Sri Lanka power utility proposes 5-pct hike to fill revenue gap

ECONOMYNEXT – Sri Lanka’s state-run Ceylon Electricity Board (CEB) has proposed a 5 percent tariff hike across the board, saying it was responding to a 5 percent gap in revenues identified by the regulator for the next six months based on the costs of the utility.

According to the filed tariff, the CEB will get Rs17.78 billion in extra revenue from October 2016 to March 2017 to cover costs and returns.

The regulator can disallow costs of the utility that it does not agree with.

The CEB has to operate on a cost-reflective basis under a deal signed with the International Monetary Fund and make profits to repay old loans.

The CEB said it after raising tariffs by 5 percent; it was rounding off prices to the nearest 50 cents. This would leave it with a Rs38 million gap per month.

The CEB said it was leaving the existing tariff structure as it is.

The CEB said it was proposing a hike across the board and was not distributing the tariffs across different categories as it was "unaware of any specific government policy guidelines" on how the increase should be distributed across different customers.

Sri Lanka has severe cross subsidies on electricity where the CEB has taken on quasi-fiscal responsibilities, analysts say.

Some users are effectively taxed at around double to three times the cost of the generation cost to subsidise other users, but the money extracted from customers are not reflected in the revenue-to-GDP ratio of the country.

The CEB said it was sending back a 5 percent tariff increase based on the regulator’s letter "without further reconciling with our submissions".





The utility said it was unable to "officially submit a consolidated end-service-tariff" and said in its letter that a uniform national tariff should be calculated by the regulator according to the existing procedure. (Colombo/Oct03/2016)

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