FTZ Manufacturers wary of electricity tariff cut as election gimmick

6 March 2024 06:17 am Views - 205

• Warns CEB not to be haphazard in hiking tariff again citing drought

The Free Trade Zone Manufacturers Association (FTZMA) welcomed the electricity tariff reduction, but said it hopes the revision is not used as another election gimmick.

“..we doubt whether the present revision reflects the cost of CEB’s operation, or whether it is an exaggeration or a precursor to a bigger tariff increment, citing the higher purchase cost allied with the forward contracts with solar and wind operators that contribute much lesser cost than that of fossil fuel,” FTZMA Chairman Dhammika Fernando said.

He pointed out that CEB was able to earn record profits last year benefiting from the massive rainfall received across the country from September onwards, which allowed the CEB to dramatically reduce oil and coal-based generation. 

For the financial year ended 2023, CEB declared a thumping Rs.61.2 billion profit and Rs. 75.7 billion for the group.

FTZMA noted that CEB failed to pass down this benefit to the consumer through the effective implementation of so-called ‘Cost Reflective tariff’ formula as envisaged by the IMF in the recent past and has overburdened consumers, hindering the industry sector.

“We warn CEB not to be haphazard in hiking the tariff again, citing the drought season we are currently experiencing. We do not want the industry to suffer from soaring production costs, making them highly uncompetitive in the export markets,” it said. 

The Association expressed that it is deeply concerned on the possibility of another hike in electricity prices, which would make it harder for consumers and businesses to carry out daily operations, and harm Sri Lanka’s ability to compete in the global market.

According to EDB, Sri Lanka’s cumulative merchandise export revenue declined by 9.54 percent YoY to Rs.11.85 billion in 2023.