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Tuesday June 18th, 2024

Sri Lanka power regulator on collision course with cabinet

ECONOMYEXT – Sri Lanka’s Public Utilities Commission, the power regulator will reject any tariff hike done by the Cabinet of Ministers without going through agency, its Chairman Janaka Ratnayake said.

Sri Lanka’s power minister is expected to seek the go ahead for an average 65 percent tariff hike at this week’s cabinet meeting including for low users, to reduce cross subsidies and get additional revenue by-passing the regulator.

“The tariff methodology on how to revise is in the Electricity Act and the Public Utilities Commission Act,” Ratnayake said.

“There is an initiative to hike tariffs by getting a wrong interpretation from the Attorney General. I have discussed it with the commission members as well. We do not expect to give any approval for that.”

Ratnayake said the proposed tariff hike will increase the bill by 1200 percent for 1.7 million people in the country that uses between 00-30 units.

“This is an unfair tax. Their target is to earn 100 billion rupees from all citizens that uses less than 120 units in 2023 with this hike”. Ratnayake said

“If the decision comes in a wrong way we have decided to reject it, without any hesitation. If the tariffs been revised correctly then it is ok, but even for that this is not the time”.

Sri Lanka’s Ceylon Electricity Board needs extra money in the first quarter to import fuel and banks are unable to fund its losses. Minister Wijesekera said the Treasury is also unable to give any more funds raised from other sources.

The CEB’s losses ballooned in 2022 mostly due to the rupee collapsing to 360 to the US dollar from 200 to the US dollar after the central bank printed money to mis-target rates for two years.

However the regulator has also not increased the tariff from 2012 after prices were cut with a coal plant coming on stream shortly after, despite the rupee falling from 131 to 182 up to 2019.

According to the minister, the price increase is based on 27 of the 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.

The generation and distribution cost will be 48.42 rupees a unit. Last August the Public Utilities Commission had given only an increase of 29.14 rupees, which was insufficient.

If costs fall in the second half of 2022 with rains, tariffs will be brought down, Minister Wijesekera said.

Global energy prices are also expected to ease with US monetary tightening. (Colombo/Jan01/2022)

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Sri Lanka’s Ceylon Chamber links up with Gujarat Chamber

ECONOMYNEXT – The Ceylon Chamber of Commerce has signed an agreement with the Southern Gujarat Chamber of Commerce and Industry (SGCCI) to increase trade cooperation between India and Sri Lanka.

The MOU was signed by CCC CEO Buwanekabahu Perera, SGCCI President Ramesh Vaghasia, in the presence of Dr Valsan Vethody, Consul General for Sri Lanka in Mumbai, India.

“With the signing of the MoU, … the Ceylon Chamber of Commerce and SGCCI aim to facilitate trade between the two countries via initiatives such as trade fairs and delegations, business networking events, training programmes,” the Ceylon Chamber said in a statement.

“This partnership will open doors for Sri Lankan businesses to explore opportunities in Surat’s dynamic market and enable the sharing of expertise and resources between the two regions.”

Established in 1940, SGCCI engages with over 12,000 members and indirect ties with more than 2,00,000 members via 150 associations. It promotes trade, commerce, and industry in South Gujarat.

The region’s commercial and economic centre Surat has risen to prominence as the global epicenter for diamond cutting and as India’s textile hub, and is ranked the world’s 4th fastest growing city with a GDP growth rate of 11.5%

Surat’s economic landscape is vibrant and diverse. As India’s 8th largest and Gujarat’s 2nd largest city, it boasts the highest average annual household income in the country.

The nearby Hazira Industrial Area hosts major corporations like Reliance, ESSAR, SHELL, and L&T. (Colombo/Jun18/2024)

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Sri Lanka telecommunications bill some clauses ruled unconstitutional by SC: Speaker

ECONOMYNEXT – Sri Lanka’s Supreme Court has found a number of clauses in a proposed amendment to the Telecom Telecommunications Amendment bill unconstitutional, speaker Mahinda Yapa Abeywardana said.

“Clause No 8, proposed section 9A 2 of the bill is inconsistent with Article 12 1 of the constitution, however this inconsistency shall cease if word ‘may’ will be replaced with word ‘shall’ as set out in the determination of the supreme court.”

“Clause No 9 is inconsistent with Article 12 1 of the constitution and only can be passed with special majority required under paragraph 2 of the Article 84. However, the inconsistency shall cease if clause is amended as set out in the determination of the supreme court.

Clause No 12, proposed section 17 10 of the bill is inconsistent with Article 12 1 of the constitution and can only be passed with special parliament majority required under Article 84 paragraph 2. However, the inconsistency shall cease if clause is amended as set out in the determination of the supreme court.”

Sections of clauses 13, 18, 20, 33 and 35 were also in violation of the constitution, and could only be passed by a special majority of parliament. (Colombo/Jun18/2024)

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Sri Lanka to exempt one house from imputed rent wealth tax: President

ECONOMYNEXT – Sri Lanka will exempt one house from a proposed wealth tax outlined in an International Monetary Fund program, President Ranil Wickremesinghe said.

About 90 percent of the people’s houses are likely to be exempt from the proposed tax, he said.

“[O]ne house will be exempt from this,” President Wickremesinghe told parliament Monday.

“It is going to have a very high threshold and I do not think the vast majority of the people in this country should even be worried about their house

“Don’t worry your house will be safe.”

The IMF program document however did not mention an exemption on one house, but did mention an exemption threshold.

Taxing houses and thrift in general could have detrimental effects on people’s well-being, housing stock and their willingness to remain in the country without migrating, critics say.

Related Sri Lanka to tax imaginary rents on houses under IMF deal

The mechanism of imputed rents was used because rates on houses were assigned to provincial councils and courts could strike it down.

Opposition legislator Harsha de Silva said the Samagi Jana Balwegaya welcomed President Wickremesinghe’s statement. (Colombo/June18/2024)

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