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Thu, 23 October 2014 19:03:58
Sri Lanka electricity ‘tariff deficit’ 30-pct: expert
10 Feb, 2010 12:29:33
Feb 10, 2010 (LBO) – Sri Lanka’s loss-making state power utility, whose rates have been held below cost by successive governments for political reasons, is running a ‘tariff deficit’ of 30 percent, an expert said.
But the new more efficient power generation plan of the Ceylon Electricity Board (CEB) should lower the deficit in future, said Leonardo Lupano, a tariff expert hired by the Asian Development Bank to help with reforms in the power sector.

The bank is funding capacity development in the power sector to implement reforms under a new law that was passed by parliament recently.

It was important to address the supply of power below cost and according to recent estimates, the tariff deficit was 30 percent, Lupano told a seminar.

It was organized by the Public Utilities Commission of Sri Lanka, ADB and Power Ministry.

But Lupano said this is expected to decrease over time when new power plants, especially those with lower-costs, come on stream.

“Cost-reflected tariff is a must but social acceptance of tariff also matters,” he said.

There is a need to identify a target revenue level for 2013 or 2014 and work towards it from the current level.

But he also said that comprehensive reforms were needed in the sector.

“Breakeven is not the end of the story but another stage in the process of a more comprehensive tariff reform looking for a more efficient sector in the long-run.”

The CEB has run up huge losses over the years as its tariffs hikes have not kept pace ith rising costs, especially of fuel.

The island’s is also heavily dependant on costly thermal power plants because it has not kept to its long-term generation plan which emphasized coal power and instead went for short-term options like building oil-based thermal plants.

However, coal plants are now being built.

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