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Tuesday February 27th, 2024

Sri Lanka electricity demand soars despite power cuts as price hike delayed

ECONOMYNEXT – Sri Lanka’s power demand is surging despite power cuts as more people shift to electricity where the regulator has not raised prices, and liquefied petroleum gas prices went and
shortages also worsened, industry sources said.

The higher power demand has triggered bigger power cuts.

“People have been buying electric cookers, heaters and are also using electric cookers at home,” a power sector official said.

“That is why total energy demand is going up, though peak load has been reduced with power cuts.”

Power demand including on weekends have surged as LP Gas prices were raised and electricity prices were not raised.

According to industry analysts demand in any case rises in March due to the heat and also the rush from export companies and others to finish orders before April holidays.

Sri Lanka fuel prices were swiftly raised by the Treasury and the bus regulator also raised prices. Train fares are going up today.

It is not clear why power prices are not raised. Lack of price hikes had damaged the finances of the CEB and also endangered state banks which finance it.

Demand has also gone up on weekends, when many offices are closed.

On Sunday December 19, 2021 total energy demand was 35.87 GigaWatt hours.

On Sunday March 27, despite power cuts, demand had gone up to 4.1 GWh.

Customers have also adapted their working hours to works when power was available.

But with 10 hour power cuts, many businesses and industries are out of options.

Sri Lanka is having severe forex shortages due to an intermediate regime, or soft-peg operated by a Latin America style central bank which replaced a currency board in 1950.

An attempt to shift from a pegged regime to a clean float has not yet succeeded due to low interest rates and a surrender requirement which pushes the rupee down, analysts have said.

Analysts had urged authorities to hike rates and float before the dry season started.

Sri Lanka has to hike rates, tourism recovery will not help end forex crisis: Bellwether

“Sri Lanka should raise interest rates immediately and float the currency without too much delay to put an to end to the ongoing misery on the import trade and head off a monetary meltdown and shortages that will lead to severe social unrest as well as default,” EN Economic columnist Bellwether said in a column published in January 2021.

“Already pressure is being seen in energy. In the first quarter droughts will come. Pressure has come faster due to the breakdown of the coal plant. It is better to float before the dry season in February and March when there will be more pressure to fund energy sector losses with credit.

“A fuel pricing formula and a fuel surcharge on electricity should also accompany a float – or even if there is no float.

“This column has shown earlier how energy subsidies are a weak link in monetary stability both in Sri Lanka and Latin America. It is now being seen.”

Read how it happens in Latin America here: Sri Lanka is not Greece, it is a Latin America style soft-peg: Bellwether

(Colombo/Mar30/2022)

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  1. Moiez Mohamed says:

    It’s totally disgusting to hear that the power cut has now stands for more than 10 hours per day, how can people live without power, what the hell the government and authorities were doing for the last so many years, yes people buy electric cookers and other electric appliances that’s not the government’s problem, they should ensure electricity should not be stopped at any cost, what about the tourist who come to sri lanka, does the government think this is an excuse, it’s a bloody shame , take or learn lesson from india , pakistan ,Bangladesh, Maldives, nepal and other countries how they are ruling those countries even after the pandemic, it’s all corrupted politicians who made worst decisions while ordinary citizens are suffering now. Find a suitable way and restore the electricity now. Otherwise get lost Mr. President, you are a spineless President we have never seen in any history.

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

  1. Moiez Mohamed says:

    It’s totally disgusting to hear that the power cut has now stands for more than 10 hours per day, how can people live without power, what the hell the government and authorities were doing for the last so many years, yes people buy electric cookers and other electric appliances that’s not the government’s problem, they should ensure electricity should not be stopped at any cost, what about the tourist who come to sri lanka, does the government think this is an excuse, it’s a bloody shame , take or learn lesson from india , pakistan ,Bangladesh, Maldives, nepal and other countries how they are ruling those countries even after the pandemic, it’s all corrupted politicians who made worst decisions while ordinary citizens are suffering now. Find a suitable way and restore the electricity now. Otherwise get lost Mr. President, you are a spineless President we have never seen in any history.

Sri Lanka president appoints Supreme Court-faulted official as police chief after CC clearance

ECONOMYNEXT – Sri Lanka President Ranil Wickremesinghe appointed Deshbandu Tennakoon as the 36th Inspector General of Police (IGP) of the country after the Constitutional Council (CC) cleared the official who along with three other police officers were asked by the Supreme Court to compensate 2 million rupees in a fundamental rights case last year.

“President Ranil Wickremesinghe has appointed Deshbandu Tennakoon as the IGP in accordance with the provisions of the Constitution,” the President’s Media Division (PMD) said.

The island nation’s Supreme Court on December 14 ordered Tennakoon when he was the Acting IGP and three other officials to pay a compensation of 500,000 rupees each for the violation of the fundamental rights of an individual.

The Supreme Court also instructed the Police Commission to take disciplinary action against the said Police officers after it considered the petition filed by W. Ranjith Sumangala who had accused the Police officers of violating his fundamental rights during his detention at Mirihana Police Station in 2011.

The Supreme Court held that the four police officers violated the fundamental rights of the petitioner by his illegal arrest, detention and subjection to torture at the Mirihana Police Station, which was under the supervision of Tennakoon at the time of the arrest.

President’s Secretary Saman Ekanayake presented the official appointment letter to Tennakoon on Monday (26) at the Presidential Secretariat.

When Tennakoon was asked over if the Supreme Court decision would have an impact on his appointment as the IGP last week, he declined to comment, saying that it was a Supreme Court matter and he does not want to say anything about it.

Tennakoon was also criticized by Colombo Archbishop Cardinal Malcolm Ranjith when he was appointed as the Acting IGP citing allegations against him related to security lapses leading up to the Easter Sunday attacks which killed at least 269 in April 2019.

However, Tennakoon rejected the allegations. (Colombo/Feb 26/2024)

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No water tariff hike in Sri Lanka this year: Minister

Millennium Challenge Corporation Photo.

ECONOMYNEXT – Sri Lanka’s planned water tariff formula is ready, and the government will implement it this year only if the formula’s tariff is lower than the current price, Water Supply Minister Jeevan Thondaman said.

President Ranil Wickremesinghe’s government has been implementing IMF-led pricing policies on utilities and the Water Supply Ministry has already come up with a formula.

“There is a water tariff formula in place right now and we are waiting for it to be drafted and seek approval from the cabinet,” Thondaman told reporters at a media briefing in Colombo on Monday.

“Once this water tariff formula is in place, there will be an annual revision with an option of biannual review.

The formula has been developed with the help of the Asian Development Bank. The formula includes electricity and exchange rate among many others as components like the fuel formula.

The National Water Supply and Drainage Board (NWS&DB) increased the water tariff in August 2023, claiming that the operating cost had been increased owing to high interest payment for bank loans and increased electricity prices.

The last year revision saw the consumers paying 30-50 percent increase from the existing water bill.

Minister Thondaman said he will implement the new formula this year only if there is a reduction.

TARIFF CUT WILL BE IMPLEMENTED 

“We will have to wait to see what the formula is. If the formula shows us there needs to be a reduction in the water tariff, we can implement it. But if there is an increase, why should we burden the people when we are on a road to recovery?” he said.

He said a group of experts including University Professors are working on the formula and the numbers.

“Once they come with the number, we will have to take a decision on whether we are going to impose on the people or not,” he said.

“We have already spoken to the Asian Development Bank and informed them we have established the formula. But according to the ADB requirement of this policy-based loan, the implementation period is only in 2025.”

“But right now, you want to take the approval for the formula for sustainability.”

The Energy Ministry is considering a drastic slash in electricity tariff soon. Thondaman said the exact numbers will be decided on after the finalized electricity tariff.

However, he said that as per the formula, there has to be a up to 10 percent increase in the water tariff as of now.

“Given the current formula set up, there must be around a 9-10 percent increase. It was actually at 14 percent. What we have done is since it is at 14 percent, we also did a calculation to see how we can do a cost cutting,” he said.

“So, despite our cost cutting measures, there will be an increase of 9 or 10 percent. But we will not be imposing it as of now because this year is meant to be policy sector reforms. Next year is meant to be the implementation.”

“As per August 2023 water tariff hike, we are able to come close to sustainable. So right now, there is no issue in the water sector. But a formula eventually needs to be established.” (Colombo/Feb 26/2024)

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Sri Lanka rupee closes at 310.80/311.00 to the US dollar

ECONOMYNEXT – Sri Lanka’s rupee closed at 310.80/311.00 to the US dollar Monday, from 310.95/311.05 on Thursday, dealers said.

Bond yields were down.

A bond maturing on 01.02.2026 closed stable at 10.60/80 percent.

A bond maturing on 15.09.2027 closed at 11.80/90 percent down from 11.90/12.05 percent.

A bond maturing on 15.03.2028 closed at 12.00/12.15 percent down from 12.10/25 percent.

A bond maturing on 15.07.2029 closed at 12.20/70 percent from 12.20/95 percent.

A bond maturing on 15.05.2030 closed at 12.30/70 percent down from 12.40/95 percent.

A bond maturing on 15.05.2031 closed at 12.60/80 percent from 12.45/13.00 percent.

A bond maturing on 01.07.2032 closed at 12.50/90 percent from 12.50/13.30 percent. (Colombo/Feb26/2024)

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