Apr 24, 2013 (LBO) - A battle has sparked between Sri Lanka's current and ex-power ministers following a hike in tariffs which has already drawn fire from opposition parties.
Former power minister Champika Ranawaka denied he initiated a tariff hike after media reported that current minister Pavithra Wanniarachchi as saying she only completed the task which had already been started.
Ranawaka said he had not submitted any note to cabinet requesting a tariff hike and challenged anyone to produce documents if possible.
Ranawaka said he had responded on January 24, to a letter by the secretary of the finance ministry which suggested a hike in power tariffs after furnace oil prices were raised by the petroleum utility from 65 and 75 rupees to 90 and 100 rupees suddenly.
He said the tariff hike was too much for low users and it came at a time when rainfall was increasing while tariffs were not raised in 2011 when there was a drought.
"After not raising tariffs in 2011 during the drought and allowing the Ceylon Electricity Board to suffer losses, to raise tariffs when reservoirs are overflowing is suspicious," Ranawaka said in a media statement.
Ranawaka said there should be pricing formula for petroleum and power which was acceptable to the people.
Sri Lanka's elected rulers suspended a petroleum pricing formula in late 2003 after it was opposed by a section of them and started arbitrary setting prices.
A well designed tariff methodology also exists for power, where tariffs can be changed every six months, but it has not been observed either.
Credit taken to keep power tariffs down in 2011 eventually triggered a balance of payments crisis, which sent the rupee from 110 to 134. The rupee has since appreciated to 127.
Political meddling in energy prices have triggered balance of payments trouble on several earlier occasions.
The government has also seen revenues falling amid contraction in imports triggering higher bank borrowings. Banks have already loaned over 150 billion rupees to state energy enterprises.