PUCSL chief slams CB’s misguided policies for current power crisis

• Questions rationale behind continuing to service debt while keeping public in dark
• Says floating exchange rate is only solution to current forex crisis 
• Reveals plan to initiate legal action on behalf of public to secure forex for fuel imports for power generation 

The Public Utilities Commission of Sri Lanka (PUCSL) this week blamed the misguided financial management of the Central Bank (CB) for the current power crisis, as it explores legal actions to secure US $ 150 million required to import fuel to power the country’s power plants over the next two months.

“My personal opinion is that we should seek a moratorium on external debt repayments. There’s no point in continuing to service our external debt burdening the public and economy and leaving the public in the dark. At the moment, the importers only release oil shipments once we make the payments. Earlier, we were able to import fuel under 30, 60 and 180-day credit facilities. However, the current situation has worsened as we have been following wrong policies,” PUCSL Chairman Janaka Ratnayake told reporters in Colombo.

The PUCSL estimated that the cost of fuel imports for power generation during the next two months at US $ 150 million.

The Ceylon Electricity Board (CEB) was expected to collect Rs.25 billion from late bill payments and the Treasury was expected to release Rs.30 billion to fund the fuel purchases from Ceylon Petroleum Corporation (CPC). Consequently, the CB was expected to provide the required forex to finance the fuel supplies to CPC.

However, Ratnayake noted that none of these agreed actions were implemented by the authorities so far, while the country continues to embrace up to eight-hour daily power cuts. “We are expecting showers by May 1 but there are two months until then,” Ratnayake added.

In particular, he blamed the Central Bank for the forex shortage, which has led to the current power crisis, as it continues to hold on to the exchange rate artificially.

“The only option is to float the rupee. It might depreciate by 30-40 against the US dollar but we don’t have an option,” he went on to say. Meanwhile, Ratnayake announced the plans to initiate legal action in order to secure forex for fuel imports. “If a solution is not given, we are going to take legal action to find the necessary foreign exchange to import the fuel required for power generation. We are doing this on behalf of the public,” he said.
Further, Ratnayake noted that he has held talks with the Indian High Commission in Colombo, recently.

“They informed us that the easiest path to secure forex for fuel is through the proposed US $ 1 billion credit line,” he added. (NF)