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Saturday March 2nd, 2024

Sri Lanka electricity use plunges, consumers move to lower categories

ECONOMYNEXT – Sri Lanka’s electricity use has fallen steeply and customers have shifted to lower categories, Director General of the Public Utilities Commission, Damitha Kumarasinghe said amid price hikes and a currency collapse.

Electricity consumption had fallen more closely in line with the projection made by the PUCL when a power tariff hike was made in the first quarter of 2022.

The CEB in its tariff filing for the first half of 2023 had initially projected 16,520 GigaWatt hours of generation compared to 15,031 GWh by the PUCSL secretariat.

Related Sri Lanka regulator disputes CEB costs, demand projections for 2023The CEB has later revised it down to 15,377 GWh.

Forecast Gap

The CEB had projected power generation of 44.96 GigaWatt hours for February down from 51.32GWh hours a year ago. The PUCSL has projected 42.01 and actual generation was 41.82 GWh.

For March generation of 47.22 GigaWatt hours was projected down from 51.32GWh hours a year ago. The PUCSL had projected 45.21 GWh for March and actual generation had been 42.36 GWh.

For April the CEB had projected 44.28GWh, the regulator had projected 41.23 actual generation had been 40.36 GWh.

In January-2023 before the price hike, generation had fallen to 40.7 GWh from 47.10 a year earlier.

By May 10, 2023 generation was down 13.8 percent to 5,391 GWh from 6,259 GWh last year.

In the domestic category, large numbers of users had moved down to lower categories.

The CEB had initially projected 16,520 GWh for 2023 compared to PUCSLs 15,031GWh. In April, a revised down forecast of 15,377GWh hours was made by the CEB to the regulator.

Savings

When higher volumes of generation are and sales are projected the marginal increase comes from liquid fuel plants, which are among the most expensive sources of generation.

A reduction in consumption therefore results in a sharp fall in costs from the most expensive sources of generation, Kumarasinghe said.

Since January, coal and fuel prices have gone down, he said, lowering costs and potentially allowing tariffs to be reduced.

However, Sri Lanka also has differential pricing and cross subsidies for domestic customers based on usage. The lowest users have tariffs which fall below average costs.

When high users reduce their consumption, CEB’s revenues and margins also goes down.

Consumption Fall

Sri Lanka raised fuel prices after a nine-year gap in August 2022 after the rupee collapsed from 200 to 360 to the US dollar, destabilizing the finances of both the CEB and Ceylon Petroleum Corporation.

Currency collapses by soft-pegged central banks lead to economy wide collapses in consumption, business failures and bad loans in banks.

Sri Lanka’s exports have also fallen in 2023 amid tighter conditions after inflation went up in Western markets from money printed by the Federal Reserve and European Central Bank. Central Bank data showed that electricity sales to industries fell 18.7 percent in January to 333 GWh.

According to CEB data available up to now analyzed by the PUCL by January 2023 out of 6.37 million domestic customers, 279,696 used more than 180 units in September 2022, when the first tariff revision was done.

About 200,000 people have moved from higher categories to under 30, another nearly 300,000 in between 30 to 60 unit category. So people have reduced their consumption and some near to the poverty line,” Kumarasinghe said.

By January 2022, 86,049 had moved from above 180 units down to lower categories.

Out of 643,696 who used up to 180 units 161,788 had moved down on a net basis.

Out of 835,866 who had used 120 units, 168,193 had moved down.
Out of 1.56 million who had used below 90 units in September 2022, 78,961 had moved down.

As a result the category between 30 and 60 units had increased by 283,238 customers from 1.61 million customers in September 2022 to 1.89 million customers in January 2023.

The category below 30 units had increased by 198,794 to 1,231,836 customers.

Data on what happened after March 2023 is not yet available.

Sri Lanka has high inflation and never-ending energy price hikes due to monetary instability from a so-called flexible exchange. The highly unstable regime found in countries that are unable to climb out poverty and has social unrest and strikes.

The rupee collapsed from 200 to 360 to the US dollar in 2022, and has since appreciated to 310 to the US dollar after private credit turned negative and money printing was reduced.

The currency has tended to collapse over the past decade as soon as credit picks up and money is printed to mis-target interest rates through aggressive open market operations.

The CEB was last allowed a tariff increase after about 9 years. From 2011 to 2013 the rupee collapsed to 131 to the US dollar from around 113 when the last tariff hike was made.

Critics have called for the central bank’s ability to inject liquidity and operate a monetary regime with both exchange and money policies to be outlawed to bring stability to the country, and end the impoverishment of the people. (Colombo/May18/2023)

Comments (2)

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  1. kapila says:

    Writer has failed to highlight how many consumers of high consumption have moved to Solar power.

  2. Jeremy Fernando says:

    Energy consumption statistics are confusing as it seems that around 279k consumers use over 180 units per month. Is this data correct? According to a report published by ADB in September 2017, this segment is only 70k. Please clarify.

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

  1. kapila says:

    Writer has failed to highlight how many consumers of high consumption have moved to Solar power.

  2. Jeremy Fernando says:

    Energy consumption statistics are confusing as it seems that around 279k consumers use over 180 units per month. Is this data correct? According to a report published by ADB in September 2017, this segment is only 70k. Please clarify.

Sri Lanka eyes SOE law by May 2024 for better governance

ECONOMYNEXT – Sri Lanka is planning to pass a Public Commercial Business (PCB) Act improve governance of state-owned enterprise by May 2024 as part of an anti-corruption efforts following an International Monetary Fund assessment.

Sri Lanka’s state enterprises have been used by politicians to give ‘jobs of the boys’, appropriate vehicles for personal use, fill board of directors and key positions with henchmen and relatives, according to critics.

Meanwhile macro-economists working for the state also used them to give off-budget subsides or made energy utilities in particular borrow through supplier’s credits and state banks after forex shortages are triggered through inflationary rate cuts.

The government has taken billons of dollars of loans given to Ceylon Petroleum Corporation from state banks.

There have also been high profile procurement scandals connected to SOEs.

An SOE Reform Policy was approved by Sri Lanka’s cabinet of ministers in May 2023.

The Public Commercial Business (PCB) Act has now been drafted.

A holding company to own the SOEs will be incorporated and an Advisory Committee and Board of Directors will be appointed after the PCB law is approved, the statement said. (Colombo/Mar01/2024)

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Sri Lanka rupee closes at 308.80/90 to the US dollar

ECONOMYNEXT – Sri Lanka’s rupee closed at 308.80/90 to the US dollar Friday, from 309.50/70 on Thursday, dealers said.

Bond yields were broadly steady.

A bond maturing on 01.02.2026 closed at 10.65/75 percent up from 10.50/70 percent.

A bond maturing on 15.09.2027 closed at 11.90/12.05 percent from 11.90/12.10 percent.

A bond maturing on 01.07.2028 closed at 12.15/35 percent down from 12.20/25 percent.

A bond maturing on 15.07.2029 closed at 12.25/40 percent up from 12.30/45 percent.

A bond maturing on 15.05.2030 closed at 12.30/45 percent down from 12.35/50 percent.

A bond maturing on 01.07.2032 closed at 12.50/13.00 percent from 12.55/13.00 percent. (Colombo/Mar1/2024)

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Sri Lanka stocks close up 0.37-pct, Expo to de-list

ECONOMYNEXT – The Colombo Stock Exchange closed up 0.37 percent on Friday, and SG Holdings, the parent company of Expolanka Holdings Plc, said it was taking the company private.

Expolanka is the largest listed company on the Colombo Stock Exchange.

“Expolanka Holdings PLC has, at the Board Meeting held on 1st March 2024, considered a request from its principal shareholder and resolved to initiate the de-listing of the Company’s shares from the Official List of the Colombo Stock Exchange subject to obtaining necessary shareholder approval and regulatory approvals,” the company said in a stock exchange filing.

As per arrangements with SG Holdings Global Pte Ltd, the Company’s majority shareholder, it will purchase its shares from shareholders who may wish to divest their shareholding in the Company at a purchase price of Rs 185.00 per share. The share closed up at 150.50.

The broader All Share Index closed up 0.37 percent, or 39.47 points, at 10,691; while the S&P SL20 Index closed down 0.64 percent, or 19.59 points, at 3,037.

Turnover stayed above the 1 billion mark for the sixth consecutive day, registering 1.4 billion.

Crossings in Melstarcorp Plc (135mn) up at 89.50, Hatton National Bank Plc (64mn) up at 158.00, Hemas Holdings Plc (53mn) up at 75.00 and Central Finance Company Plc (26mn) up at 103.50, added significantly to the day’s turnover.

“The upward trend is continuing, with more retail buying also coming in, the number of trades was more than 10,000 today,” a market participant said. “Investors are looking for undervalued stocks and buying in quantities.” (Colombo/Mar1/2024).

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