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Tuesday September 27th, 2022

Sri Lanka to introduce new electricity tariff scheme for low-income households

CEB incurred a loss of 65 billion rupees in the first quarter

ECONOMYNEXT – Sri Lanka will introduce a new electricity tariff scheme for low-income households from next week, Power & Energy Minister Kanchana Wijesekara said, calling for support in restructuring the state-run Ceylon Electricity Board (CEB).

A day after the regulator, the Public Utilities Commission of Sri Lanka (PUCSL) announced an increase in electricity tariffs by an average of 75 percent, Wijesekara told parliament on Wednesday August 10 that a separate price scheme for low income families is on the cards.

These new rates, proposed by the CEB, have been approved by the PUCSL, will be effective next week, he said.

Tuesday’s tariff hike was the first time electricity rates were increased in Sri Lanka nine years. The CEB has faced steep cost increases since 2001 with rupee depreciation adding to costs. CEB diesel rupee cost went up 255% since 2013, coal rupee cost went up 550% and furnace oil rupee cost went up 365%, according to PUCSL data.

Minister Wijesekara said, in 2021, the monthly cost of electricity generation was 23.6 billion rupees while earnings stood at 21.7 billion rupees.

He said, after taking the price increase of fuel and coal in the international market in 2021 into account, the cost has approximately gone up to 33 billion rupees per month for electricity generation, while the earnings remained at the same level.

“The CEB had to pay 28.5 billion rupees to renewable energy producers for the last six months. We have to pay over one billion to solar panel holders. Private power plants that we purchase energy from need to be paid 76.8 billion rupees,” said Wijesekara.

“Even though the Ministry of Finance and Central Bank provided some money to purchase fuel, for the credit purchase from state run Ceylon Petroleum Corporation (CPC) we have to pay 31.6 billion rupees.”

The minister said along with project loans of 284 billion rupees and term loans of 138 billion rupees, the CEB is in debt of a total of 612 billion rupees.

“That is why we proposed that we focus more on renewable energy rather than we requested by not putting the entire burden on the public,” Wijesekara said.

“That is how we can reduce generation costs. Until then we needed a price revision.”

The CEB is now permitted to increase rates by 264 percent to consumers who use below 30 units, and from 30 units to 60 units by 211 percent. From 60 to 90 units, the increase will be by 125 percent.

The minister also claimed that places of worship have been abusing the privilege of subsidised electricity tariffs.

“When take religious places, for 30 units we charged only 1.90 rupees,” said Wijesekara.

“The monthly bill for religious places was around 87 rupees, but we have seen these places misuse this subsidy,” he said.

“We have to manage some of this cost and at the same time we have to provide some relief to  low income families.”

However, said Wijesekara, the price revision still does not cover the costs, and the plan is to minimise the operational cost.

“After 2014, there were no steps taken towards a major power plant. That is the main reason for this power crisis,” he said.

“I ask for support in restructuring the CEB. We definitely have to do it. With that, if we get any relief to minimise the cost, we will give that benefit to the consumer.”

If the CEB continues under these losses, he said, within a month the utility provider will be rendered unable to produce electricity.

“Even now, the private power suppliers have informed us that if we do not settle the due payments, they will be unable to supply electricity anymore. In the recent past, 70 percent of the electricity was produced by fuel and coal because we could not produce electricity through hydro,” he said.

“If you made one more power plant during the Yahapalana government’s time then we would not have been been in this position,” he told opposition MPs. (Colombo/Aug10/2022)

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