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Monday December 4th, 2023

Sri Lanka’s CEB seeks interim power tariff hike amid IMF review

LOSS EXPECTATION: CEB expects Rs32bn loss after earlier price cut.

ECONOMYNEXT – Sri Lanka’s Ceylon Electricity Board has sought an interim tariff hike based on lower than forecasted rainfall up to August on which an earlier tariff hike was decided by the regulator, as well as higher costs due to coal plant outages.

The Ceylon Electricity Board in a letter to the regulator said dry weather conditions it had based the last tariff revision now turned out in actual practice and the 4500 GigaWatt hours hydro energy on which a larger tariff cut was made by the regulator was no longer likely even with higher rainfall in the last quarter.

Under a forecast for 3,750 GWh in hydro power, the CEB would make a loss 32.5 billion rupees after other income and 44.58 billion rupees before other income.

Under a worse case scenario for 3,500 GWh the CEB was on track to make a loss of 54.38 billion rupees after other income and 66.46 billion rupees before

The CEB in its letter to the regulator said it had lost 13.7 billion rupees up to July and a 14.3 billion loss was forecast for the month of August alone.

Sri Lanka is making 6 monthly tariff adjustments under an International Monetary Fund agreement to reduce state enterprise losses.

In the context where the central bank prints money to maintain fixed policy rate, CEB losses which drive up domestic credit tends result in inflationary open market operations and reserve losses if the central bank does not allow rates to go up.

“Building on the Central Bank of Sri Lanka’s success in controlling inflation, refraining from monetary financing will help keep inflation in check,” the IMF said at the conclusion of a review mission which did not result in an immediate staff level agreement.

“Other challenges include maintaining cost recovery in electricity pricing.”

The Public Utilities Commission said “Cabinet of ministers has conveyed the decision of the Cabinet to the Public Utilities Commission of Sri Lanka (PUCSL), among other things to, “urgently consider the submission by CEB based on the cost reflective tariff methodology” and to advance “the tariff revision scheduled for January 2024 to October 2023 to recover all costs.”

Reduction in coal power, due to outages as well as a recovery in demand had increased liquid fuel generation.

CEB said while rainfall was projected to be higher in the last quarter, it also had to re-build hydro storage to at least 850 GWh by the end of the year, which it had run down up to August by using other sources.

According to meteorologists 2023/2034 are El Nino years, where Sri Lanka gets extra rain in the latter part of the year helping in paddy production but the first quarter tends to extra dry which can hit the power sector.

The CEB has continued to seek higher tariffs for households above that of hotels and industry along the lines the Public Utilities Commission had approved earlier.

Sri Lanka has highly interventionist and discriminatory pricing based on the type of user and not just time of day, and there is no uniform tariff unlike in better managed countries like Singapore.

Singapore also revises tariffs more regularly, which reduces forecast errors.

Singapore also does not have a fixed policy rate, which leads to currency depreciation when the monetary authority prints money to cut rates as in Sri Lanka, leading to energy enterprise losses, inflation, social unrest and reformist government being booted out, critics have said.

The CEB has given the regulator lines of options to raise tariffs as a 22 percent surcharge, with an energy charge hike or a mix of fixed charge.

Under a mixed system, the household tariff above 181 will go to 83 rupees.

Under a 22 percent increase the household tariff above 181 units rising 91.5 rupees a unit from the current 75.

(Colombo/Sept29/2023)

Comments (1)

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  1. Kadija says:

    Why all these tariff hike explanations blaming the weather etc. You idiots have no idea how to manage energy. How to manipulate natural resources. Only thing you know is price hikes.

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  1. Kadija says:

    Why all these tariff hike explanations blaming the weather etc. You idiots have no idea how to manage energy. How to manipulate natural resources. Only thing you know is price hikes.

Sri Lanka stocks close up as some investor interest returns

ECONOMYNEXT – The Colombo Stock Exchange closed up on Monday, CSE data showed.

The All Share Price Index was up 0.22 percent, or 23.33 points, at 10,743.59.

The S&P SL20 index was up 0.68 percent, or 20.60 points, at 3,067.73.

Turnover was at 708 million. The banks sector contributed 189 million, while the food, beverage and tobacco sector contributed 176 million of this.

Sri Lanka’s stock market has seen some investor interest return after last week’s news that the country had managed an agreement on a debt restructuring deal with an official creditor committee, and foreign funds for some development projects resumed.

Top positive contributors to the ASPI in the day were Sampath Bank Plc (up at 71.50), LOLC Holdings Plc (up at 379.00), and Commercial Bank of Ceylon Plc, (up at 90.90).

There was a net foreign outflow of 52 million.

Citrus Leisure Plc, which announced that its banquet hall and revolving restaurant at the Lotus Tower would launch on or around Dec 9, saw its share price rise to 6.20 rupees. (Colombo/Dec4/2023).

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Sri Lanka rupee closes broadly steady at 328.10/30 to the US dollar

ECONOMYNEXT – Sri Lanka’s rupee closed at 328.10/30 to the US dollar on Monday, from 328.00/10 on Friday, dealers said.

Bond yields were stable.

A bond maturing on 01.06.2025 closed at 13.70/14.00 percent from 13.70/95 percent.

A bond maturing on 01.08.2026 closed at 13.90/14.10 percent from 13.90/14.05 percent.

A bond maturing on 15.01.2027 closed at 14.00/14.10 percent from 14.05/10 percent.

A bond maturing on 01.07.2028 closed at 14.20/35 percent from 14.15/25 percent.

A bond maturing on 15.05.2030 closed at 14.25/45 percent, from 14.20/45 percent.

A bond maturing on 01.07.2032 closed at 14.05/40 percent, from 14.00/45 percent. (Colombo/Dec4/2023)

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Gov minister highlights abortion rights, sex-ed for children, and Sri Lanka men killing their women

ECONOMYNEXT – Sri Lanka’s legislators have politicized the topics of rape and violence without addressing the elephant in the room, Jeevan Thondaman, Minister of Water Supply and Estate Infrastructure Development said in parliament on Monday (4).

“All the members here are talking about rape. What happens after that? We must talk about abortion rights. That is not something anyone wants to touch on, and that is why we are in this place right now,” Thondaman said.

“Despite alarming statistics on rape and violence, women are often blamed and punished for it. The criminalisation of abortion is a major example of this.”

Sri Lanka has some of the most restrictive abortion laws in the world. According to a 2016 estimate by the Health Ministry, he said, approximately 658 abortions take place a day, and close to 250,000 a year.

“That’s 250,000 women whose lives you are endangering.”

He added that what was needed at this point in time was comprehensive sexual education (CSE) for children and young people.

“Only through CSE in schools will children and young people develop, accurate, age appropriate knowledge attitude and skills; positive values such as respect for human rights, gender equality, diversity and attitude and skills that contribute to a safe, healthy and positive relationship.”

Thondaman pointed out that CSE plays a pivotal role in preparing young people for a world where HIV, AIDS, sexually transmitted infections, unintended pregnancies, and sexual and gender based violence still pose a risk to their well-being.

“CSE basically empowers children take control and make informed decisions freely and responsibly.”

Thondaman also highlighted the findings of a 2021 study (Fatalities_20211109_UNFPA) by the UNFPA and the University of Kelaniya that showed that a majority of women killed in Sri Lanka were murdered by those close to them.

“62 percent of homicides of Sri Lankan women are committed by either an intimate partner, ex-partner or family member. 84 percent are killed in their own homes by someone they know.”

Police and the judiciary have failed Sri Lanka’s women, the minister pointed out.

“Only 5 percent of these cases, between 2013-2017, were ever concluded. Men claim they were provoked, or are of unsound mind or have mental illness: These have been successful defenses. And the Police often express sympathy to this narrative as opposed to the victim’s.”

“We have a history of protecting oppressors.”

It takes 7-10 years for a child rape case to conclude, he pointed out.

Establishment of child courts are needed, he said, as well as several legislative amendments. “The government is working on a new law to reform the domestic violence act, reform of marriage and divorce laws to ensure there is an easier path to divorce: no one should be forced to remain in a marriage that is either abusive or not healthy.” (Colombo/Dec4/2023)

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