20% Savings on Goods and Services Guaranteed with Slashed Electricity Prices

Minister of Power and Energy, Kanchana Wijesekera emphasized the potential for a 20% reduction in the prices of goods and services in the market following the revision of electricity prices.

The Minister called upon the business community to lower prices to ease the burden on the public, starting from midnight on the day of the electricity price adjustment, coinciding with the reduction in electricity bills.

Speaking at a press briefing titled “Collective Path to a Stable Country” at the President’s Media Centre (PMC) today (16), Minister of Power and Energy, Kanchana Wijesekera highlighted the benefits received by those consuming less than 90 units from the recent electricity amendment.

The Minister added,

The government has decided to revise the electricity tariff every January, April, July, and October each year. Following the price adjustment in March, the Public Utilities Commission (PUCSL) requested a July revision instead of April. Therefore, the new electricity tariff revision will take effect from July 16. The next revision is scheduled for October.

During the economic crisis of 2022, bank interest rates peaked at 36%. The escalation of coal, fuel, and other commodity prices due to the Russian-Ukrainian war also necessitated an electricity price revision, the first since 2014, which occurred in August 2022.

However, this time, several factors have contributed to a 22.5% reduction in electricity prices, including improvements in the economic situation and higher hydropower generation due to increased rainfall over the past two years. Renewable energy production has also increased, with the integration of electricity from the Uma Oya hydropower plant into the national grid in April.

Over the last 18 months, the Ceylon Electricity Board (CEB) has focused on reducing operational costs by not hiring new employees, leading to a decrease in the workforce from 26,000 to 22,000.

Consumers using less than 90 units have benefitted the most from this tariff revision, with 79% of households falling into this category.

During peak billing periods, the production cost per unit decreased from approximately Rs.48.00 to Rs.35.00. Hotels and industries received a 25%-26% reduction in electricity prices, while religious institutions saw a 30% decrease in their entire category.

The key to further reducing electricity tariffs lies in lowering generation costs by establishing cost-effective power plants rapidly. These new facilities are expected to be operational within the next three years, leading to additional reductions in electricity charges.

Currently, there are only 189,000 consumers using more than 180 units of electricity. Consumers using 30 units pay Rs.290.00, while those consuming 1 to 60 units pay around Rs.790.00.

Factories and small businesses experienced a significant 20% price reduction in this electricity tariff revision. Despite this, the reduction in electricity costs may not lead to a corresponding decrease in the prices of goods and services, similar to previous trends. Therefore, the public is encouraged to take advantage of these savings, anticipating at least a 20% reduction in overall expenses.

Previous reports comparing electricity tariffs with regional countries have led to discussions on the recent reduction in regional electricity prices and the importance of maintaining continuous electricity supply. The timing of this tariff revision has been questioned by some media outlets, linking it to upcoming elections. However, the policies were formulated in 2022 through a formal process based on sound policy decisions rather than populist measures. Thus, equal recognition and acknowledgment are requested for the President and the government when electricity prices are reduced.

Future plans focus on implementing an electricity generation plan emphasizing efficiency and low operating costs. The power sector operated at a loss before 2022, but achieved operating profits in 2023 and 2024.

Due to the agreement with the International Monetary Fund (IMF), funding for the CEB from the Treasury ceased in August of last year. Despite this, through stringent financial discipline, the CEB has become profitable, with efforts made to repay a substantial portion of its debts to other institutions.

The government has promoted the installation of solar panels to increase renewable energy adoption, with rooftop solar panels contributing 150 megawatts annually to the national grid. These installations currently add 149 megawatts per year to the grid.