News

Sri Lanka’s electricity demand, sales and investment needs are growing rapidly compelling the Ceylon Electricity Board (CEB) to increase end user tariff making it cost effective, and expedite the implementation of power plants.This was highlighted in the Asian Development Bank funded power sector assessment report.

The peak demand was forecasted to cross 3,000 MW by 2020 and reach 4,800 MW by 2030, the report disclosed.

According to findings and forecasts of a Asian Development Bank funded report, the Ceylon Electricity Board (CEB) will have to incur a massive loss of LKR 436 billion for the period of 2021 to 2023 for emergency power purchasing from independent power producers (IPPs).

A proposal has already been made to purchase 800 megawatts of power from these private power producers this year without calling for tenders.

The CEB System Control is deciding on the most feasible option to purchase power using the available data manually.

This method of power purchasing has opened the floodgates for corruption and irregularities as identifying the least cost method and viable option based on the available data cannot be cannot be carried out manually and it requires relevant software, it was stated.

The CEB plans indicate the investment requirements for power generation to be USD 2400 million from 2020–2025 to meet the growing demand at the lowest cost, the report added.

The capacity shortage has to be resolved by building larger power plants. The CEB has proposed that the two cancelled coal-fired power plants be revived and built using the latest technology.

Additionally, two combined cycle power plants are required to be built to cater to seasonal shortages of hydro power.

“Matching investments are required for transmission estimated to be USD 320 million and in distribution (to serve the growing demand and to improve reliability of supply to customers) a further USD 60 million,” the report said.

Around 69 per cent of the total installed capacity in the country is owned by CEB; while IPPs and small power producers (SPPs) own the rest.

All IPPs are diesel-fired, operating on 10 to 20 year power purchase agreements. All SPPs are renewable energy-based, with 15 or 20 year contracts.

In order to offset this massive loss, the Ministry of Power has no alternative other than increasing electricity tariff by at least LKR 2.50 per unit for this period, the report recommended.

Emergency power purchasing at higher rates from IPPs has now become a significant burden to the economy. Annual purchases of power average from LKR 160 billion to LKR 200 billion.

When the CEB purchases at higher rates, the party involved with the transaction gains a commission for supporting the business, the National Movement for Consumer Rights Protection alleged.

The higher the margin between the buying and selling rate, the higher these parties gain, it said.

Cash strapped Sri Lanka government is receiving assistance from the Netherlands to implement its ambitious rural infrastructure development programme of building roads and bridges in remote villages. The government has allocated additional LKR 20, 000 million to commence construction on rural roads under the 100,000 km programme and LKR 7, 000 million to build 10,000 rural bridges connecting the villages to the external environment.

President Gotabaya Rajapaksa has assigned officials to complete the project for the construction of 100,000 km of rural roads and connect them with the main road network by 2024.

The President stated that new bridges will be built replacing hanging, wooden plank and small bridges. The construction of 8000 km of roads has commenced and 400km of it has already been completed in the last few months.

In the wake of the government’s new rural bridges programme, the Finance Ministry has received a pledge from the Rabobank of Netherlands to provide 52.1 million euro financial assistance to construct approximately 250 steel bridges island wide especially in the rural areas.

Finance and Economic Affairs Ministry Secretary, S. R. Attygalle has reportedly signed this Credit Facility Agreement at the Ministry of Finance.

The Sri Lankan Government has accorded high priority for connectivity improvement within the country, with a view to providing full benefits to the remote villages from mainstream development activities in the country, the Ministry has stated.

Accordingly, the Government is planning to construct 10,000 bridges in rural areas to establish connectivity for transportation.

A large number of lagging villages will be connected with transport facilities through this project, which will in turn facilitate easy access to market, education and healthcare facilities to villagers.

The announcement of the agreement signed between Sri Lanka’s Finance Ministry and the Rabobank of the Netherlands for a project to construct steel bridges indicates the opening up of a business opportunity in the country’s ongoing development programme.

The Sri Lankan government is engaged in the development of the rural road network and connectivity. Hence, there are many projects in the roads and highways sector in Sri Lanka with most programmes having secured foreign funding lines.

Therefore, foreign businesses could seriously explore business opportunities in Sri Lanka’s roads and highways sector.

The Lanka Coal Company says they were following policies set by the previous Government in 2015 when it was decided that half of the 2.25 million metric tonnes required for the Lakvijeya power plant should be purchased through a term tender while the rest procured through spot tenders.

Accordingly, the company said it had taken steps to purchase 1.2 million metric tonnes from a term tender awarded on November 08, while the remainder was to be bought via six spot tenders.

Lanka Coal said five of those spot tenders have already been awarded and four of them were given to the lowest bidder.

Only two tenders had to be rejected, the statement said. The first, after the bidder wished to change the port the coal was being shipped from, and the second, after it was found that the bidder’s price was USD 7 higher than global prices.

“The Lanka Coal Company follows internationally accepted indices when evaluating prices of tenders, and during the last few months, coal was purchased for prices as low as USD 53.94, USD 58.11 and USD 59.50.

It is an accepted fact that coal prices are at their highest during December and January, resulting in annual purchases made during this time being customarily higher,” the statement said.

The company said in January 2018, coal was purchased at USD 100.35 per metric tonnes and in 2019, for USD 91.40 per metric tonne, which was higher than the USD 90.20 per metric tonne in January 2021.

The recession-hit Sri Lanka Treasury is grappling to drive economic growth towards 5 to 6 per cent of GDP this year amidst current fiscal woes, Finance Ministry sources said.

President Gotabaya Rajapaksa has appointed a 3-member panel to probe the findings of the previous commissions appointed by the state to investigate human rights abuses committed during the last phase of the armed conflict with the LTTE in 2009.

Sri Lankans have been under threat of several types of financial frauds and scams being operated through social media, Internet-based applications and mobile payment applications, the Central Bank warned.  Most of these scams are conducted through web or mobile app based easy loan schemes that attract the public, the Central Bank revealed in a special announcement today (22).  

During such a loan application evaluation process, the fraudsters entice the public to share confidential personal customer information/data.

This data included Debit/Credit Card numbers, personal identification numbers (PINs), card verification digits commonly found at the back of the card and referred to as CVV, CVC or CVS numbers, card expiry date, transaction verification information such as One-Time-Passwords (OTPs)

These scammers are also requesting internet users for their internet banking – username, password, OTP etc.

People have been strongly advised to exercise due diligence and care to avoid becoming victims of the scams operating in the guise of money lending businesses and obtain full information of the financial transaction and the lending party before entering into an agreement and conduct financial transactions with regulated/authorised entities. They will have to be extremely vigilant when dealing with easy/instant loan schemes and  avoid entering into agreements that it is difficult to fully understand the implications of the contents of the terms and conditions.

The should also be cautious when applying to easy/instant loan schemes with characteristics such as attractive slogans which lure customers in such as zero interest for the first loan

The scammers are offering extremely high interest rates even though the initial interest rates may be low.

Further, the Central Bank wishes to request the public to obtain real-time notification services, such as SMS alerts, from their banks or non-bank financial institutions, so that they would become aware of any fraudulent activity that takes place using their accounts, instantly.