Industry energy costs to shoot up to 180%: FTZMA

• Says if govt. fails to come up with concessionary tariff band for BOI export sector, investors wouldn’t hesitate to relocate

Free Trade Zone Manufacturers Association (FTZMA) yesterday said that the electricity tariff hike that came into effect from yesterday will expand its members’ energy costs further up to 180 percent.

The association shared that the first tariff revision in August last year increased the electricity costs of industries by 110 percent, and the second increase of 66 percent which came into effect yesterday will push costs up to 180 percent.

 “The proposed hike will increase costs by 33 percent compared to the prevailing, causing a serious negative impact on our businesses. Industries including apparel, non-apparel, and the SME sector that are capable of earning the much-needed dollars into the country are going to be severely affected,” FTZMA Secretary Dhammika Fernando told Mirror Business. As global energy prices are expected to drop in 2023 as projected by the World Bank, Sri Lanka’s high energy costs will make it far more challenging to face competition, he added. Pointing out that the unit tariff is more or less similar to all the time zones, there is now no provision given to the manufacturers to plan their operation in a cost-effective manner, which according to FTZMA, will create a “huge” demand on CEB at the same time as there will be no spread-out of operation to get the cost advantage. Fernando said the newly imposed tariff will result in production costs “skyrocketing”, which in turn will render the BOI exports uncompetitive among international players. “We are losing our valued customers and resulting in losing much-needed foreign remittances to the country. Our investors are having serious concerns about the increasing costs, unfavourable market conditions, high taxes, and ad-hoc policy changes,” said Fernando. He added that unless the government takes immediate steps to create a suitable business environment by adopting a concessionary tariff band (structure) separately for the BOI export sector, investors would not hesitate to move their operations to other countries.