Ceylon Chamber fires warning over new CEB tariff

• 20-30% increase difficult for biz; will result in sharp profitability fall
• Will acutely affect exports
• Urges CEB to give priority to implementation of PUCSL directions

The Ceylon Chamber of Commerce is up in arms over the steep rise in electricity tariffs, warning that it will result in a sharp fall in profitability in addition to impacting exports and services sectors.

“The new tariffs will entail significant increase in electricity costs for all industry sectors. On average, the increase is estimated at around 20%-30%.

It will be difficult for businesses to absorb such an increase and it will result in a sharp fall in profitability,” the Ceylon Chamber said in a

statement.

“The tariff increase will acutely affect businesses engaged in producing goods and services for exports, as they are already facing severe competition from other countries and losing their market share,” the Chamber said adding that Sri Lanka’s merchandise exports contracted by 7.4% in 2012 and by over 18% in January 2013.

It noted that although there has been no adjustment to tariffs based on the views expressed at the public consultation, the Public Utilities Commission (PUCSL) has directed the Ceylon Electricity Board to implement some recommendations made by the public.

“These recommendations, when implemented, are expected to increase transparency and monitoring of generation plants which will lead to reduction of costs. We urge the CEB to give priority to implementation of these directions,” the Ceylon Chamber said.

The chamber submitted its observations and recommendations to the Public Utilities Commission of Sri Lanka in response to its call for public consultation on the proposed electricity tariffs, through the Joint Chambers Forum. Broadly, its submissions covered:

1. Views expressed by industry sectors on the proposed tariffs

2. Request for the PUCSL to publish the road map to cost reflective tariffs and profitability of the CEB

3. Request for republishing the costs of supplying power to each category of user based on more accurate distribution losses as the costs for each category user in the consultation paper provides a distorted position on the subsidy element

4. Measures to improve transparency by publishing updated information as required by the tariff methodology

5. Recommendation to monitor the efficiency of electricity generating units and benchmarking them against global standards

6. In the event of renewal of Independent Power Purchase Agreements which have/will be lapsing the renewal agreements be negotiated in a transparent manner with cost justifications and

7. Recommendation to reduce the cost of generation by implementing the dispatch planning software.

These were intended to enhance transparency and reduce total cost of electricity and thereby the tariffs for the end users.