Friday Nov 22, 2024
Friday Nov 22, 2024
Thursday, 23 March 2023 01:40 - - {{hitsCtrl.values.hits}}
President Ranil Wickremesinghe yesterday revealed that fuel prices will be revised monthly based on the 2018 formula implemented when he was the Prime Minister.
“Fuel prices will be determined based on the 2018 Price Formula. The adjustment will take place once a month to cover the cost. Therefore, determination of fuel prices will be bereft of politicisation,” President told Parliament in his special address following the receipt of IMF Executive Board approval of $ 2.9 billion Extended Fund Facility program for Sri Lanka.
The President also said measures will also be taken to adjust the tariff on electricity every six months to cover the cost after considering the estimated future cost.
His remarks on electricity hike were amidst multiple litigation against the Government’s decision to increase electricity tariff effective 15 February as approved by a majority of the members of the Public Utilities Commission (PUCSL).
On Tuesday, Power and Energy Minister Kanchana Wijesekera informed Parliament that April revision of fuel prices will be substantial on the strength of an appreciating Rupee and favourable global market conditions.
As per the agreement with the IMF for the EFF program, the Government will set retail fuel prices to their cost recovery levels with monthly formula-based adjustments, and compensate the CPC for providing any fuel subsidies with on-budget transfers.
Government will also set the end-user electricity tariff schedule to its cost-recovery with semi-annual formula-based adjustments and compensate the electricity sector for providing any residual subsidies with on-budget transfers. Improve the Bulk Supply Transaction Account (BSTA) to accurately measure the electricity subsidy.
By June 2024, the Government is to introduce legislative reforms making the Minister of Power and Energy responsible for implementing cost-recovery based fuel and electricity price adjustments. At present electricity tariff revision approval rests with the PUCSL.
The IMF program notes that despite automatic fuel and electricity pricing, retail fuel or electricity prices may temporarily fall below their costs. The gap would be considered as non-commercial obligations for the CPC and CEB that need to be recorded as government expenditure to avoid off-budget subsidies. To achieve this objective, the cost of non-commercial obligations of the CPC and the CEB will be compensated by government transfers.
By December 2023, the authorities will improve the BSTA used to settle transactions between generators, the transmission operator, and distributors. This would allow accurate measurement of the cost-recovery based electricity tariff and government transfer requirement.
The electricity tariff was first revised upwards by 75% in August last year for the first time in nine years.
