An Echelon Media Company
Tuesday February 7th, 2023

Sri Lanka could face 6-8-hour power cuts in 2023 if tariffs aren’t revised: minister

Sri Lanka will continue to experience more power cuts

ECONOMYNEXT — If the proposed revisions to the tariff structure of the state-run Ceylon Electricity Board (CEB) are not made, Sri Lanka could face daily power cuts of up to six to eight hours in 2023, Power & Energy Minister Kanchana Wijesekara said.

Speaking in parliament on Tuesday December 06, Wijesekara said, assuming drought conditions prevail, power generation can cost 56 rupees and 90 cents per unit for an uninterrupted power supply next year. The CEB at present charges an average of 29 rupees and 14 cents from its customers, at a gap of 27 rupees and 76 cents which amounts to 423.5 billion rupees in total.

According to the minister, the Rs 56.90 figure was arrived at as per the following projection (Scenario A).

Addressing parliament, Wijesekara insisted that the tariff revisions were not proposed to recover past losses as claimed by some opposition members and the Public Utilities Commission of Sri Lanka (PUCSL), the regulator.

The prevailing 2-hour-and-20-minute daily power cuts, he said, are in spite of hydro and coal generation running at maximum capacity. Fuel and furnace oil must simply be used to meet the remaining demand, he said.

This year’s total electricity demand is 16,370 gigawatt hours, counting the 2-hour, 3-hour and the recent 6-hour power cuts. For an uninterrupted 24-hour supply, 17,155 gigawatt hours of electricity must be generated, said Wijesekara further explaining the projected unit cost for 2023.

The tariff hike that was approved by the PUCSL in August this year, the minister said, was not adequate to cover losses.

“Last year’s generation cost was 800 billion rupees. The PUCSL only approved a tariff revision that would cover only 500 billion of that. That, too, was after nine years. This tariff revision needs to happen every year, and the CEB did it once or twice a year until 2009,” he said, faulting the PUCSL for not taking the initiative.

“Now the average charge is 29 rupees and 14 cents a unit. There’s a gap of 27 rupees, which amounts to 423.5 billion rupees, which must be paid by either the Treasury or by the public through direct or indirect taxation,” he said.

“The other solution is to update the tariffs. If the CEB doesn’t get this 423 to pay for the fuel, coal and furnace oil, we must all be ready to face six to eight-hour power cuts next year,” he added.

Acknowledging that a tariff hike is a sensitive matter in Sri Lanka’s dire economic straits at present, Wijesekara said however that the CEB owes 70 billion rupees to private power suppliers for power generated in the past 12 months and 40 billion rupees to renewable suppliers.

“The plan is to have a cost-reflective tariff that will allow us access to bank facilities to finance those due payments.  If these wind, solar and minihydro suppliers stop halt their supply, we’ll be in a worse situation. I don’t think any potlitician here will want that,” he said.

“Most CEB unions and senior management agree that a revision is needed, but some are using this as a slogan vowing not to allow a tariff increase. This is only because we have proposed a CEB restructure,” he added.

Taking to Twitter on Monday, the minister said citing billing data that there are 1,460,828 consumers that consume 0 to 30 units a month at 8 rupees per unit.

Up to 1,683,172 consumers are in the 30 to 60 unit category who pay 10 rupees per unit, while 1,702,515 consumers are in the 60 to 90 category and paying 16 rupees per unit, and 1,559,131 consumers are in the 90 to 180 range paying 50 rupees per unit. In the 180+ category, there are 303,928 consumers paying 75 rupees per unit.

“Lower layers are heavily subsidized and top layer pays over the average cost of a unit to compensate [for] a part of the subsidy. The balance subsidy is borne by the Treasury. My personal opinion is that every layer should be 56.90 rupees per unit and a direct cash allowance [should be paid] for low income families,” the minister tweeted. (Colombo/Dec06/2022)

Leave a Comment

Your email address will not be published. Required fields are marked *

Leave a Comment

Leave a Comment

Cancel reply

Your email address will not be published. Required fields are marked *

Sri Lanka Railways to seek PPPs to boost revenue streams

CURFEW RUSH: Commuters scrambling to get home after curfew was declared in Sri Lanka on March 20, 2020.

ECONOMYNEXT – Sri Lanka Railway department hopes to expand Public Private Partnerships and earn more non-passenger revenues to offset recurring operational costs, an official said.

“For the past 10 years, except the last few years, the Railway operational income only covers around 50 percent of the operational expense of the Department,” the General Manager of the Railway, D.S. Gunasinghe told EconomyNext.

“Our plan is to increase the non-passenger revenue of the Railway department.

“And we cannot expect and do not hope for money from the government.”

Sri Lanka Railways already has agreements with Prima, a food firm, and Insee Cement, which is bringing in additional income, Gunasinghe said.

“We had agreements for material transportation such as sand in the past, however it was canceled but we hope to start it again” he said.

The department will rent out its storage facilities and circuit bungalows for the tourism sector to create additional revenue streams.

Sri Lanka Railways recorded an operating loss of 10.3 billion rupees during 2021, compared to a loss of 10.1 billion rupees in 2020, the Central Bank 2021 annual report showed.

The total revenue of the SLR stood at 2.7 billion rupees, a 41.3 percent drop from a year ago.

(Colombo/ Feb 06/2023)

Continue Reading

Sri Lanka’s doctors distribute anti-tax hike leaflets to train commuters

ECONOMYNEXT – Doctors representing Sri Lanka’s Government Medical Officers Association (GMOA) distributed leaflets outside the Colombo Fort railway station against a progressive tax hike, threatening to address the government in a “language it speaks”.

GMOA Secretary Haritha Aluthge told reporters outside the busy Fort railway station Monday February 06 afternoon that all professional associations have collectively agreed to oppose the personal income tax hike.

“The government is taking a lethargic approach. They cannot keep doing this. They have a responsibility towards the citizens, the country and society,” said Aluthge.

The medical officer claimed that the government was acting arbitrarily (අත්තනෝමතික).

“If it cannot understand the language they’ve been speaking, if the government’s plan is to put all professionals out on the street, if it doesn’t present a solution, all professional unions have decided unanimously to address the government in a language it speaks, ,” he said.

Aluthge and other GMOA members were seen distributing leaflets to commuters leaving the railway station. Doctors in Sri Lanka in general are likely to earn higher salaries than the average train commuter, and a vast majority of Sri Lanka’s population, most of whom take public transport, don’t fall into the government’s new tax bracket. Many doctors, though certainly not all, collect substantial sums of money at the end of every month as doctor’s fees in private consultations.

About two miles away from the doctors, the Ceylon Blank Employees’ Union, too, engaged in a similar distribution leaflet campaign on Monday at the Maradana railway station. A spokesman promised “tough trade union” action if there was no solution offered by next week.

Sri Lanka’s cash-strapped government has imposed a Pay As You Earn (PAYE) tax on all Sri Lankans who earn an income above 100,000 rupees monthly, with the tax rate progressively increasing for higher earners, from 6 percent to 36 percent.

A person who paid a tax of 9,000 rupees on a 400,000 rupee monthly income will now have to pay 70,500 rupees as income tax, the latest data showed. This has triggered a growing wave of anti-government protests mostly organised by public sector trade unions and professional associations.

Even employees of Sri Lanka’s Central Bank recently joined a week-long “black protest” campaign organised by state sector unions against the sharp hike in personal income tax, even as Central Bank Governor Nandalal Weerasinghe said painful measures were needed for the country to recover from its worst currency crisis in decades.

The government, however, defends the tax hike arguing that it is starved for cash as Sri Lanka, still far from a complete recovery, is struggling to make even the most basic payments, to say nothing of the billions needed for public sector salaries.

Economists say Sri Lanka’s bloated public service is a burden for taxpayers in the best of times, and under the present circumstances, it is getting harder and harder to pay salaries and benefits.

Sri Lanka’s new tax regime has both its defenders and detractors. Critics who are opposed to progressive taxation say it serves as a disincentive to industry and capital which can otherwise be invested in growth and employment-generating business ventures. Instead, they call for a flat rate of taxation where everyone is taxed at the same rate, irrespective of income.

Others, however, contend that the new taxes only affect some 10-12 percent of the population and, given the country’s economic situation, is necessary, if not vital, at least for a year or two.

Critics of the protesting workers argue that most of the workers earn high salaries that most ordinary people can only dream of, and, they argue, though there may be some cases where breadwinners could be taxed more equitably, overall, Sri Lanka’s tax rates remain low and are not unfair.  (Colombo/Feb06/2023)

Continue Reading

Sri Lanka bond Yields end steady

ECONOMYNEXT – Sri Lanka’s bond yields closed steady on Monday, dealers said while a guidance peg for interbank transactions remained unchanged.

A bond maturing on 01.07.2025 closed at 32.15/30 percent, steady from Friday’s 32.05/10 percent.

A bond maturing on 01.05.2027 closed at 28.90/29.10, steady from Friday’s 28.90/20.05 percent.

The Central Bank’s guidance peg for interbank US dollar transactions appreciated by one cent to 361.96 rupees against the US dollar.

Commercial banks offered dollars for telegraphic transfers at 370.35 rupees on Monday, data showed. (Colombo/Feb 06/2023)

Continue Reading