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Sri Lanka's CEB posts profits in 2013, with rains, tariff hike
11 Apr, 2014 11:29:25
Apr 11, 2014 (LBO) - Sri Lanka Ceylon Electricity Board has made operating profits of 24.6 billion rupees in 2013, the Central Bank said, amid reports that it had lost 24.3 billion rupees in the first quarter of 2014 due to a drought.
The 2013 profit was an improvement on the 2012 loss of 62.1 billion rupees helped by a 2.5 billion rupee monthly increase in revenues from a tariff hike.

The total fuel bill had fallen 30.8 percent to 29.4 billion in 2013 despite a increase of 25 rupees a litre due to higher hydro power generation, the Central Bank's annual report said.

Last year the average selling price had risen to 18.23 rupees a unit, and the average cost was 17.70 rupees.

Over the past quarter, drought had steeply increased thermal generation, with media reports saying the CEB was losing about 8.0 billion rupees a month.

Credit Reduction

The Central Bank said CEB's short term borrowing to banks and private power producers had fallen 47.2 billion rupees to 90.1 billion rupees by end December 2013. Long term liabilities were down to 406.4 billion rupees from 482.8 billion rupees.

In 2011 and 2012 the CEB's credit financed subsidies triggered a balance of payments crisis which sent the rupee tumbling from 110 to 130 to the US dollars and inflation up to around 10 percent.

State-run Ceylon Petroleum Corporation which sold subsidized furnace oil to the CEB in turn borrowed more money.

The loans were ultimately accommodated by Central Bank credit in a bid to keep interest rates down. The crisis was averted by raising fuel and electricity tarries, hiking interest rates and allowing the rupee to weaken.

"The tariff revision was an essential move towards adopting a rational and cost reflective pricing policy to improve the financial performance of CEB and reducing its exposure to bank borrowings," the Central Bank said.

"In recent years, the losses made by the CEB have had a significant impact on the banking sector as credit levels remained at excessively high levels leading to crowding out of private sector investments thereby hindering the efficient channeling of funds to more productive investments.

"This had adversely affected the capital formation of the country while creating spillover effect on macroeconomic variables such as interest rates, employment, exchange rate and more importantly, fiscal management and inflation."

Central Bank Governor Nivard Cabraal said this week the operation of a second coal power plant had reduced the negative impact of lower rainfall.

In 2013 power sales had rise 1.4 percent to 10,475 GigaWatt hours (millions of units of electricity), though domestic consumption fell 1 percent despite the number of consumers going up by 4.5 percent. The tariffs of those consuming below 60 units were not raised.

Sales to hotels had increase 5.0 percent and sales to general purpose customers were up 5.2 percent with industry up 1.9 percent.

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