ECONOMYNEXT – Sri Lanka’s state-run Ceylon Electricity Board’s high operating costs are partly due to excessive prices paid for fuel and no tariff hike is being considered, Chairman of the Public Utilities Commission of Sri Lanka, Janaka Ratnayake said.
The CEB itself does not buy fuel but depends on state-run Ceylon Petroleum Corporation and Lanka Coal, another state firm to buy fuel. Both firms are periodically caught in procurement scandals.
“They are paying about 385 plus rupees per litre for furnace oil,” Ratnayaka told EconomyNext.
“That is too much. From the global market we can buy it to much lower price. It can be imported below 200 rupees,”
“I ask the government to take the necessary steps to create a system to import furnace oil, like they did for fuel, to be imported at the lower price levels. If that happens, we can go without going for a price hike.”
Sri Lanka’s CEB generally gets furnace oil and residual oil from the domestic refinery and usually do not import furnace oil.
The refinery however is not regularly operating due to inability to get crude amidst the worst currency crisis in the history of the island’s intermediate regime central bank.
Ratnayake had earlier brought to light import costs of the CPC.
Pushing for operations efficiency of the CEB is a role of the regulator. Regulating costs based on global benchmark prices to push for procurement efficiencies is a standard practice. However the PUCSL is not the official regulator of the petroleum sector.
Sri Lanka power tariff revisions sought in Jan and July: Minister
Power and Energy Minister Kanchana Wijesekera told parliament that cabinet approval was sought to twice yearly tariff hikes in January and July of each year.
No Electricity tariff hikes are being considered yet, Ratnayake said.
Wijesekera blamed the regulator as well as successive administrations for not regularly revising power prices and pushing the sector into crisis.
In Sri Lanka activists had also blocked cheap coal power. (Colombo/Dec01/2022)