ECONOMYNEXT – Sri Lanka’s energy intensives firms say they are struggling to face the latest electricity tariff hike amid worries over losing competitiveness.
The state-run Ceylon Electricity Board (CEB) has raised the tariff by 66 percent with effect from February 15 after a dragged clash between the CEB and the power regulator, Public Utilities Commission of Sri Lanka (PUCSL).
“Already the Prices are up and we don’t actually know whether we might go for an increment or we are going to stay at the same price for now,” Ishaq Muzzammil, the Managing Director of tile manufacturer Marcopolo told EconomyNext.
“We are already planning out because if you take our category, we are into a high business market product. So, already our prices are expensive compared to the normal tiles. Increasing the prices again is not a good idea. We have to squeeze our margins.”
Analysts say manufacturers of chemicals, iron & steel, food & beverages, cement, tiles, and paper are hit by the latest move very much.
Many of the manufacturers cannot pass the price to consumers as disposable income has sharply fallen with the recent tax hike. Increasing prices would discourage customers from buying the products, some manufacturers say.
Lanka Confectionery Manufacturers Association (LCMA) President S.D. Suriyakumar said the latest price hike “will definitely have a direct effect”
“But we have not yet calculated how it is going to go around. But whatever it is, even if it is going by 10 percent that will definitely have a direct rate effect and a bearing from our operators,” Suriyakumar said.
President Ranil Wickremesinghe’s government already raised electricity prices by more than 60 percent last year to prevent the collapse of loss-making CEB.
The latest price hike comes as the CEB raised fixed costs for lower and medium level electricity consumers along with the electricity units.
The tariff hike along with over 80 percent inflation has resulted in a chaotic market in the country as the authorities failed to maintain stable prices of goods and services.
“I can say that the business would collapse,” N.K Jayawardena, President Chairman of the All Ceylon Bakery Owners’ Association told EconomyNext.
“We can’t invest now. We have to borrow to pay such high electricity tariffs. We just have to look at it and see what will happen to us,” Jayawardena said.
The Power & Energy Minister Kanchana Wijesekara on Thursday said the CEB will now ensure uninterrupted power supply as the latest electricity tariff hike has been approved by the regulator the PUCSL.