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Monday June 3rd, 2024

Sri Lanka free trade zone manufacturers alarmed by electricity tariff hike

ECONOMYNEXT –  Sri Lanka’s “alarming” and “unprecedented” decision to raise electricity tariffs could have disastrous consequences on export businesses, the Free Trade Zone Manufacturers’ Association (FTZMA)  said.

In a letter to Power & Energy Minister Kanchana WIjesekara on Friday August 10, the FTZMA said the high tariffs which are driving up cost of production would make Sri Lankan products highly uncompetitive in the global market, driving away foreign investment at a time the country is dealing with a debilitating forex crisis.

“We urge you to revisit and reanalyse the price structure once again [bearing in mind] that that foreign direct investors are the future lifeline and backbone of our country’s economy,” the letter said.

The Public Utilities Commission of Sri Lanka (PUCSL) has said that prior to the revision, the average revenue from the Industry category was 4.6 US cents per kiloWatthour (kWh) and the proposed increase would only increase revenue to 8.6 US cents per kiloWatthour.

The PUCSL has also asked that users who generate over 60 percent of revenue by forex would have to pay electricity bills in dollars, and would be given a 1.5 percent discount on their bills.

Chairman of the FTZMA, Dhammika Fernando said the dollar benefit would not be passed down to manufacturers, as rupee costs were increasing rapidly.

The PUCSL and the Ceylon Electricity Board (CEB) has for some time been calling for price hikes, as the previous hike was in 2013. Tariffs were decreased by 25 percent in 2014.

The CEB has been running on losses due to several reasons, inefficient and overpaid staff and selling at subsidised rates, according to Wijesekara.

The PUCSL has argued that it may not be prudent to wait for a revision, as it could further deteriorate the financial position of the Utilities.

The revenue requirement for the CEB to cover estimated costs in 2022 is 505 billion rupees excluding Lanka Electricity Company (LECO) costs. The hiked tariffs will bring in an estimated revenue of 512 billion rupees including LECO sales. Covering costs would require an 82.4% increase in revenue, but even with hikes the estimated revenue is at 79 percent.

Out of 7.8 million electricity consumers, 4.8 million domestic consumers are being given subsidised rates, even with the price hikes, the PUCSL said.

These subsidies are recovered in part by increasing the day rate given to Bulk Consumers in the Industry category.

The FTZMA  said that the approved hikes by PUCSL were unreasonable when compared to the CEB requested rates.

The CEB had requested an average of 78 percent increased rates for the Industry (IP1) sector, while the PUCSL has approved an overall increase of 91 percent.

IP2 had a proposed increase of 78 percent and the approved increase is 117 percent.

IP3 had a proposed increase of 56 percent and the approved increase is 118 percent.

Fernando stated that if costs could not be kept down, small and medium enterprises would have to shut down, and that other businesses would have to increase prices to cover production costs.

Sri Lanka is now in a position where it cannot afford to subsidise and consumers cannot afford to pay up.

The FTZMA has requested a meeting with Wijesekara to discuss the situation.

“It is our fervent hope…to come to an agreement whilst reaching a win win situation…and retaining much needed FDIs.” (Colombo/Aug12/22)

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Water levels rising in Sri Lanka Kalu, Nilwala river basins: Irrigation Department

Sri Lanka Navy assisting in rescue operations (Pic courtesy SL Navy)

ECONOMYNEXT – Sri Lanka’s Irrigation Department has issued warnings that water levels in the Kalu and Nilwala river basins are rising and major flooding is possible due to the continuous rain. People living in close proximity are advised to take precautions.

“There is a high possibility of slowly increasing prevailing flood lowline areas of Kiriella, Millaniya, Ingiriya, Horana, Dodangoda, Bulathsinhala, Palinda Nuwara and Madurawala D/S divisions of Ratnapura and Kalutara Districts, up to next 48 hours,” it said issuing a warning.

“In addition, flood situation prevailing at upstream lowline areas of Ratnapura district will further be prevailing with a slight decrease.

“The residents and vehicle drivers running through those area are requested to pay high attention in this regard.

“Disaster Management Authorities are requested to take adequate precautions in this regard.”

The island is in the midst of south western monsoon.

DMC reported that 11,864 people belonging to 3,727 families have been affected due to the weather in Rathnapura, Kegalle, Kilinochchi, Jaffna, Mullaitivu, Kalutara, Gampaha, Colombo, Galle, Matara, Hambantota, Puttalam, Kurunegala, Kandy, Nuwara Eliya, Anuradhapura, Polonnaruwa, Badulla, Moneragala, and Trincomalee districts.

Meanwhile, the Meteorology Department stated that showers are expected on most parts of the island today.(Colombo/June3/2024)

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UNP gen secy defends call for postponing Sri Lanka poll, claims opposition silent

The UNP party headquarters in Pitakotte/EconomyNext

ECONOMYNEXT — United National Party (UNP) General Secretary Palitha Range Bandara has defended his call for postponing Sri Lanka’s presidential election by two years, claiming that his proposal was not undemocratic nor unconstitutional.

Speaking to reporters at the UNP headquarters Monday June 03 morning, Bandara also claimed that neither opposition leader Sajith Premadasa nor National People’s Power (NPP) leader Anura Kumara Dissanayake have spoken against his proposal.

“I have made no statement that’s undemocratic. My statement was in line with provisions of the constitution,” the former UNP parliamentarian said.

He quoted Section 86 of Chapter XIII of the constitution which says: “The President may, subject to the provisions of Article 85, submit to the People by Referendum any matter which in the opinion of the President is of national importance.”

Sections 87.1, 87.2 also elaborates on the matter and describes the parliament’s role, said Bandara.

“I spoke of a referendum and parliament’s duty. Neither of this is antidemocratic or unconstitutional. As per the constitution, priority should be given to ensuring people’s right to life,” he said.

“Some parties may be against what I proposed. They may criticse me. But what I ask them is to come to one position as political parties and make a statement on whether they’re ready to continue the ongoing economic programme,” he added.

Bandara claimed that, though thee has been much criticism of his proposal for a postponement of the presidential election, President Wickremesinghe’s rivals Premadasa and Dissanayake have yet to remark on the matter.

“I suggested that [Premadasa] make this proposal in parliament and for [Dissanayake] to second it. But I don’t see that either Premadasa nor Dissanayake is opposed to it. To date, I have not seen nor heard either of them utter a word against this. I believe they have no objection to my proposal which was made for the betterment of the country,” he said. (Colombo/Jun03/2024)

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300 of 100,000 trees in Colombo considered high risk: state minister

ECONOMYNEXT – Trees in Sri Lanka’s capital Colombo are being monitored by the municipal council, Army and Civil Defense Force as the severe weather conditions continue, State Minister for Defense Premitha Bandara Tennakoon said.

“Within the Colombo Municipal Council city limits, there are 100,000 trees. Of these, around 300 are considered high risk,” Tennakoon told reporters at a media conference to raise awareness about the current disaster management situation.

Not all trees required to be cut down he said. “We can trim some of the branches and retain them.”

The problem was that buildings in the vicinity of the tree had cut branches on one side, causing it to become unbalanced, the minister said.

New laws would be brought in so provincial/municipal institutions could strengthen enforcement of building codes.

“We don’t have a single institution that can issue a warning about a tree. Not one to tell us what trees can or cannot be planted near a road.

“Trees should be suitable for the area. Some trees have roots that spread and damage roads, buildings. When the roots can’t go deep, they tend to topple over.

“Now Environment Day is coming up, and anyone can go plant a tree by the road. We have to take a decision about this. We have to enforce laws strongly in future.” (Colombo/June3/2024)

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