The IMF has expressed concern over the way electricity and fuel prices are set in Sri Lanka. The International Monetary Fund (IMF) has said in its latest staff report that Sri Lanka has not implemented the pricing formula to reflect the actual cost of producing and supplying electricity and fuel, but the system is not being implemented properly.
The IMF said that since January, Sri Lanka has failed to meet its target of recovering the actual cost of producing a unit of electricity through consumer tariffs.
The IMF said this situation has arisen due to the failure to review electricity prices in line with rising production costs.
The IMF points out that the same situation exists with regard to fuel prices in Sri Lanka, and that despite the increase in fuel prices in the world market due to the Middle East crisis, a tariff system that does not cover real costs has been in effect in the country since last April.
However, the IMF says that the current fuel subsidy process will be completely completed by September and that it is ready to provide Sri Lanka with its technical team’s assistance to formulate clear electricity tariff criteria that cover real costs.