units in the months of March, April and May.

The consumers were also given a grace period of three months to pay up while there will not be any disconnections or late fees.

Because meter readers could not perform their regular duties due to the lockdown, the electricity bills became hugely distorted as consumers get their first level of consumption at lower rates and have to pay a surcharge for higher consumption.

Since the readings were taken months later, the surcharges were excessive, resulting in artificially high bills.

The Public Utilities Commission (PUCSL) proposed a formula for the recalculation of the bills for the two providers CEB and Lanka Electric Company Ltd., but the CEB did not implement that.

LECO consumers have already received the revised bills, and the billing cycle has not caused a loss to the utility which serves a small number of consumers in the Greater Colombo area.

But, with elections around the corner, the government has been keen to show it is providing relief to consumers, causing huge losses to the already troubled state-run utility CEB. (Colombo, July 16, 2020-sb)

Reported by Imesh Ranasinghe

 

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A new Sri Lanka monetary law may have prevented 2019 tax cuts?

ECONOMYNEXT – A new monetary law planned in 2019, if it had been enacted may have prevented the steep tax cuts made in that year which was followed by unprecedented money printing, ex-Central Bank Governor Indrajit Coomaraswamy said.

The bill for the central bank law was ready in 2019 but the then administration ran out of parliamentary time to enact it, he said.

Economists backing the new administration slashed taxes in December 2019 and placed price controls on Treasuries auctions bought new and maturing securities, claiming that there was a ‘persistent output gap’.

Coomaraswamy said he keeps wondering whether “someone sitting in the Treasury would have implemented those tax cuts” if the law had been enacted.

“We would never know,” he told an investor forum organized by CT CLSA Securities, a Colombo-based brokerage.

The new law however will sill allow open market operations under a highly discretionary ‘flexible’ inflation targeting regime.

A reserve collecting central bank which injects money to push down interest rates as domestic credit recovers triggers forex shortages.

The currency is then depreciated to cover the policy error through what is known as a ‘flexible exchange rate’ which is neither a clean float nor a hard peg.

From 2015 to 2019 two currency crises were triggered mainly through open market operations amid public opposition to direct purchases of Treasury bills, analysts have shown.

Sri Lanka’s central bank generally triggers currency crises in the second or third year of the credit cycle by purchasing maturing bills from existing holders (monetizing the gross financing requirement) as private loan demand pick up and not necessarily to monetize current year deficits, critics have pointed out.

Past deficits can be monetized as long as open market operations are permitted through outright purchases of bill in the hands of banks and other holders.

In Latin America central banks trigger currency crises mainly by their failure to roll-over sterilization securities. (Colombo/Nov29/2022)

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Sri Lanka cabinet clears CEB re-structure proposal: Minister

ECONOMYNEXT – Sri Lanka’s cabinet has cleared proposals by a committee to re-structure state-run Ceylon Electricity Board, Power and Energy Minister Kanchana Wijeskera said.

“Cabinet approval was granted today to the recommendations proposed by the committee on Restructuring CEB,” he said in a twitter.com message.

“The Electricity Reforms Bill will be drafted within a month to begin the unbundling process of CEB & work on a rapid timeline to get the approval of the Parliament needed.”

Sri Lanka’s Ceylon Electricity Board finances had been hit by failure to operate cost reflective tariffs and there are capacity shortfalls due to failure to implement planned generators in time. (Colombo/Nov28/2022)

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Sri Lanka new CB law to cabinet soon as IMF prior action

ECONOMYNEXT – Sri Lanka’s new central bank law will be submitted to the cabinet as a prior action of International Monetary Fund with clauses to improve governance and legalize ‘flexible’ inflation targeting, Central Bank Governor Nandalal Weerasinghe said.

Under the new law members of the monetary board will be appointed by the country’s Constitutional Council replacing the current system of the Finance Minister making appointments.

“It will be a bipartisan approach,” Governor Weerasinghe told an investor forum organized by CT CLSA Securities, Colombo-based brokerage.

“The central bank’s ability to finance the budget deficit will be taken out. Thirdly the flexible inflation targeting regime will be recognized in the law as the framework.”

The law will also make macro-prudential surveillance formally under the bank.

There will be two governing boards, one for the management of the agency and one to conduct monetary policy.

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