Home Sri Lanka IMF warns Sri Lanka over electricity tariff reduction
Sri Lanka

IMF warns Sri Lanka over electricity tariff reduction

Share
Share

The International Monetary Fund (IMF) has expressed concerns over Sri Lanka’s recent decision to reduce electricity tariffs by 20%, effective January 17, 2025.

Peter Breuer, the IMF’s Senior Mission Chief for Sri Lanka, noted that this reduction moves away from cost-reflective pricing, potentially leading to financial losses for the Ceylon Electricity Board (CEB).

He noted that such losses could accumulate as debt, becoming a contingent liability for the government—a scenario Sri Lanka has faced before.

Breuer emphasized the importance of aligning electricity tariffs with the actual costs of generation and distribution.

He stated that restoring cost-recovery pricing is a key objective for the next program review.

Breuer also noted that mechanisms are in place to address this issue, such as the bulk supply transaction account, which is designed to trigger an automatic tariff increase when CEB’s losses become too large.

He stressed the importance of allowing these mechanisms to function properly and ensuring that future tariffs are set to cover costs.

Share

Leave a comment

Leave a Reply

Your email address will not be published. Required fields are marked *

Related Articles
Sri Lanka

Senior presidential advisor says US tariff hike could push apparel duties to 40%

Senior Economic Adviser to the President, Duminda Hulangamuwa, said that the proposed...

Sri Lanka

US tariffs on Sri Lanka and Philippines may shift trade advantage to India

India could pose stiff competition to Sri Lanka and the Philippines for...

Sri Lanka

A nation’s shame deepens as iconic tuskers are being shot in the wild

Veterinary and wildlife officials are racing against time to save two of...

Sri Lanka

New US tariff to affect very adversely on Sri Lankan exports

The tariff newly-imposed by the US will have a very adverse effect...