Amid the ongoing economic crisis in Sri Lanka, the country’s cabinet of ministers has approved the implementation of a cost-reflective electricity tariff formula in order to ensure a continuous power supply throughout the year. This new pricing structure will come into effect this month, according to Minister of Power and Energy Kanchana Wijesekera.
In addition to approving the cost-reflective pricing formula, the cabinet also granted approval to amend the general policy guidelines for the electricity industry. The goal of these amendments is to improve the overall efficiency and profitability of the industry.
Minister Wijesekera stated that the electricity tariff would be increased by around 65 per cent to ensure a sustainable and reliable power supply for the country. This is not the first time that electricity tariffs have been increased in Sri Lanka, as tariffs were also raised in August 2022.
The decision to raise tariffs comes after the state-owned electricity producer and distributor, Ceylon Electricity Board, incurred a significant loss of over 150 billion LKR (about $413 million) in 2022. The revenue generated from the increased tariffs is expected to help the company recover from these losses and become financially stable once again.
Overall, the implementation of a cost-reflective electricity tariff formula and the amendments to the general policy guidelines for the industry aim to improve the sustainability and reliability of the power supply in Sri Lanka, while also ensuring the financial stability of the state-owned electricity producer and distributor.