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Friday December 8th, 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.

SLPP enjoying “great demand” from potential presidential candidates: Namal

FILE PHOTO – President Gotabaya Rajapaksa with nephew Namal at the opening of the last part of the Southern Expressway/PMD

ECONOMYNEXT – The ruling Sri Lanka Podujana Peramuna (SLPP) enjoys “great demand” from potential presidential candidates, and the party will have to take a call on working with incumbent President Ranil Wickremesinghe, MP Namal Rajapaksa said.

Speaking to reporters on Thursday December 07, Rajapaksa claimed several names have come up concerning the SLPP’s candidate at next year’s presidential election.

“There is great demand: entrepreneurs, businessmen, politicians, are all there. There are presidents too, ready to come forward with our party,” he said.

“Out of all these people, we will put forward on behalf of our party the candidate that can take the country forward while stabilising the economy,” he added.

Commenting on continued support for President Wickremesinghe, Rajapaksa said the while SLPP at present works with the former in the present government, the party will have to decide whether that relationship continues going forward.

“The matter of whether we work with the United National Party (UNP) in the future – this is not a politics dependent on individuals; the SLPP is a party. We will talk as a party with other parties, but no discussions will be held centred around individuals,” he said.

Rajapaksa noted that Wickremesinghe was the only member of parliament representing the UNP at the time of his election by parliament following the resignation of his predecessor Gotabaya Rajapaksa .

“If we are to collaborate with the UNP in the future, we’ll have to discuss that. Once the party has decided on that, we can get a start on those discussions. Today, we work with the president in the present government,” he said.

Last month, when asked to comment on President Wickremesinghe’s 2024 budget, MP Rajapkasa sounded rather sceptical of the president’s ambitions for turning the crisis-hit economy around.

“We must study the budget. He had presented a lot of these proposals in last year’s budget too. They don’t seem to have been implemented,” Namal Rajapaksa said, speaking to reporters after the budget presentation Monday November 13 afternoon.

Rajapaksa’s father and leader of the SLPP former president Mahinda Rajapaksa, however, spoke in favour of Wickremesinghe’s budget.

Related:

Sri Lanka’s “forward-looking” 2024 budget will instill fiscal discipline: MR

While not without its shortcomings, the older Rajapaksa said, the 2024 budget is a forward-looking one that aims to ensure fiscal discipline and put Sri Lanka on the path to recovery. (Colombo/Dec07/2023)

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Sri Lanka ruling party MP contradicts poll to claim his party is overtaking president’s

ECONOMYNEXT – The ruling Sri Lanka Podujana Peramuna (SLPP) is rising from the ashes albeit at a slower than anticipated pace, while President Ranil Wickremesinghe’s United National Party (UNP) still commands only 1-2 percent of the vote, an SLPP legislator said.

MP S B Dissanayake, who is not a member of the cabinet of ministers headed by President Wickremesinghe, told reporters on Thursday December 07 that support for any major political party of the island nation is on a downward trend while the SLPP alone is gaining ground.

An independent poll by the Institute for Health Policy (IHP) however shows that this is decidedly not the case. Polling data for October showed that the leftist National People’s Power (NPP) had enjoyed support from 40 percent of likely voters, having dipped 2 percent from September, while the main opposition the Samagi Jana Balawegaya (SJB) stood at 26 percent, increasing four percent from 22 percent in September. President Ranil Wickremesinghe’s UNP’s support decreased marginally to 11 percent in October from September’s 13 percent. The SLPP also saw a decrease to 5 percent from the previous month’s 8 percent.

“You can’t gamble with elections. The election must be held. We always say electrons must be held. The presidential election must be held next year. There is no alternative,” said Dissanayake.

“Parliamentary elections can be called if needed. But that’s not how it is with the presidential election. Nominations for that will have to be called by September, October next year,” he added.

Asked by a reporter if the SLPP is ready for elections, Dissanayake acknowledged that support for his party had eroded, to nothing.

“We crashed to zero. We were turned to ashes. But we will rise from those ashes. We’re not where we thought we were. The 6.9 million [votes received at the 2019 presidential election] no longer applies. We’re at about half of that. But we’re rising, like this,” he said, gesturing upwards.

“As other major parties go in the opposite direction, we’re rising slowly. But the UNP is not. It’s still on the ground, and still at 1 to 2 percent,” he claimed.

“The SLFP is there too. Those who left us are the same. Even together they cannot form 1 percent. But we’re climbing,” he said. (Colombo/Dec07/2023)

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Sri Lanka president appoints main opposition MP advisor

ECONOMYNEXT – Sri Lanka President Ranil Wickremesinghe has appointed MP Vadivel Suresh as a Senior Advisor aimed at “fostering the integration of Hill Country Tamils into Sri Lankan society”, the president’s office said.

A statement from the President’s Media Divison (PMD) said Suresh’s “pivotal role will centre around overseeing the comprehensive integration of Hill Country Tamils, particularly focusing on the districts of Badulla, Nuwara Eliya and Rathnapura”.

“The Senior Advisor will play a key role in coordinating various initiatives related to the welfare of Plantation Companies, the promotion of women, safeguarding children, addressing disparities in Tamil schools and upgrading the delivery of health services,” the statement said.

In May this year, Suresh, who represents the main opposition Samagi Jana Balawegaya (SJB) in parliament and also serves as the general secretary of the Lanka Jathika Estate Workers’ Union, made headlines when he issued an ultimatum to opposition and SJB leader Sajith Premadasa, demanding an apology for a perceived slight on the Indian-origin Tamil community that Suresh represents. He also spoke favourably of President Wickremesinghe, hinting at a possible cross over.

Sri Lanka’s Indian-origin Tamils, most of whom have historically worked in the plantation sector and live in dire conditions on wages widely considered unacceptably low. Speaking at a May Day rally, the Badulla district MP said Premadasa must apologise to the estate Tamils for allegedly snubbing them at an event in Madulsima that he failed to attend.

“I would like to say to our leader, sir, do not take us for granted,” said Suresh.

“If you need us to stay with you, come right now to Madulsima and apologise to my people and then we shall restart our journey. Otherwise I won’t be part of that journey. There will be no Vadivel Suresh. If you don’t apologise to my people, I won’t be with the SJB,” he said.

Making matters worse, the MP also expressed a willingness to join President Wickremesinghe if he was able to raise the daily wage of plantation workers and resolve their grievances. He also said the president has been successful in containing the disruptions caused by the currency crisis.

“On this May Day, we say to both the opposition leader and the president, I and my people would join hands with a leader that worked to increase [estate workers’] wages and give them [access to the Samurdhi welfare scheme] and include them in national policy,” he said. (Colombo/Dec07/2023)

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