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Sri Lanka's power utility in profits, cashflow positive: minister
10 Mar, 2011 14:10:54
Mar 10, 2011 (LBO) - Sri Lanka's Ceylon Electricity Board, the island's state-run power utility ended 2010 in profits and is also cash positive being able to settle is payments on time, power minister Patali Ranawaka said.
The CEB had sold 121.86 billion rupees of power including 2.6 billion rupees worth energy for street lighting which has to be paid by the Treasury. With other income it had total revenues of 125.4 billion rupees.

It had expenses of 120.4 billion rupees generating a profit of 5,063 million for the year. The state utility does not have to make a provision for income taxes, unlike enterprises run by ordinary citizens.

Minister Ranawaka said the utility was now cash positive and it had cleared a bank overdraft and negotiated lower interest rates from state-run People's Bank.

CEB had tightened collections and cuts costs, reduced power piracy and also maximized hydro generation to produce stronger results, he said.

Hydro energy had risen to 47 percent in 2010 from 34 percent a year earlier and thermal generation had fallen to 47 percent from 60 percent.

The utility had cut system losses to 13.39 percent in 2010 from 14.58 percent a year earlier. It had generated 10,695 million units of power (GigaWatthours) and sold 9,263GWh, up from 9,882GWh and 8,441GWh in 2009.

The CEB had originally expected to pay 82 billion for private thermal producers but had eventually paid 57.6 billion rupees. CEB's own fuel bill had come down from a budgeted 23.5 billion rupees to 16.3 billion.

But power paid to private renewable, who are mainly mini-hydro firms had gone up from a budgeted 6.0 billion rupees to 8.0 billion.

The minister said it showed that while rains could reduce the fuel bill, the CEB also had to pay more for mini-hydro plants.

CEB is compelled to buy all the power mini-hydros generate even at the cost of shutting down CEB's own hydro plants which have little or no storage.

Mini-hydro plants however have no separate 'capacity charge' to cover their capital costs.

Last year the Treasury had converted about 30 billion rupees of its long-term debt originally take on to build capital stock to equity. Repayments on a further 30 billion rupees in debt had been frozen. It has to be paid back only from 2014.

No interest charge had been made to the 2010 profit and loss account for interest on the balance 30 billion rupees, since it has been 'frozen'.

The CEB had been unable to pay the loans since the state controls power prices and it had been forced to give power to domestic consumers and even industries at prices lower than even in India.

The state will now repay the loans from taxes charged on other goods and services.

Separately the petroleum ministry said 80 percent of the loss in Ceylon Petroleum Corporation came from cut priced sales of furnace oil made to the CEB.

A ministry statement said CPC was selling furnace oil which cost it 81 rupees for 40 rupees to the CEB.

Sri Lanka's rulers have been playing politics with energy for years, sometimes printing money to subsidize oil prices or to make up for revenue losses, in the process driving inflation to very high levels and also depreciating a currency peg.

Sri Lankan citizens who do not readily understand that state operate with taxes charged from the people, printed money which creates inflation or accumulation of debt which has to be paid back with future taxes, are routinely told that the 'government bears the burden.'

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READER COMMENT(S)
1. lalinda Mar 10
Shows lack of knowledge when, CEB profit is driven by CPC loss..