Sri Lanka sacks regulator for blocking power tariff rise – EQ Mag

Sri Lanka’s parliament on Wednesday removed the head of the country’s utilities regulator after he blocked a huge electricity tariff increase that was in line with demands from the IMF.

The legislature voted 123 to 77 to drop Janaka Ratnayake as the boss of the Public Utilities Commission with immediate effect, making him the first head of a utilities regulator to be sacked in Sri Lanka’s history.

Ratnayake had resisted a second tariff increase of up to 275 percent in February on top of a 264 percent hike six months earlier at the height of an economic crisis.

The government overruled Ratnayake’s objections and went ahead with February’s rise, saying it was crucial to reduce losses at Sri Lanka’s state-owned electricity company.

Efforts to balance the books at state-owned enterprises were key to qualifying for a $2.9 billion bailout in March from the International Monetary Fund.

The IMF had prescribed that Sri Lanka implement cost-based tariffs and the lender wanted energy subsidies removed ahead of releasing the first tranche of $330 million under the four-year package.

Sri Lanka’s political opposition accused the government of undermining the independence of regulators by sacking the utilities chief.

“You are sending a bad message to the international community,” said MP Lakshman Kiriella. “The government is telling the world that it will not allow independent commissions to function independently.”

The government has removed subsidies and doubled taxes following the worst economic crisis in Sri Lanka’s history, when a shortage of foreign exchange meant the country could not finance imports of many essentials.

Sri Lanka defaulted on its $46 billion foreign debt in April last year, forcing it to seek the IMF assistance.

Months of protests over economic mismanagement led to the toppling of former president Gotabaya Rajapaksa, who fled the country and resigned in July.

Source: PTI