● Finalized off-peak and daytime industrial electricity tariff rates are exponentially high and detrimental to the apparel industry
● Reassessing the newly revised tariff rates is essential for companies within the sector to plan and budget better
17th August 2022: With the Public Utilities Commission (PUCSL) granting permission to the Ceylon Electricity Board (CBSL) to increase power tariffs, the off-peak and daytime tariff applicable to industries has increased exponentially.
The initial proposal by the PUCSL suggested the off-peak industrial electricity tariff be increased from
Rs 6.85 to Rs 14.50 and the daytime tariff be increased from Rs 11.00 to Rs 18.50. In response, the Joint Apparel Association (JAAF) submitted counter proposals at the stakeholder consultation, identifying the 113% increase in off-peak industrial electricity tariffs to be extraordinarily high and detrimental to the industry. JAAF suggested implementing the final tariff increases in two phases, with the proposed rate being reduced to approximately 50% in each phase. However, JAAF made no counter proposals for the suggested modest revisions for daytime tariffs, as the industry understands that these revisions are mandatory to rectify the massive losses incurred by the Ceylon Electricity Board (CEB).
Alarmingly, despite the cautions highlighted by JAAF, the approved off-peak and daytime tariffs are higher than those initially proposed for the l2 category. Moreover, much to the industry’s surprise, revisions made to daytime tariffs are three times higher than the rate initially proposed. The table below depicts previous, proposed, and published daytime and off-peak tariff revisions:
|
Industry I2 |
Previous |
Proposed |
Published |
|
Daytime (05:30-18:30) |
11.00 |
18.50 |
29.00 |
|
Peak (18:30-22:30) |
20.50 |
31.50 |
34.50 |
|
Off-peak (22:30-05:30) |
6.85 |
14.50 |
15.00 |
JAAF is concerned over the finalized industrial electricity tariff rates, as it has overlooked the needs of the apparel industry and suggestions made by JAAF at the stakeholder consultation on behalf of the industry.
To reiterate JAAF’s concerns, the increase in off-peak tariffs defeats the very purpose of having an off-peak slab, which is to incentivize businesses to operate during off-peak hours. This move will further add to the industry’s operational costs, compelling the industry to bear higher off-peak staff costs. Moreover, Energy-intensive businesses such as the textile industry operate on a 24-hour cycle. An exponential boost in off-peak tariff rates will result in a disproportionate increase in tariff costs for the industry, making business operations infeasible and non-viable.
An exponential increase in both off-peak and daytime tariff rates will also increase overall industry costs and will adversely impact JAAF’s strategy to drive Sri Lanka’s annual apparel export earnings to USD 8 billion by 2025. This will prove to be harmful to Sri Lanka’s already fragile economy, hampering value addition and export diversification.
Therefore, JAAF urges PUCSL, the electricity sector regulator, to reassess the exponentially high off-peak and daytime industry tariff rates, and to consider submissions made against the initial proposals. Urgent attention to this matter is vital to enable companies plan and budget better as this will enable the apparel industry to continue supporting the revival of the country’s economy.