COLOMBO: Sri Lanka will cut power tariffs by 21.9 percent from midnight, the power regulator said on Monday, as the island nation attempts to ease the cost of living for millions of people living through the worst financial crisis in decades.
The regulator also said it will reduce power tariffs by 18% for hotels and industries.
“We wanted to give the maximum relief to consumers and this tariff will make sure that there will be zero scheduled power cuts,” Manjula Fernando, chairman of the Public Utilities Commission of Sri Lanka (PUCSL), told reporters.
The island nation of 22 million people is grappling with a severe shortage of foreign exchange reserves that pushed its economy into freefall in 2022, shrinking it by 7.8% that year.
Sri Lanka increased power prices by 75% in September 2022 and by another 66% in February 2023 to fall in line with energy price adjustments required under a $2.9 billion bailout from the International Monetary Fund (IMF).
The power tariff hikes together with higher taxes and fuel cost increases pushed inflation to a record high of 70% in September 2022, later declining to 5.9% in February 2024. But inflation in the electricity, water, cooking gas and, housing category was 15.8% last month, Census and Statistics Department data showed.
The power tariff reduction is expected to help halve inflation this month, according to analysts. The new revision will provide relief between 28%-33% to households with consumption of 90 units or less, the regulator said.
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