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Tue, 28 April 2015 05:42:21
Sri Lanka govt. agrees to restructure Rs. 60 bn electricity board debt
30 Dec, 2006 15:41:56
December 30 (LBO) – The Sri Lanka government has agreed to offload half the 60 billion-rupee long-term debt of the Ceylon Electricity Board from January and re-schedule the balance to be paid after five years.
"To allow the Ceylon Electricity Board to begin with a clear balance sheet from January 01, the government has agreed to offload 50 percent of CEB’s long term debt, to be re-issued as share capital of the CEB," M M C Ferdinando, secretary to the power ministry, told LBO on Friday.

"The balance 50 percent is to be re-scheduled by the government, allowing the CEB to repay in monthly installments after 2011, after commission of the coal power plant in Norachcholai."

Sri Lanka's first coal power project is due to be completed in 2011, bringing down high costs of generating electricity from expensive liquid thermal plants.

Operating Deficit

According to provisional data from the Central Bank, CEBs net operating losses were up 16 percent in the first half of this year to 8.8 billion rupees.

Short-term bank borrowings by CEB amounted to 10.4 billion rupees, while payment arrears to Ceylon Petroleum Corporation and Independent Power Producers stood at 15.3 billion rupees as at end June.

The debt ridden utility is also expected to post a 20 billion-rupee loss this year, though a recent domestic tariff hike should also slow the slide in CEB finances next year.

In February this year, the CEB increased fixed charges by 100 to 275 percent and in September jacked up unit tariff rates by 30 percent, to partly offset the utility's losses.

The average tariff however, after the revisions at 9.26 rupees a unit, is still lower than the average cost of generation at 10.76 rupees a unit.

Tariff Cut

Meanwhile, industrial users are to also get a tariff cut from February next year, resulting in an annual loss of a billion rupees, a CEB official said.

A 20 percent fuel adjustment levy currently charged on every unit of electricity used by industrial customers is to be removed.

Domestic users were also exempt from a 15 percent Value Added Tax in this year’s budget, but this is to be incorporated into the household tariff, to partly offset losses from industrial use.

"The VAT is being absorbed into the tariff, so there will be no change in the household bills. This will partly offset the cost of lowering industrial tariffs, but there will still be a one billion rupees loss annually," the CEB official said.

Industrial users are charged in three bands – Retail users with a maximum demand of 42 KVA are charged 8.50 rupees a unit, medium scale users at 8.10 rupees a unit and large industries that use a high voltage supply are charged 8 rupees a unit.

In addition, medium and large industries have to pay a 3000 rupee fixed charge each month.

The CEB sells about seven billion units of electricity each year, with households using up 2550 million units with an almost equal amount used up by industries.
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