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Thursday March 23rd, 2023

Sri Lanka plans up to 65-pct tariff hike in January: Minister

ECONOMYNEXT – Sri Lanka plans to hike power tariffs by 60 to 65 percent in January 2023 through cabinet approval to offset costs, officials said.

Sri Lanka’s Public Utilities Commission the regulator has not given sufficient increase in an August decision, General Manager of Ceylon Electricity Board, Rohan Seneviratne said.

Sri Lanka’s power regulator is usually expected to approve price hikes. However Prime Minister Ranil Wickremesinghe has said in parliament the Treasury has authority to do so.

“We will go cabinet on January 02, the price hike will happen legitimately and if anyone has the right to express their views and criticize the tariff raise, if they wish to they could even challenge it in court,” Minister Wijesekera told reporters.

“The cost is based on average rainfall. We still do have a forecast for rain next year. If there is more rain the coming year, we will reduce the price in the month of July.”

The price increase based on 27 of energy generated from hydro in 2023, 28 percent from coal, 13 percent from CEB’s liquid fuel plants, other private IPPs 12 percent, private renewables including 13 percent and 4 percent from rooftop solar.

Generation and distribution cost will be 48.42 rupees a unit. Last August the Public Utilities Commission had given only and increase of 29.14 rupees.

The revenue shortfall is calculated 277.5 billion rupees.

“The hike is to cover the gap,” Wijesekera said. “If not we will have to have more power cuts. The people asked for uninterrupted power. To do that we need to operate both CEB and private power plants.”

Sri Lanka expects to give some benefit to industries to maintain their competitiveness and also to low income households.

Low income households may be given cash grants, he said.

There is currently an effective subsidy of about 100 billion rupees to industries and 130 billion rupees to households he said.

“There are 14 lacks of customers using less than 30 units (a month), there 16 lacks using less than 60 units,” Minister Wijesekera said.

“We discussing with several agencies to give the cash grants. The government will give some support for their costs.”

For all religious institutions under an Indian credit line a 5kW of solar panels will be given. The plan would be done in the next three months. For small temples or others could reduce their bill to almost zero, with a 5kW panel, he said.


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Sri Lanka establishes committee to investigate aircraft incidents

An aircraft lands at the Jaffna International Airport, which was opened in October 2019 and promises to push the tourism frontiers in Jaffna.

ECONOMYNEXT: Sri Lanka’s has established an expert committee under the state-run Civil Aviation Authority to investigate aircraft accidents and to implement precautionary methods in the Sri Lankan airspace, an Official said.

“Even if it is only one flight, there is a chance an accident may occur,” Civil Aviation Authority of Sri Lanka, Director General, P. A. Jayakantha said.

“This particular committee is there to investigate aircraft accidents and act as a mechanism to take over if something goes wrong”.

Sri Lanka has encountered around 2,700 minor aircraft accidents and incidents mostly on the ground in the 19 years through 2021, the CAA annual reports showed.

The new committee will analyze the past accidents and take precautionary measures while also conducting investigations and provide independent reports in the future, Jayakantha said.

The team is provided with required training and qualifications by the CAA along with an International organization, free of charge.

“Internationally also it is a requirement to have a team to investigate the aircraft accidents,” Jayakantha added.

“For a long time we have not fulfilled this requirement and that is why we established this team with the cabinet approval. Moreover, recently, Sri Lanka’s two aircrafts, one training aircraft and a commercial aircraft met an accident”

The committee will be on active duty, until the Accident Investigation Act is passed and a proper Aircraft Accident and Incident Investigation Bureau is established. (Colombo/ Mar23/2023)

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Sri Lanka bond yields steady, Rupee 319/325 at close

ECONOMYNEXT – Sri Lanka’s treasury bond yields closed steady on Thursday while rupee closed weaker, dealers said.

A 01.07.2025 bond closed at 30.60/31.00 percent on Tuesday, down from 30.25/75 percent on Wednesday.

A 15.09.2027 bond closed at 27.80/28.10 percent, steady from 27.90/28.00 percent from Wednesday.

Sri Lanka rupee closed at 319/325 against the US dollar depreciating from 318/320 from a day earlier. (Colombo/ March23/2023)

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Sri Lanka shares dive to two-week low on local debt restructuring fears

ECONOMYNEXT – The Sri Lanka market fell for a fourth session to a two-week low on Thursday, led by financials, as worries over domestic debt restructuring continued after the IMF loan was approved earlier this week resulting in investors adopting a wait-and-see approach until further clarity was provided, analysts said.

The main All Share Price Index (ASPI) closed down 1.38 percent or 131.07 points to 9,395.98, lowest since March 02.

Analysts said, majority of the banks have been on slower investment trends on fears of domestic debt restructuring after the IMF approval and waiting for more clarity on the local debt restructuring.

“The market is on muted sentiments despite the IMF loan being approved and is going through a period of consolidation,” Ranjan Ranatunga of First Capital Holdings said.

The market saw a net foreign outflow of 298 million rupees and the total offshore inflows recorded so far in 2023 to 3.3 billion rupees.

The most liquid index, S&P SL20, closed 1.64 percent, or 45.33 points, down at 2,722.94.

The market saw a turnover of 3.4 billion rupees on Thursday, above this year’s daily average of 1.8 billion rupees.

This is the highest turnover generated since March 08, which is when the market was driven off of positive sentiments from International Monetary Fund deal hope after Chinese assurances.

Top contributors to revenue was Agalawatte Plantations, on off board transactions of a stake change, contributing revenue of 1.6 billion rupees, Ranatunga said.

Top contributors to revenue industry wise was Food and Beverage and Telecommunications.

Sri Lanka Telecom has been seeing positive uptrends as the Secretary to the Treasury has informed the Board of Directors of Sri Lanka Telecom PLC (SLT) and Lanka Hospitals PLC that the Cabinet of Ministers has granted approval in principle for the divestment of the stakes held by the Treasury Secretary in the two companies.

Top losers were Sampath Bank, Hatton National Bank and Commercial Bank.

Sri Lanka is looking at options to re-structure domestic debt, or local law local currency debt (LLLC), without harming the banking sector and announce them the International Monetary Fund said in a report.

Banks have been witnessing profit taking and selling pressures after continuous uptrends prior to the IMF loan had been approved.

Analysts said, selling pressures is expected to ease as the IMF hopes to reduce inflationary pressures which will in turn lead to reductions in interest rates. (Colombo/Mar23/2023)

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