Oct 24, 2011 (LBO) - Sri Lanka's power utility has lost 167 million rupees a day in August amid dry weather and power sector faces bankruptcy unless tariffs are adjusted, power minister Champika Ranawaka has said.
The daily numbers points to a monthly loss of about five billion rupees. Sri Lanka has two state run power distributors, Ceylon Electricity Board and Lanka Electric Company.
Under on-going power sector reforms, different parts of the sectors are ring-fenced.
"We should remember that if we want power 24 hours it has to be done with thermal energy and it is expensive," minister Ranawaka told parliament.
"People must be prepared to pay that. If not those intuitions cannot be prevented from going bankrupt."
In the past Sri Lanka's rulers have engaged in comprehensive energy price deceptions by funding energy subsidies by Treasury transfers from taxes collected from other sources such as food. The Treasury has also taken on energy sector losses adding to national debt.
Despite knowing full well that losses have to be paid by citizens by taxes in a different way many third world politicians engaged in rampant demagoguery claiming that the 'government bears the burden.'
Even now there is a debt moratorium on the Ceylon Electricity Board, which analysts have estimated to be a about 4.0 rupee a kilowatt hour.
Higher borrowings from the banking system to cover utility losses can also pressure Sri Lanka's exchange rate peg unless interest rates are hiked to generate new deposits and curb aggregate consumption.Minister Ranawaka said the August loss indicated a 33 to 34 rupee daily subsidy to CEB's 4.7 million customer base.
He said the CEB could not immediately increase rates and a request has been made from the Public Utilities Commission, the sector regulator.
The PUC revised tariffs last January till June and the same tariffs have been extended from July to December.
The Sunday Times newspaper quoting PUC chairman Jayatissa de Costa said CEB had requested a tariff revision and there were also discussions with the Treasury.
Courtesy of Lanka Business Online
He said the CEB could not immediately increase rates and a request has been made from the Public Utilities Commission, the sector regulator.
The PUC revised tariffs last January till June and the same tariffs have been extended from July to December.
The Sunday Times newspaper quoting PUC chairman Jayatissa de Costa said CEB had requested a tariff revision and there were also discussions with the Treasury.
Courtesy of Lanka Business Online
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