Ceylon Electricity Board (CEB) is likely to increase the electricity tariff after eight years with the consent of the cabinet of ministers to day (Monday 05), CEB sources said.

The Public Utilities Commission has submitted the proposed electricity tariff structure to the treasury for observations on providing subsidy follow income earners and necessary revisions recently.     

The CEB was now losing Rs 13 per unit and a tariff increase has been sought to raise Rs 14 billion in extra revenues, the relevant memorandum indicated. 

For the lowest category the  per unit rate of Rs 5.50 had been proposed from the current  Rs. 2.50 and the fixed fee will go up to Rs  290 from Rs. 30 .

According the memorandum electricity tariff for factories will be increased by 38 percent, hotels 23 percent and state institutions 22 percent.

The Ceylon Electricity Board (CEB) is on the verge of collapse and it was trying trying to obtain an overdraft from a state bank to pay employees’ wages CEB sources said.

CEB Chairman M.M.C. Ferdinando noted that t there was an urgent need to increase the electricity tariffs as the Board was now struggling to pay the salaries of its employees.

“It has been observed the CEB is currently incurring a loss of over Rs. 300 billion per year as its expenditure had now increased to over Rs. 500 billion, while revenue is around Rs. 200 billion. 

The State Pharmaceutical Corporation is set to take action to resolve the drug shortage in the country as soon as possible by using funds from the Indian credit line assistance and other credit facilities, COPE Chairman Charitha Herath said. 

Officials from the SPC appeared before the Committee on Tuesday to discuss the shortage of drugs in government hospitals as of 13 May and the measures taken to address the shortage.

The COPE Chairman said that despite receiving $ 200 million in financial assistance under the Indian credit line facility, by 22 April, the Ministry’s Drug Sub-committee had only recommended a stockpile of medical supplies worth $ 55.5 million which is only 28% of that grant. 

By 18 May, only $ 92.9 million had been recommended for invoices,” he informed the Committee.

Committee members said that as there is a shortage of essential medicines in the country, action should be taken to obtain the required medicines using this money immediately.

SPC officials said that necessary steps are being taken to obtain essential medicines from this money and said the process was delayed due to the appointment of several ministers during this period.

The Committee was told that in addition to the Indian credit line, the World Bank Loan Assistance Scheme (WB), World Health Organisation (WHO), Asian Development Bank (ABD) and other donor assistance were received for purchase of medicine and the assistance so far exceeded $ 330 million and has not yet been disbursed.

Committee members said if the necessary administrative decisions and necessary approvals are taken as soon as possible and medicines are purchased with this money, there will be no shortage of drugs until the middle of 2023.

COPE Chairman noted that the money received to prevent the shortage of drugs had not been properly managed and used effectively. He said it was not the lack of foreign exchange but the inefficiency in management of such funds that has led to the medicine shortage.

The officials who were present also pointed out that there was a shortage of rupees in purchasing medicines. Accordingly, the Secretary to the Ministry of Finance who also joined the meeting online, stated that the necessary steps were taken to resolve it as soon as possible.

COPE also observed that the computer system used for the management of medical supplies had not been properly updated. 

It was revealed that a company had been given Rs. 645 million to set up the system and Rs. 5 million a month for its maintenance, but the system was not functioning properly. 

Due to this, work has already commenced to prepare a new computer system at a lower cost and about 80% of the work has already been completed, officials stated.

The Chairman of the COPE Committee also focused on the methodology for calculating the drug requirement in the country and pointed out the importance of maintaining such a system more accurately. 

The World Bank Group and S&P Global Market Intelligence have ranked the Port of Colombo as the No. 1 Port in South Asia and Indian Subcontinent, for efficiency, in the Container Port Performance Index 2021. 

Contributing towards 44% of container volumes moving through the Port of Colombo in 2021, Colombo International Container Terminals Ltd. (CICT), which manages the South Terminal of the Port of Colombo, has worked hard to support the Port of Colombo to achieve this global recognition. 

In addition to being ranked No. 1 in South Asia, the Port of Colombo has also been ranked No. 3 among ports in the Indian Ocean Rim and No. 22 among 370 seaports worldwide. 

Managed by the China Merchants Port Group (CMPort), CICT is the first deep water container terminal in Sri Lanka and is also the only terminal in the South Asian region capable of handling 22,000+ TEU vessels. 

Commenting on the achievement, CICT Chief Executive Officer Jack Huang said: “From our inception, we have been dedicated to realising optimum efficiency and achieving our KPIs. We have done this through extensive investments into infrastructure, process automation, crew training and standardisation.

“As the largest contributor to container volumes at the Port of Colombo, we take this opportunity to express our congratulations to the Port of Colombo and renew our resolve to achieve new heights in terms of efficiency, volumes, and overall productivity. 

We look forward to continuing to support the Port of Colombo to retain its No. 1 status regionally, and rise even further in the global rankings.”

CICT has invested in state-of-the-art equipment and infrastructure to support the operations of the Port of Colombo. Presently, CICT operates 14 quay cranes (two of which are capable of handling 22,000+ TEU vessels), 46 rubber-tyred gantry (RTG) cranes and 105 trucks during its normal operations. 

CICT’s dedication to efficiency and service excellence is reflected in CICT achieving a GCR of 30.34 which is much higher than the global average. The Organisation has also consistently won a number of awards presented by the AFLAS Logistics and Cargo Awards, the premier awarding body for the global shipping and logistics industry. 

CICT, which mainly handles larger vessels at the Port of Colombo, has also been instrumental in helping the Port of Colombo secure the No. 13 position amongst ports capable of handling volumes larger than 13,500 TEUs, worldwide with a GCR of 29 moves per hour whilst the global GCR is only 23.8 moves per hour.

Colombo International Container Terminals (CICT), which is managed by China Merchants Port Group (CMPort), is responsible for the management of the South Terminal of the Port of Colombo, the first deep water terminal in South Asia, equipped with all facilities to handle the largest vessels afloat. 

The Central Bank defends the current exchange arrangement claiming that it has already made positive impact in extremely challenging economic circumstances at present facing worst balance of payments crisis in history

Following the excessive depreciation, inflation accelerated significantly through imported prices, while second-round effects of such excessive depreciation on other goods and services were also observed subsequently. 

The implementation of this arrangement has brought in a greater stability in the exchange rate determination in both formal market and grey market thus far, while also minimizing excessive margins prevailed in both markets, and the effects of the same are expected to reflect in the exchange rates used for customer transactions. 

According to the feedback received from the stakeholders, there exists broader consensus on the current arrangement of the exchange rate, which is market driven with less volatility and more predictability, compared to the earlier arrangement, which experienced excessively volatile of the exchange rate driven more by speculation rather than market forces and economic fundamentals

Moreover, due to the acute shortage of foreign exchange in the domestic foreign exchange market, along with continuous depreciation of exchange rate the conversions of foreign exchange by the foreign exchange holders delayed.

This was  due to expectation of further depreciation and high premium offered in the grey market, thus adding further pressures on the currency,

Meanwhile, the demand for foreign exchange in the grey market thrived to part finance rising import demand outside the banking system, causing further pressures on the currency as well as heightening stresses in the banking system. 

This significant volatility of the exchange rates drove up the interbank exchange rates as well as customer buying and selling rates in an abrupt nature, causing undue speculation on the currency.

Restrictions imposed on open accounts and consignment payments terms have helped curtail activity in the grey market, thereby narrowing the gap between the official exchange rate and the grey market rate. 

Accordingly, the current exchange rate arrangement is viewed as a more credible mechanism, vis-a-vis an arrangement where grey market activity could operate freely. 

Consequently, inflows on account of workers’ remittances to the banking system have gathered pace since the introduction of the new exchange rate arrangement.

This improved momentum in the domestic foreign exchange market is expected to consolidate with the progress being made towards reaching the staff level agreement with the International Monetary Fund (IMF) on a funding arrangement, along with the negotiations for bridging finance from other multilateral and bilateral partners. 

The Central Bank reiterated that the current arrangement of exchange rate would be reviewed from time to time, and further flexibility would be allowed if need be, once market confidence is restored, supported by envisaged foreign exchange inflows to the country.

Highly respected economist and former  Central Bank Governor Dr. Indrajit Coomaraswamy yesterday expressed confidence in the policy measures taken by the Central Bank, whilst highlighting critical issues that need to be addressed for a long-term stable economy.

“The incumbent Central Bank Governor and the Monetary Board sent the right signals to the market with the firm policy directions and there are positive responses, he claimed 

 The monetary policy is going in the right direction to ensure stability,” he said at a webinar titled ‘Surviving the current economic crisis: Ex-Central Bankers in Dialogue’ organised by CBSL yesterday.

Noting that many criticised the policy direction for its impact on MSMEs, Dr. Coomaraswamy pointed out that it would otherwise cause hyperinflation which would affect every sector and have devastating consequences on the overall economy.

Dr. Coomaraswamy was of the view that Sri Lanka could reach a staff-level agreement within the next four to five weeks with the IMF, adding that a drawdown of funds needed progress on debt restructuring.

“A staff-level agreement could increase confidence to bring in foreign investment into capital markets, encourage more exporter conversions and remittances into official channels,” he said.

He also pointed out that these steps will ease the supply side pressure on the exchange rate at present and bring in stability in a gradual manner. 

Dr. Coomaraswamy said bridge financing was a key element that Sri Lanka should work on, as multilateral agencies cannot repurpose till the IMF is finalised.

As per him, Sri Lanka could get as much as $ 6 billion from India through the previously agreed $ 4.5 billion credit line and another facility of $ 1.5 billion where the negotiations are still underway. 

“There were some indications that Japan may provide some money. India has also sounded out Japan over funding for Sri Lanka during a meeting of Quad nations recently,” Dr. Coomarswamy said.

Former Central Bank Governor also highlighted that Sri Lanka needed to start negotiations with creditors to win adequate assurances that debt sustainability will be restored.

He said the Government will have to work on a social safety net to protect the vulnerable and poor with a ramped-up cash transfer. 

Pointing out that Sri Lanka had always missed the opportunities to make structural changes, Dr. Coomaraswamy insisted on authorities making those painful, yet critical reforms to avoid severe recession in the future.