An Echelon Media Company
Thursday September 29th, 2022

Sri Lanka hikes electricity prices 75-pct after soft-peg collapse

ECONOMYNEXT – The Public Utilities Commission of Sri Lanka (PUCSL) has approved a proposal by the Ceylon Electricity Board (CEB) to increase monthly electricity charges by an average of 75 percent, effective Wednesday August 10.

PUCSL Chairman Janaka Ratnayake announced the tariff hike on Tuesday August 09, noting that different price plans will be applicable to different numbers of units consumed.

Ratnayake said the CEB is now permitted to increase rates by 264 percent to consumers who use below 30 units up to a maximum of 198 rupees, and from 30 units to 60 units by 211 percent to a maximum of 599 rupees. From 60 to 90 units, the increase will be by 125 percent.

This will be the first time electricity rates are increased in nine years. The CEB has faced steep cost increases since 2001 with rupee depreciation adding to costs. CEB diesel rupee cost went up 350% since 2013, coal rupee cost went up 650% ad furnace oil rupee cost went up 410%.

In June 2022, the CEB requested PUCSL approval to raise tariffs by 229 percent.

The PUCSL has imposed a number of conditions on the CEB for the rate hike. These include the opening of a bulk supply transaction account, conducting an independent dispatch audit for 2021, renewing and revising purchase and sales agreements and payment of interest for security deposits obtained from consumers.

The PUCSL had requested that no bonuses should be given for CEB staff until finances become stabilised.

The CEB has also been instructed to charge only a monthly fixed amount for retail consumers with solar rooftops under the Net Metering and Net Accounting schemes.

Ratnayake said 100 million US dollars is needed to import coal after October. Base power is provided by coal, he said.

Furnace costs have also risen, he said, noting that Sri Lanka currently generates 30 to 35 percent of electricity using fuel.

“With the rising global prices and the war situation we need to increase tariffs because we produce a lot of electricity by burning fuel,” he said.

Meanwhile, local electricity suppliers have to be paid 20 billion rupees, he added.

The new tariffs are made according to the least cost based method. The tourism industry will get tariff hikes in two stages, due to the precarious situation of the industry.

People who earn more than 60 percent of income in forex will have to pay electricity bills with dollars, said Ratnayake. The consumers who fall under this scheme will get a 1.5% discount on their bills.

“Power cuts are going on, the dollar has gone up, we are getting oil for high prices without a proper plan…so we cannot justify [raising prices as CEB had earlier proposed],” he said.

He claimed that in the CEB will be able to cover costs in the next six months, as the revenue requirement filed by CEB was 505 billion rupees, while the expected revenue increase due to the new tariffs is expected to be 512 billion rupees including LECO sales.

The Treasury had allocated 85 billion rupees to the CEB, he added.

“Till next January we might be able to manage the situation with less than three hour power cuts, depending on several factors” he said, commenting on the ongoing scheduled power cuts.

Ratnayake said Sri Lanka has 7.8 million electricity users, 6.7 million of which are domestic consumers. 1.1 million are general purpose, while 1.4 million consume under 30 units.

1.7 million use 90 units, while 4.8 million use fewer than 90 units each month, he said. (Colombo/Aug09/2022)

Leave a Comment

Your email address will not be published.

Leave a Comment

Leave a Comment

Your email address will not be published.