Power tariff hike in Sri Lanka may detrimentally affect apparel sector

Sri Lanka’s state-run Ceylon Electricity Board (CEB) will raise tariffs by 264 per cent for people consuming the least, it recently announced, while a smaller hike will be faced by users consuming more. The decision is expected to have some detrimental impact on the country’s garment industry as most units would fall under the ‘more use’ category.

CEB has been permitted to increase rates by 264 per cent to consumers who use below 30 units up to a maximum of 198 rupees and by 211 per cent for consumers whose between 30 and 60 units to a maximum of 599 rupees. For those using between 60 and 90 units, the increase will be by 125 per cent.

The highest increases will affect two-thirds of the 7.8 million households using less than 90 kilowatts a month, while bigger consumers will pay about 80 per cent more, official records say.

The smallest consumers, charged 2.50 rupees a unit now, will be charged 8 rupees. Bigger consumers, being charged 45 rupees a unit now, will have to pay 75 rupees.

The regulator had allowed CEB to carry out the sharp hikes—the first in nine years—from August 11 to recover part of its accumulated losses of $616 million, according to media reports from the country.

CEB had reportedly asked for tariff increase of over 800 per cent, but the regulator capped it at a maximum of 264 per cent.

Apart from facing its worst economic crisis after running out of foreign exchange reserves to finance essential imports, the country is facing hyperinflation and long electricity blackouts after CEB could not procure oil for its thermal generators.

The Public Utilities Commission of Sri Lanka (PUCSL) has imposed a number of conditions on CEB for the rate hike. These include the opening of a bulk supply transaction account, conducting an independent dispatch audit for 2021, renewing and revising purchase and sales agreements and payment of interest for security deposits obtained from consumers.

Sri Lanka has 7.8 million electricity users, 6.7 million of which are domestic consumers. 1.1 million are general purpose, while 1.4 million consume under 30 units. 1.7 million use 90 units, while 4.8 million use fewer than 90 units each month.

Source: https://www.fibre2fashion.com/