Patali writes to IMF on electricity tariff hike

Saturday, 25 February 2023 00:00 - - {{hitsCtrl.values.hits}}

Says the formula used for the recent electricity tariff increase is flawed and regressive
Highlights the effects the tariff increase has on the poor and concerns about profit projections
Asks IMF to confirm if the current formula is a requirement of the IMF program and if it’s in conformity with the IMF expectations

Leader of the 43 Brigade MP Patali Champika Ranawaka has written to the International Monetary Fund (IMF) seeking an explanation of the Sri Lankan Government’s recent decision to impose an electricity tariff hike. In the letter to the Resident Representative of the IMF Sarwat Jahan, Ranawaka questioned if the recent electricity tariffs were in line with the structural benchmarks of the IMF. Ranawaka noted that it was President Ranil Wickremesinghe who announced that the electricity tariff hike implemented from 15 February was an IMF requirement. He said while welcoming the implementation of cost-reflective pricing of utilities the formula should be grounded on a reasonably robust analysis.

Calling the formula used by the Government in the recent hike flawed and regressive, he said it also lacks awareness of CEB operations.

He also expressed further concerns about the electricity tariff hike questioning if CEB will earn the profit projection for 2023 as the forecast for 2023 is expected to be a 4% reduction in electricity demand due to the contraction in the economy.

Highlighting the effects the hike has on the poor, Ranawaka said it is surprising that the IMF has not imposed any conditionality on the performance of CEB. “Simply, the IMF appears to be ignoring the significance of curtailing expenses at CEB. Instead, it is attempting to meet an inflated cost via tariff hikes, burdening the poor and vulnerable. This would also adversely impact the relative competitiveness of Sri Lanka’s economy,” the MP noted. Accordingly, the MP asked the IMF to confirm whether the current formula is a requirement of the IMF program and if it’s in conformity with the IMF expectations.

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