Mar 31, 2013 (LBO) – Sri Lanka’s power regulator had directed state-run Ceylon Electricity Board to cut penalties on late payers and also halted penal interest accruing after disconnection. The CEB has also been directed to come up with a plan to pay interest on customer security deposits held by the power firm. The power utility has agreed submit information on customer deposits by April 30.
The Public Utilities Commission of Sri Lanka said penalty interest currently at 2.0 percent a month had been cut to 1.24 percent.
The regulator said the interest rates would henceforth be based on a formula indexed to money market interest rates.
Sri Lanka’s bank interest rates have been high over the past year due to heavy borrowing by state energy enterprise, especially Ceylon Petroleum Corporation.
Until recently some state banks have been borrowing fixed deposits as high as 18 percent a year which are believed to have been on lent to cash hungry state entities at rates in excess of 20 percent, considering a reserve cost of 8 percent, according to banking sector sources.
Sri Lanka’s interest rates spiked over late 2011 and 2012 as state energy utilities borrowed from the b