Sri Lanka to cut power prices by 22.5 percent: summary

What we know

• According to the Public Utilities Commission of Sri Lanka (PUCSL), starting Tuesday, July 16, Sri Lanka will reduce power prices by 22.5 percent. This move aims to alleviate the cost of living for millions of citizens as the country navigates its most severe financial crisis in decades.
• Analysts indicate that the reduction will assist Sri Lanka in maintaining its central bank's inflation target of 5 percent. The economy is projected to grow by 3 percent this year, marking a recovery after a two-year hiatus.
• The regulator also noted that industries would benefit from a roughly 33 percent reduction in power tariffs, while poorer users would see a decrease of about Rs2,000 ($7) in their bills.
• Alongside higher taxes, a weaker rupee, and rising fuel costs, the power price hikes had driven inflation in the nation of 22 million to a record high of 70 percent in September 2022. However, inflation dropped to 1.7 percent in June, aided by a 21.9 percent price cut in March this year.
• Following a 7.8 percent contraction of its economy in 2022, Sri Lanka increased power prices by 75 percent in September and by an additional 66 percent in February to comply with the conditions of a $2.9 billion bailout from the International Monetary Fund (IMF).
• Sri Lanka's four-year Extended Fund Facility agreement with the IMF, finalised in March last year, mandates the country to increase taxes, eliminate subsidies affecting the power sector, and reduce public sector debt.

What they said

According to Gulf Today, Manjula Fernando, chairman of the Public Utilities Commission of Sri Lanka (PUCSL), told reporters on Monday “We expect this reduction to assist in the rejuvenation of the economy and help the public get relief.”