Sri Lanka takes key step to help market price electricity
ECONOMYNEXT – Sri Lanka’s state-run Ceylon Electricity Board has set up a costing account that will make, generation, transmission and distribution transparent and will help quickly assess costs to help market price electricity.
Damitha Kumarasinghe, Director General of the Public Utilities Commission of Sri Lanka’ which regulates the power sector said a ‘bulk supply transactions’ account which shows real time settlements between generators, the transmission operator and distributors had been approved.
The BST account is a key requirement in a tariff methodology worked out in December 2015.
Setting up a settlement account to assess costs quickly was a structural benchmark in an economic program with the International Monetary Fund. The original December 2016 benchmark was later deferred to March 2018.
The cabinet of ministers are expected to approve a pricing formula for fuel also shortly ahead of a completion of an ongoing review of the program.
The inability to market-price power and electricity in time has triggered losses at state-run Ceylon Electricity Board and Ceylon Petroleum Corporation, which were then funded by bank credit which tend to push up interest rates.
If the central bank then prints money to keep rates down, the rupee then comes under pressure.
Sri Lanka has sharply cut taxes on fuel over the last six months as fuel prices rose.
The central bank in April printed tens of billions of rupees through reverse repo auction to bring overnight interest rates which suddenly rose to 8.50 percent levels to around 7.90 percent amid more money printed to accommodate a New Year cash demand.