Sri Lanka to introduce new electricity pricing system for low-income households

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ECONOMYNEXT – Sri Lanka will introduce a new electricity pricing system for low-income households from September, Energy and Power Minister Kanchana Wijesekara says, calling for support for restructuring of the Ceylon Electricity Board (CEB).

A day after the regulator, the Public Utilities Commission of Sri Lanka (PUCSL) announced an increase in electricity tariffs of 75% on average, Wijesekara told Parliament on Wednesday August 10 that a separate tariff system for low-income families was on the cards.

These new tariffs, proposed by the CEB, have been approved by the PUCSL, will come into force next month, he said.

Tuesday’s tariff hike was the first increase in electricity tariffs in Sri Lanka for nine years. The CEB has faced steep cost increases since 2001, with the depreciation of the rupee adding to the costs. The cost of CEB diesel rupee has increased by 350% since 2013, the cost of coal rupee has increased by 650% and the cost of fuel oil rupee has increased by 410%.

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

He said that after taking into account the increase in fuel and coal prices in the international market in 2021, the cost has increased by about 33 billion rupees per month for power generation, while the profits remained at the same level.

“The CEB had to pay 28.5 billion rupees to renewable energy producers in the last six months. We have to pay more than a billion to the holders of solar panels. The private power plants from which we buy power have to be paid 76.8 billion rupees,” Wijesekara said.

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

The minister said that in addition to project loans of Rs 284 billion and term loans of Rs 138 billion, the CEB is indebted with a total of Rs 612 billion.

“That’s why we proposed to focus more on renewables rather than what we asked for by not putting all the burden on the public,” Wijesekara said.

“This is how we can reduce production costs. Until then, we needed a price review.

The CEB is now authorized to increase tariffs by 264% for consumers who use less than 30 units, and from 30 units to 60 units by 211%. From 60 to 90 units, the increase will be 125%.

The Minister also claimed that places of worship were abusing the privilege of subsidized electricity tariffs.

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

“The monthly bill for religious venues was around Rs 87 but we have seen these venues abuse this subsidy,” he said.

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

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

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

“I ask for help in restructuring the CEB. We absolutely have to. With this, if we get relief to minimize costs, we will give this benefit to the consumer.

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

“Even now, private electricity suppliers have informed us that if we do not settle the payments due, they will no longer be able to supply electricity. In the recent past, 70% of electricity was generated by fuel and coal because we could not generate electricity from hydropower,” he said.

“If you had built one more power station during the time of the Yahapalana government, we would not have been in this position,” he told opposition MPs. (Colombo/August 10, 2022)

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