Sri Lanka’s debt-ridden power utility seeks more loans

August 12, 2012 (LBO) – Sri Lanka’s power minister has sought cabinet approval to raise state-run Ceylon Electricity Board’s borrowing limit to 74.2 billion rupees to meet increasing fuel needs, settle debts and pay independent power producers, a report said. Minister Champika Ranawaka told his cabinet colleagues that the state power utility owed 16 billion rupees to independent power producers and another 15 billion rupees to state-run Ceylon Petroleum Corporation, the Colombo-based Sunday Times newspaper said.

The higher borrowing limit will be used to meet:
– Overdraft and term loans 45 billion rupees
– Provision for letters of credit — 10 million rupees
– New guarantees for independent power producers — 19.2 million rupees

The minister blamed the heavy costs on the prevailing drought that has limited hydro power generation. The CEB is now depending on expensive thermal power to provide uninterrupted electricity supply to the country.

As payables to independent power producers have reached peak level, purchasing of fuel from CPC for thermal generation has been limited. IPPs have utilised their credit limit to maximum level, Ranawaka was quoted in the report.

The CEB has secured a 20 billion rupee short-term