CEB delay in raising electricity tariff affects CPC and monetary stability

The failure to take appropriate action on time to restructure loss-making state-owned business enterprises specially the Ceylon Petroleum Corporation (CPC) and the Ceylon Electricity Board (CEB) while introducing pricing formulas has affected the country’s monetary stability.         

The delay in increasing electricity prices by the CEB has made it impossible to pay for fuel purchases timely to the CPC impacting the cash flow of the CPC although it has already introduced a price formula, Central Bank Governor Dr. Nandalal Weerasinghe told a media briefing in Colombo on Thursday.

This has created a situation where the CPC has not been able earn enough rupees to buy dollars, he said adding that the CPC is still requesting rupees from Treasury compelling it to seek funding from the Central Bank via money printing.

The CEB is running at a loss due to its delay in increasing electricity tariff making it difficult to earn adequate rupees to pay for fuel being purchased from the CPC, he added.

Under this situation of no rupees to pay for dollars, the CPC has made a request of Rs. 217 billion from the Treasury to pay for emergency fuel procurement and the Treasury seeks the Central Bank for funding via money printing, he explained.

Fiscal policy on state-owned enterprises reforms will have to adopted by the Finance Ministry in accordance with the government policy stance, he said adding that the delay in such structural adjustments will affect the monetary situation.