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14th January  2001
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Big raise in electricity bills soon

By Shelani de Silva
The Ceylon Electricity Board in a bid to overcome a financial crisis due to defaults of payments — mostly from state institutions — has proposed the increase of tariffs by 20 per cent, The Sunday Times learns.

Arrears due to the electricity Board have exceeded Rs 6 billion (6,000 million) with the main defaulters being the Ministries of Defence, Education and Health. 

According to CEB's Additional General Manager K Gnanalingam, the ministries and government institutions have defaulted on the payments though the Treasury had passed the money.

Mr. Gnanalingam said if the payments were not forthcoming, the CEB would be forced to deduct from the money it remits to the Treasury annually.

He said the CEB proposal to increase tariffs was discussed with Treasury officials and they were awaiting the cabinet approval for the increase.

The CEB claims it incurred a 10 billion loss last year and at present is running on a Rs. 4 billion over-draft. Consequently the consumers would have to bear the cost to cover up losses of the Board.

"Charges have to be increased to recover the loss or else there has to be some alternatives. If power cuts are to be avoided there has to be some other way to get the money. In our submissions we have given a percentage to be increased under various alternatives," he said adding that the Government only increased the tariffs by five percent last year when the CEB called for a 10 percent increase. 

The CEB's financial crisis has been further aggravated with its dependence on the thermal power increasing in the face of a below-average rainfall in the catchment areas. 

CEB Engineer Susantha Perera told The Sunday Times that the institution would be forced to go for emergency generators — a costly exercise — if rains failed in the catchment areas. 

In the light of these problems, there would definitely be an increase in the electricity charges, he said.


Mahanayake on why he rebuked US envoy

By Shane Seneviratne
The Ven Rambukwelle Sri Vipassi Mahanayake Thera of the Malwatte chapter who rebuffed US Ambassador Ashley Wills by rejecting a private discussion sans journalists yesterday said that he did not wish to have secret discussion on matters of national importance.

The Mahanayake thera explaining reasons for turning down the US Ambassador's request said he did not wish to go down to the level of a politician who discussed matters of national interest secretively.

The Mahanayake told The Sunday Times that journalists had the right to be present at the event as they were there to report on the discussion which was focused on the current situation in the country.

Mr. Wills made the request to remove journalists when he visited the prelate at the Malwatte temple on Thursday.

US Embassy spokesman Stephen Holgate commenting on the incident said that what the Ambassador meant was that holding a public discussion in the presence of journalists would not help.

Meanwhile a group of Buddhist monks have commended the Mahanayake for upholding the rights of journalists.


Ratwatte holds 'thank-you' bash

Three months after he was declared the number one winner for the Peoples Alliance in the Kandy District at the Parliamentary elections, Anuruddha Ratwatte, Minister of Power and Energy and Deputy Defence Minister, had a victory bash for his supporters yesterday.

PA provincial councillors and Pradeshiya Sabha members were among the distinguished guests.

Each invitee was asked to bring along 15 guests, men and women who worked hard to make him the number one winner.

The grand event at Minister Ratwatte's Mahaiyawa residence also saw an intense baila session.


Rupee plunge to lift prices

By Faraza Farook and Nilika de Silva
Traders yesterday said prices of food items and other commodities would go up following the devaluation of the rupee for the fourth time within the past seven months.

Importers said they would be forced to increase the prices as a result of the devaluation. 

"Most importers are in a fix. At this rate of devaluation, we can't survive. All importers will have to close their shops," one businessman said. 

K. P. Sundaram, president of a trade association at Old Moor Street said importers would have to increase the prices of provisions at least by Rs. 1 per kilogram, though this increase was hardly sufficient to recover the loss. 

Shelton Kekulthota, a spokesman for the Duty Free Traders Association said prices were likely to go up by 10 percent in the coming month.

The dollar per rupee rate went up from Rs. 82.24 to Rs. 84.70 on Friday, representing a rise of 16 percent within the past seven months. The recent devaluation came a month after the Central Bank adjusted the dollar fluctuation band by two percent two month. 

One of the worst affected sectors is the motor car trade. 

Associated Motorways Deputy General Manager Shivantha de Silva said the prices would be adjusted by the market forces with dollar going up and economy facing a downturn. 

With importers buying their goods on Letters of Credit, the devaluation of the rupee forces importers to pay more at the time of payment, sustaining losses, one analyst pointed out.

Financial analysts said the effects of the devaluation would be seen in the coming weeks with indirect reactions emerging from all sectors of the economy. 

Amal Sanderatne, Head of Research at Jardine Fleming HNB Securities, said that though the devaluation would benefit the exporters and make them more competitive, it would place a burden on the people as imports would become more expensive.


Aid flow linked to Government performance

By Feizal Samath
Foreign donors can put pressure on Sri Lanka and curb aid flows, particularly concessional loans if the country's performance in human rights, governance and the economy is below par, economists and analysts said.

"Though the Paris aid meeting is no more a pledging conference, donors can use other means to put pressure on Sri Lanka to get its act right in terms of human rights and governance issues," one economist said.

Private sector analysts said there was absolute confusion over the status of the December 19 donor meeting, now titled the Sri Lanka development forum, due to conflicting reports by ministers on the issue of aid received.

Several ministers, reacting to opposition criticism that donors had not pledged funds to Sri Lanka this time, were earlier quoted as saying the government received aid pledges ranging from US $ 1 billion to US $ 3 billion.

But Minister G. L. Peiris told parliament last week that the Paris meeting was no more a pledging conference unlike in the past as Sri Lanka had attained the status of a middle-level income country and it no more had access to cheap concessional aid and other benefits offered to low-income countries.

He said foreign aid worth US $ 2.4 billion was available to continue Sri Lanka's development work while another $850 million had been earmarked for projects due to start this year.

The minister, in a statement clarifying the recent Paris meeting of the country's foreign donors where unlike in the past no formal aid pledges were made, said projects totalling US $ 80 million with emphasis on infrastructure development were also being processed for this year and next year.

Economists, while acknowledging that the World Bank had accepted Sri Lanka's position that it was facing a critical period due to war spending and unavoidable fuel price hikes owing to external pressure, noted that the bank nevertheless expressed concern over the growing budget deficit and runaway spending like maintaining probably one of the biggest cabinets in the world.

"There are economic issues that have drawn the attention of donors and these funders can put pressure on the government," one economist said adding that the non-utilisation of donor aid was another problem.

While Sri Lanka's record of utilisation of foreign aid has improved in the past few years, the government is still having problems in raising the required local finances or matching credit for foreign-funded projects due to rising war expenditure.

Economists said the country's economy this year was unlikely to achieve last year's growth levels of around 6 percent due to high inflation, fuel price hikes, high interest rates, wage pressures and currency devaluation.

The Central Bank on Friday pegged its selling rate of the rupee to 85 rupees per US dollar, resulting in a near 15 percent devaluation of the local currency in the past year.

Please see Business sections for related stories.

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