The Chairman of the Public Utilities Commission of Sri Lanka (PUCSL) Janaka Ratnayake has requested the Ceylon Electricity Board (CEB) to propose a tariff reduction considering the recent developments in the country that drive down the costs of the CEB.
Ratnayake told the media today that the electricity charges can be reduced by 30% under the current circumstances.
The PUCSL Chairman said considering the actual data for the first quarter, the electricity demand in the country is 18% less compared to 2022 and this reduces the reliance on high-cost oil-fired thermal electricity generation.
He further stated that apart from the demand, the US Dollar exchange rate has reduced from RS. 370 to around Rs. 325 which is a 13% reduction and thereby reduces fuel and other import costs of the CEB, adding that this alone would reduce costs by about 20% per annum.
Janaka Ratnayake also pointed out that apart from the above two cost drivers, the international fuel prices have reduced significantly, and as a result, the fuel costs to the CEB would reduce significantly.
He revealed at present, the Richards Bay Coal index is at 133 USD/MT, Singapore PLATTS for Furnace Oil is 403 USD/MT, Singapore PLATTS for Diesel is 98.38 USD/bbl and Singapore PLATTS for high-quality chemical Naptha is 674 USD /MT.
Via his letter dated 30th March 2023, the Chairman of the PUCSL has requested the CEB to propose a reduced electricity tariff structure capturing all these recent developments by 15th May 2023.
Full statement:
Chairman, Public Utilities Commission of Sri Lanka has requested CEB to propose a tariff reduction considering the recent developments in the country that drive down the costs of CEB.
Considering the actual data for the first quarter, the electricity demand in the country is 18% less compared to 2022. This reduces the reliance on high-cost oil-fired thermal electricity generation.
| Jan | Feb | Mar | Apr | May | Jun | Jul | Aug | Sep | Oct | Nov | Dec | |
| 2022 – Actual | 47.05 | 48.01 | 51.31 | 45.69 | 47.24 | 47.02 | 45.83 | 45.32 | 45.01 | 42.95 | 42.61 | 40.91 |
| 2023 – CEB Forecast | 43.93 | 44.96 | 47.22 | 44.85 | 44.28 | 45.04 | 46.92 | 46.95 | 45.32 | 45.10 | 44.27 | 44.23 |
| 2023 – PUCSL Forecast | 41.05 | 42.01 | 45.31 | 39.68 | 41.23 | 40.99 | 39.82 | 39.26 | 39.01 | 42.76 | 42.14 | 40.91 |
| 2023 – Actual | 41.23 | 41.82 | 42.36 |
Apart from the demand, the US Dollar exchange rate has reduced from 370 LKR/USD to around 325 LKR/USD, which is a 13% reduction and thereby reduces fuel and other import costs of CEB. This alone would reduce costs by about 20% per annum.
| Estimated generation demand (GWh) per annum | 15,050 | 16,520 |
| Total cost (LKR Bn.) | 534 | 610 |
| Average supply cost (LKR/kWh) | 38.98 | 40.57 |
| Current selling price (LKR/kWh) | 48.52 | 48.52 |
| Possible tariff reduction, % | 20% | 16% |
Apart from the above two cost drivers, the international fuel prices have reduced significantly, and as a result, the fuel costs to CEB would reduce significantly. At present, the Richards Bay Coal index is at 133 USD/MT, Singapore PLATTS for Furnace Oil is 403 USD/MT, Singapore PLATTS for Diesel is 98.38 USD/bbl and Singapore PLATTS for high-quality chemical Naptha is 674 USD /MT.
Following fuel prices with Government taxes were calculated using current international prices mentioned above.
| Fuel | Price | Unit |
| Coal | 59.6 | LKR/kg |
| Furnace Oil | 187.5 | LKR/Ltr |
| Naptha | 153.0 | LKR/Ltr |
| Diesel | 247.2 | LKR/Ltr |
Assumptions made –
- Freight, insurance and handling charges of coal is 25 USD/MT
- Freight and premium for Furnace oil is 200 USD/MT
- Freight and premium for Diesel and Naptha is 15 USD/Bbl
- VAT is applicable to Coal imports
- 7.5% PAL is applicable to Furnace oil and Diesel
- 31 LKR/Ltr duty is applicable for Diesel
- No Taxes for Naptha
As a result of these cost changes and demand reductions the expected reduction in costs would be 30% as given below.
| Estimated generation demand (GWh) per annum | 15,050 |
| Total cost (LKR Bn.) | 466 |
| Average supply cost (LKR/kWh) | 34.05 |
| Current selling price (LKR/kWh) | 48.52 |
| Possible tariff reduction, % | 30% |
Via his letter dated 30th March 2023, the Chairman, PUCSL has requested the CEB to propose a reduced electricity tariff structure capturing all these recent developments by 15th May 2023. This is expected a provide much-needed relief to all consumers, especially the vulnerable Domestic category consumers and the SME sector of the economy. (NewsWire)