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Sri Lanka’s 2026 Budget: Fiscal balance meets economic progress

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President Anura Kumara Dissanayake sharing a light moment with the Opposition while presenting Budget 2025

The government budget is the nation’s key economic policy document — the primary instrument through which a state translates its political priorities into concrete economic action. Sri Lanka’s 2026 Budget comes at a crucial juncture, following the severe macroeconomic crisis of 2022, the implementation of an IMF-supported stabilization programme, and the ongoing debt restructuring process. As the country enters a phase of gradual recovery, the government faces the delicate task of balancing fiscal discipline, social protection, and growth-oriented investment.

A government budget functions both as a financial plan and a policy document. It outlines projected revenues and planned expenditures for a fiscal year, sets tax and spending priorities, and articulates the government’s broader macroeconomic objectives — economic growth, price stability, social equity, and debt sustainability. Unlike a corporate budget focused purely on profits and losses, a national budget integrates non-financial policy objectives such as welfare, security, and the provision of public goods, while also reflecting political trade-offs and long-term commitments like pensions and public debt.

Why the budget matters:

= Macroeconomic stability: The budget shapes fiscal deficits, public debt paths, and influences inflation and interest rates. Sound fiscal management builds confidence among investors, international partners, and citizens alike.

= Resource allocation: Through its expenditure framework, the budget determines how resources are distributed among key sectors such as health, education, and infrastructure, directly affecting service delivery and development outcomes.

= Redistribution: Taxation and social transfer mechanisms embedded within the budget play a key role in determining income distribution and social equity.

= Signalling and governance: The budget serves as a policy signal to both markets and the public. A transparent and accountable budget process enhances trust, governance quality, and institutional credibility.

The Importance of the Government Budget

A national budget is more than a financial plan — it is the government’s main tool for turning policy goals into economic action. Its impact extends across all sectors of society, shaping stability, confidence, and development.

= For the Economy:
A credible budget anchors macroeconomic expectations, manages fiscal deficits, and supports investment by ensuring stability and predictability.

= For Investors:
It signals policy direction on taxation, spending, and fiscal priorities. Transparent and consistent budgeting reduces risk and builds investor confidence.

= For Households:
Budgets fund essential services such as health, education, and social protection, helping safeguard vulnerable groups and promote inclusive growth.

= For Public Institutions:
They guide operational priorities of ministries while ensuring transparency and accountability through parliamentary and civic oversight.

= For Creditors and Partners:
Budgets demonstrate fiscal discipline and reform commitment, strengthening credibility with international lenders and development agencies.

Characteristics of a “Best Practice” Government Budget

= Macroeconomic Consistency: Based on realistic, transparent assumptions for GDP, inflation, and interest rates, aligned with monetary policy.

= Fiscal Sustainability: Maintains credible deficit and debt targets within a medium-term fiscal framework.

= Strategic Focus: Links annual spending to medium-term policy goals and development priorities.

= Prioritization & Efficiency: Directs funds to high-impact investments and social protection while reducing wasteful spending.

= Transparency: Ensures public access to budget data, fostering accountability and investor trust.

= Realistic Revenue & Tax Design: Uses conservative revenue estimates and broad, fair, growth-friendly taxation.

= Strong Public Financial Management: Strengthens controls, procurement, and cash management to reduce leakages.

= Countercyclical Flexibility: Allows fiscal adjustment to respond effectively to economic shocks.

= Inclusivity: Protects vulnerable groups through funding for welfare, education, and healthcare.

= Monitoring & Evaluation: Uses measurable indicators and reviews to enhance performance and accountability.

Special Features of Sri Lanka’s 2026 Budget

Sri Lanka’s 2026 Budget marks a shift from crisis recovery to sustainable growth while staying aligned with IMF-supported fiscal frameworks. It emphasizes fiscal discipline, revenue mobilization, and investment-led growth.

Key Highlights:


= IMF Alignment: The budget follows IMF fiscal targets on deficit reduction, revenue growth, and achieving a primary surplus to restore debt sustainability.

· Revenue Mobilization: Focus on expanding the tax base, improving administration, and digitalizing systems to raise revenue-to-GDP ratios sustainably.

= Debt Management: Debt restructuring eased pressures but requires transparent reporting and credible medium-term plans to maintain stability.

= Capital Expenditure Push: Increased capital spending to close infrastructure gaps and stimulate private investment and productivity.

= Subsidy and Expenditure Reform: Rationalizing subsidies and recurrent costs while protecting key social sectors like health, education, and welfare.

= Transparency and PFM Reforms: Ongoing improvements in treasury operations, cash-flow forecasting, and procurement to enhance accountability.

Fiscal and Monetary Policy Coordination

Fiscal policy (spending and taxation) and monetary policy (interest rates and liquidity) must work together for stability.

= Debt & Interest Rates: Large deficits can raise interest rates and crowd out private credit; external borrowing raises currency risks.

= Inflation Control: Expansionary budgets can fuel inflation, prompting tighter monetary policy and higher borrowing costs.

= Policy Coordination: Fiscal discipline supports central bank independence and price stability.

Sri Lanka’s Central Bank has maintained a cautious stance ahead of the 2026 Budget — balancing growth support with inflation control.

Singapore – Fiscal Prudence & Institutional Strength

= Focuses on long-term stability, protected reserves, and efficient use of surpluses.

= Invests in competitiveness, human capital, and innovation.

= Strong institutions and transparent fiscal management ensure sustainable growth.
= Lesson: Strengthen PFM systems, build fiscal buffers, and focus on high-return investments.

India – Scale & Infrastructure-Led Growth

= Uses large infrastructure spending and social programs to drive employment and consumption.

= Leverages PPPs and incentives to attract private investment.

= Balances higher deficits with strong growth potential.
= Lesson: Invest in infrastructure, expand PPPs, and manage fiscal risks carefully.

Sri Lanka must balance Singapore’s fiscal discipline with India’s growth-driven investment — building a resilient, inclusive, and forward-looking fiscal framework aligned with its Vision 2048 goals.

Sri Lanka’s Appropriation Bill 2026

Sri Lanka’s Appropriation Bill 2026, which projects total government expenditure at Rs. 4,434.36 billion for the period from January 1 to December 31, 2026, marks a critical point in the nation’s post-crisis recovery path.

After several years of fiscal strain, mounting external debt obligations, and persistent inflationary pressures, the 2026 budget seeks to strike a delicate balance among three key objectives: macroeconomic stabilization, social welfare protection, and structural economic transformation. However, achieving this balance remains a significant challenge.

Expenditure Overview:

= Total Government Expenditure: Rs. 4,434.36 billion

=Recurrent Expenditure: Rs. 3,028.75 billion (68% of total)

= Capital Expenditure: Rs. 1,405.60 billion (32% of total)

This composition reflects Sri Lanka’s enduring fiscal structure, where recurrent spending—driven by public sector salaries, pensions, interest obligations, and subsidies—continues to dominate.

From an economic perspective, this 68:32 ratio highlights the country’s limited fiscal flexibility. For a more sustainable and growth-oriented fiscal path, economists often advocate for a 60:40 ratio, ensuring that a greater share of government expenditure supports capital formation, infrastructure development, and innovation-driven growth.

Fiscal Interpretation

= The recurrent-heavy composition signals fiscal rigidity — the inability of the government to reallocate spending efficiently due to structural commitments.

= Capital expenditure, though improved in nominal terms, still constrains the government’s ability to finance long-term infrastructure, technology, and competitiveness improvements.

= The dominance of consumption-oriented expenditure over investment spending implies that fiscal policy is still more focused on stability and social continuity than on transformation and growth. (See Figure 1)

High-Expenditure Ministries

( See Figure 2)

These five ministries alone account for nearly 65% of the total national expenditure, reflecting the government’s concentration on administration, debt service, and essential social services.

Capital-Intensive Ministries

Some ministries stand out for their high proportion of capital investment, signaling their developmental role:

(See Figure 3)

These allocations emphasize infrastructure development, urban expansion, and irrigation improvement — key pillars of physical and economic connectivity. However, the digital and renewable sectors, though strategically vital, still receive relatively modest allocations compared to traditional infrastructure.

Low-Allocation and Emerging Sectors

Several ministries receive less than 1% of total spending — including Environment (0.41%), Digital Economy (0.36%), Youth and Sports (0.30%), and Science and Technology (0.14%).

From an economist’s perspective, this signals a policy gap between stated national goals (e.g., digital transformation, climate resilience, innovation) and actual fiscal commitment. For a modern economy aspiring to transition toward a knowledge- and technology-driven model, such underfunding represents a missed opportunity.

Key Economic Insights and Structural Issues

The Weight of Recurrent Commitments

Public sector salaries, pensions, and debt servicing consume the majority of recurrent expenditure. This pattern leaves limited fiscal space for productivity-enhancing spending. In 2026, the Ministry of Finance alone accounts for Rs. 634.78 billion, largely reflecting interest and debt repayments, which absorb a significant share of GDP.

Economists caution that such fiscal patterns can lead to a “crowding out effect”, where public debt obligations limit the government’s capacity to invest in education, research, and entrepreneurship — areas critical for long-term economic competitiveness.

Defence and Administrative Overheads

Despite the absence of internal conflict, defence expenditure (Rs. 455 billion) remains over 10% of total expenditure, surpassing allocations for education, agriculture, or digital development. While national security is indispensable, reallocating even a small portion of defence spending toward research, innovation, and human capital could yield higher socio-economic returns.

Social Sector Balance

= Health (Rs. 555 billion) maintains a robust 12.5% share — a positive sign of post-pandemic resilience and continued investment in public healthcare.

= Education (Rs. 301 billion) receives only 6.8%, lower than the global average of 4–6% of GDP recommended by UNESCO for developing nations.

= The Women and Child Affairs (Rs. 16.4 billion) and Social Empowerment (Rs. 38.6 billion) ministries, though small in absolute terms, play crucial roles in human capital and inclusion, yet remain underfunded.

Capital Development and Growth Drivers

Infrastructure-related ministries — particularly Transport, Urban Development, and Agriculture — exhibit a more development-oriented focus. The Rs. 390 billion capital investment in transport aligns with the government’s ambition to modernize logistics, reduce bottlenecks, and attract investment in ports and civil aviation.

However, without parallel reforms in energy, industry, and entrepreneurship, the long-term multiplier effects of these capital projects may remain limited.

Comparative Economic Context

a) India and Singapore as Contrasts

= India’s Union Budget 2025–26 allocates around 37% for capital expenditure, emphasizing infrastructure, manufacturing, and renewable energy.

= Singapore, though smaller, channels over 45% of its annual spending into development projects, digital economy infrastructure, and R&D.

In comparison, Sri Lanka’s 32% capital ratio indicates a more conservative fiscal structure, constrained by debt obligations and revenue limitations.

b) Regional Benchmarking

Countries like Bangladesh and Vietnam have prioritized industrial policy and export competitiveness, leading to GDP growth rates exceeding 6%. Sri Lanka’s fiscal design, heavily skewed toward recurrent expenditure, risks prolonging stagnant productivity unless structural adjustments are made.

Fiscal Policy Implications

a) Fiscal Discipline vs. Growth Ambition

The 2026 Appropriation Bill shows clear signs of fiscal consolidation under IMF guidance — maintaining expenditure discipline while avoiding excessive borrowing. However, fiscal consolidation must be paired with growth-oriented fiscal policy, ensuring that expenditure quality improves, not just expenditure control.

b) Revenue and Deficit Management

= Tax administration efficiency and digital compliance systems.

= Widening of the tax base, especially through formalizing the informal economy.

= Reduction of tax exemptions that erode fiscal capacity.

Without improved revenue mobilization, dependence on domestic and external borrowing could perpetuate debt vulnerability and currency instability.

Monetary and Macro Linkages

Sri Lanka’s fiscal stance directly influences monetary stability. With recurrent expenditure at 68%, the government must rely on short-term borrowing and domestic credit expansion, which can pressure interest rates and exchange rates.

A prudent coordination between the Central Bank’s monetary tightening and the Treasury’s fiscal strategy is essential to prevent inflationary resurgence and maintain external credibility.

Investment Climate and Private Sector Response

From an investor’s perspective, the 2026 budget sends mixed signals.

= On one hand, infrastructure allocations (transport, urban development, irrigation) enhance long-term investment attractiveness and logistics efficiency.

= On the other, persistent fiscal rigidity, high administrative expenditure, and low innovation investment limit the country’s competitiveness in attracting FDI and technology ventures.

To strengthen investor confidence, future budgets must:

= Provide predictable fiscal policy.

= Enhance public-private partnership (PPP) frameworks.

= Support digital transformation, start-up ecosystems, and green industries.

Social and Human Development Dimensions

Economic recovery must be inclusive. With poverty and inequality still elevated post-crisis, social spending quality becomes crucial. The allocations to education, health, women, and youth are essential, yet insufficient to drive structural transformation.

A more effective approach would involve targeted social protection, skills development, and employment-linked welfare programs, particularly for rural and marginalized communities.

Recommendations

= Rebalancing Recurrent vs. Capital Spending
Shift gradually from 68:32 to 60:40, prioritizing productive investment in technology, transport, and renewable energy.

= Performance-Based Budgeting
· Introduce outcome-oriented metrics for ministries — measuring not only spending but impact (e.g., literacy, employment, exports).

= Fiscal Decentralization
· Strengthen provincial councils’ fiscal autonomy while ensuring transparent reporting and auditing.

= Innovation and R&D Investment
· Allocate at least 1% of GDP for science, research, and innovation — critical for productivity growth.

= Public Sector Reform
· Rationalize administrative structures and adopt digital systems to reduce recurrent overhead.

= Green and Digital Transformation
· Scale up investment in renewable energy, climate adaptation, and digital infrastructure, positioning Sri Lanka within the global sustainability agenda.

Conclusion

The Sri Lankan Appropriation Bill 2026 represents a budget of stabilization and continuity, rather than bold transformation. While it ensures essential services, administrative continuity, and gradual infrastructure recovery, it still reflects the weight of historical fiscal constraints.

The economic direction is cautiously positive — signaling discipline under IMF guidance and a slow shift toward investment-led growth. However, to truly unlock its economic potential, Sri Lanka must redefine its spending priorities — from consumption to creation, from protection to production.

A resilient and prosperous Sri Lankan economy will require not only balanced books but balanced vision — one that aligns fiscal responsibility with innovation, inclusivity, and sustainable growth.

Visvalingam Muralithas

is a researcher in the legislative sector, specializing in policy analysis and economic research. He is currently pursuing a PhD in Economics at the University of Colombo, with a research focus on governance, development, and sustainable growth.

He holds a Bachelor of Arts in Economics (Honours) from the University of Jaffna and a Master’s degree in Economics from the University of Colombo. His academic background is further strengthened by postgraduate diplomas in Education from the Open University of Sri Lanka and in Monitoring and Evaluation from the University of Sri Jayewardenepura.

In addition to his research work, Muralithas has contributed to academia by teaching economics at the University of Colombo and the Institute of Bankers of Sri Lanka (IBSL), and has also gained industry experience as an investment advisor at a stock brokerage firm affiliated with the Colombo Stock Exchange. Views are personal. He can be contacted at muralithas.v@gmail.com

by Visvalingam Muralithas



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Features

Constitutional inconsistencies relating to franchise

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The Preamble to Sri Lanka’s Constitution states: “The PEOPLE of SRI LANKA having by their Mandate … entrusted and empowered their Representatives … to draft, adopt and operate a new Republican Constitution in order to achieve the goals of a DEMOCRATIC SOCIALIST REPUBLIC, whilst ratifying the immutable republican principles of REPRESENTATIVE DEMOCRATIC”.

The intent of this exercise is to ascertain whether the practices as adopted by successive Governments to elect the People’s representatives are in keeping with the “immutable principles of Representative Democracy”.

According to Article 3 of the Constitution: “Sovereignty includes the powers of government, fundamental rights and the franchisee”. Furthermore, Article 3 is an entrenched article – Article 83. According to Chapter XIV, titled “The Franchise And Elections”, Article 88 states: “Every person shall, unless disqualified….be qualified to be an elector at the election of the President and of the Members of Parliament or to vote at a Referendum”. Therefore, it is the electors in the Electoral Districts, as determined by the Delimitation Commission (DC), that elect the President and Members of Parliament.

EXISTING INCONSISTENCIIES

= The first relates to Article 96 (1). This states: “The (DC) shall divide into not less than twenty and not more than twenty-four electoral districts…”. The reason for the upper limit for Electoral Districts is perhaps because Sri Lanka was originally divided into twenty-for Administrative Districts (now 25), and 96 (3) establishes a relationship between Electoral Districts and Administrative Districts when it states: “Where a Province is divided into a number of electoral districts the Delimitation Commission shall have regard to the existing administrative districts so as to ensure as far as practicable that each electoral district shall be an administrative district or a combination of two or more administrative districts or more electoral districts together constitute an administrative district”

Despite the fact that the Constitutional direction to the DC was that the Electoral District was to “have regard to the existing Administrative District”, the number of Electoral Districts established by the DC is twenty-two (22) while the number of Administrative Districts are now twenty-five (25). Although the provision to combine Administrative Districts into one Electoral District exists, the reason for the difference is reportedly because the DC decided to factor in issues, such as land which is extraneous to franchise thus compromising the sanctity of franchise and the sovereignty of the electors. On the other hand, if the Electoral District is coterminous with the Administrative District, not only would it protect the elector’s Franchise but also enable the elected members to address the administrative interests of the electors. Would such an opportunity not give substance to the “immutable republican principle of Representative Democracy”?

= The second inconsistency relates to Article 96 (4). This states: “The electoral districts of each Province shall together be entitled to return four members, (independently of the numbers which they are entitled to return by reference to the number of electors whose names appear in the registers of electors of such electoral districts), and the Delimitation Commission shall apportion such entitlement equitably among such electoral districts”.

Consequently, the four members to be returned from each of the nine Provinces amounts to thirty-six additional members, shall be apportioned equitably by the DC among the twenty-two (22) Electoral Districts together with the one hundred and sixty members from the electoral registers, thus making a total of one hundred and ninety-six members being elected through the franchise of the electors. The balance twenty-nine through the National List nominated by Political Parties is also elected by the electors, thus making a total of two hundred and twenty-five (225) Members of Parliament elected through Electoral Districts.

The irony however, is that although Members of Parliament are elected through Electoral Districts, all Executive Powers of the Line Ministries of the Central Government are implemented by the District Secretaries in the twenty-five Administrative Districts. The present convoluted process of appointing a Parliament through Electoral Districts and administering its functions through Administrative Districts cannot be justified. What would be more meaningful is to make Administrative Districts also perform Electoral functions such as appointing the Members of Parliament.

= The third inconsistency relates to the election of Members for Provincial Councils. According to the Provincials Councils Act: “Every administrative district in a Province shall for the purposes of elections to the Provincial Council established for that province, constitute an electoral area”

This is a departure from the practice adopted to elect Members to Parliament since they are based on outcomes from twenty-two (22) Electoral Districts. Therefore, it is worth exploring why Members to Parliament and Provincial Councils cannot be elected using the existing 25 Administrative Districts.

RECOMMENDATIONS

The intention is for an arrangement where Administrative Districts are also assigned electoral functions, so that both Members to Parliament and Provincial Councils could be elected by a single unit. The advantage would be that Administrative Districts could carry out Central Government functions under a District Secretary as at present, a parallel unit within the Administrative District could be set up to implement devolved powers in each of the Administrative Districts, while retaining the existing structural arrangements of Provincial Councils. This would facilitate the coordination of devolved powers with Central Government activities, thus improving productivity of each.

CONCLUSION

The current practice is that while representative of the Government of Sri Lanka is elected by Electoral Districts as stated above, Provincial Councils in the periphery with less powers than the Government are elected by electors in Administrative Districts of each Province. If elections to Parliament and to Provincial Councils are elected by electors in each of the twenty-five Administrative Districts, perhaps one election could elect Members to both bodies.

In view of the significant cost savings involved, it is imperative that serious consideration is given to equip Administrative Districts to serve as Electoral Districts for Parliamentary Elections as well as for Provincial Council Elections, since such an arrangement would further fortify the “immutable republican principle of Representative Democracy”. Furthermore, since such an arrangement would be closer to the People, services to them would be better served.

By Neville Ladduwahetty

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Power cuts are here! But we have a way out!

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The much-dreaded power cuts are already here though not declared as such. The tragedy is that the power cuts are not due to inadequate electricity supply, but the inability of the power and energy authorities to use the abundant solar and wind power installed without any financial or economic burden on the state. They ought to admit their lack of wisdom to be mindful of the rapid changes in the sector and the need to be equipped.

Fuel Prices have been increased again up to the 2022 levels. Therefore another Electricity tariff hike is inevitable. Perhaps, the government may hold it back until September, when the next tariff revision is due. An appeal has been made to “prosumers” to switch off their solar PV system in the fear of grid stability being affected. While there is excess solar power, which they are unable to manage, even when the demand is below the installed capacity and high contribution of hydro, solar and wind. May 31 (Sunday) energy mix indicated substantial use of oil in CEB-owned power plants and those belonging to the Independent Power Producers (IPPs) . What is the rationale? One would believe that even the hydro reservoir water can be saved for use during the night, without curtailing solar and wind power. It will be said that the system is very complex and beyond the understanding of mere mortals like ordinary “prosumers”, who have added over 2300 MW to the grid, entirely at their expense and at rates well below the average cost of generation. (See Image 1)

Storage Batteries and Renewable Transition

The fact that the growing need for storage batteries to optimise the utilisation of variable renewable energy (VRE) has been felt for the last decade or more, and nothing was done about it, is never mentioned in their laments.

However, there is a glimmer of hope due to the initiatives taken by the Public Utilities Commission of Sri Lanka (PUCSL). An increase in the demand due to a general GDP growth will have to be met using renewable resources. It has been clearly noted that such alternatives must be developed while curtailing the use of oil and ensuring the uninterrupted power to the consumers.

Recognising this need and the fact that fastest intervention is possible by promoting BESS (Battery Energy Storage Systems) to be added to all existing renewable energy sources, the PUCSL has initiated stakeholder consultation to determine the feed-in tariff payable for each type of BESS. A detailed methodology for determining the FIT has been circulated. The identified types of BESS discussed were as follows”

1. Power Plants

a. Mini -Hydro

b. Mini – Hydro-Local: mini hydro plants that at least use locally manufactured turbines

c. Wind

d. Wind – Local: Wind plants that at least use locally manufactured turbine blades

e. Biomass – Dendro – Biomass plants that use sustainably grown fuel wood

f. Biomass – Agricultural/Industrial Waste; Biomass fired plants use byproducts, like paddy husk, sawdust, sugar cane bagasse, etc.

g. Municipal Solid Waste

h. Waste Heat Recovery

i. Ground Mounted Solar PV

j. Floating Solar PV

2. Prosumers

a. Roof Top Solar PV

b. Rooftop Solar PV with Battery Energy Storage System (BESS)

c. Prosumers with behind the meter Battery Energy Storage System (BESS)

3. Power Plants with BESS

We mentioned in an earlier article that the PUCSL proposed a scheme whereby we can get rid of use of oil for power generation in stages, commencing with elimination of the diesel use by 2027 and all imported oils by 2030.

Stakeholder Meeting & Feed In Tariff( FIT)

The PUCSL has been empowered by the new Electricity Act No 36 (as amended), which came into full force on 09 March, 2026, with responsibility for calculating and announcing all FIT schemes, both for purchase and sale of electricity to consumers.

A well-represented stakeholder meeting was held recently, when the proposed methodology for determining the FIT of each type of BESS was given to them to provide further specific inputs. It is, therefore, realistic to expect such a FIT to be declared by the end of June, 2026.

While this is a welcome and progressive step unlike the ad hoc process adopted hitherto. But the fact remains that the responsibility for the effective use of FIT to attract investors to add the BESS at different scales, lies with the one or more of the newly appointed companies to take over the functions of the former Ceylon Electricity Board (CEB).

Government Recognition of Fossil Fuel Risks

The current government has reportedly recognised the danger of overdependence on imported fossil fuels, which we have absolutely no control over. This is something we have been stressing for a long time. However, better late than never. As a matter of interest, we show the degree of fossil fuel dependence and its adverse impact on the economy. (See Graph 1)

It is to be noted that earnings from our traditional exports of tea, rubber and coconuts fail to meet the ever-increasing cost of importing fossil fuels. Time was when earnings from these exports barely helped meet the cost of import of fuels which was back in 2010. The rupee cost of imports is shown in Billions to keep the data columns within the bounds of the chart. This is the factor which affects you and me directly.

However, we earnestly urge the government to direct the electricity companies to take immediate action to prepare the grid which costs only a fraction of the values predicted by the CEB to institute their schemes which are not in line with the ground reality to accept the BESS system once the FIT is announced. Reasonable BESS and FIT will help attract investors with the assurance of short-term and long-term improvement, at no cost to the state.

Solar PV & BESS Proposal

We proposed some time back of the opportunity for those “prosumers” using 300 units per month, for installing solar PV with adequately sized batteries, which is more economical than drawing power from the grid, and to gain the happy situation, to be insulated from the danger of power cuts and further increases in consumer tariff.

The PUCSL intervention to declare a BESS tariff will add a great impetus to those who are willing to adopt the above proposal. They will be encouraged to increase the capacity of their installations as well as the battery capacity so that the excess can be exported to the grid during peak hours, when firm economic power is most needed. Such additional features would enhance their financial returns and would enable rapid elimination of the use of diesel during peak hours. In recent months with the depreciation of the rupee, coupled with the increase of costs of solar panels, inverters and batteries, our original analysis of financial viability of this interevention was facing some uncertainties. As such, we welcome this move by the PUCSL, whereby the consumers would have a steady revenue in addition to the savings on their monthly electricity bills. It is likely that the level of FIT and the permitted number of exports will be adequate to work with the increased costs, as shown. (See Table 1)

It must be noted that the cost values are highly volatile ,and some variations are to be expected. FIT for export on energy is stated as 60% of the current peak time energy charge of Rs 106/kWh.

This revolution is well within the means of the over 200,000 potential “Prosumers” who consume over 250 units per month. While they would fulfil their own goal of being immune to any power cuts as well as being insulated from future tariff increases, they would be serving the country by progressively eliminating the need for any fossil fuels for power generation. For example, if 50,000 of them add 10 kWh of battery capacity, the peak power demand can be reduced by 500 MW, thereby obviating the need for using the most expensive diesel during the peak period. Very special advantages can be derived by those also purchasing EVs instead of petrol and diesel vehicles. It will be possible to save on LPG, which costs Rs 4,700.00 per cylinder at present. Thus, the excuse for demanding ever increasing consumer tariff in the future will not be available. As such this move would help all consumers down to the lowest level of consumers.

It is hoped that the energy authorities recognise this reality and support the PUCSL proposals by approving the BESS FIT system and directing all Utility companies to adopt the same and urgently initiate action to install the simple infrastructure additions to accept the BESS energy, as proposed. If they care to review this proposal having discarded biases and any other agendas, they, too, will benefit.

Conclusion

The inescapable conclusion one can derive from the above is that the solution to the crisis is available from the consumers themselves in a manner that is attractive and profitabe to them. It would also be of major assistance for the Utility to manage the sector effectively and efficiently. In addition, all consumers will benefit by gradually weaning themselves away from the grid an use of oil for power generation. This would obviate any more demands for consumer tariff increases by the National System Operator. The PUCSL has taken an essential first step with its intention to declare a BESS FIT. It is up to the government to ensure that the Ministry and the Utility companies adopt the correct stance and make a commitment to ensure the success of this scheme as soon as possible.

by Eng Parakrama Jayasinghe
Past President and Council Member
Bio Energy Association of Sri Lanka

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Features

Is power devolution under JVP-NPP a political daydream?

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Former President Chandrika Kumaratunga

The JVP General Secretary Tilvin Silva’s recent remarks at a news conference in Jaffna where he ruled out the possibility of holding provincial council elections this year has been widely reported and widely criticized. About the same time there was another media event in Jaffna that went largely unnoticed and unreported outside Jaffna. What was said at the second media event may carry far more political implications than Tilvin Silva’s election timing talk. A veteran Tamil political participant made the startling yet not implausible statement that the prospect of having political devolution under the JVP-NPP government is becoming “a daydream”. The statement was made by Dr. K. Vigneswaran, who served as Provincial Secretary to the only North-East Provincial Council Government that was elected under the auspices of the Thirteenth Amendment.

Dr. Vigneswaran is a Professional Civil Engineer who studied at Royal College, graduated with First Class Honours in Engineering in 1964, and went on to complete a pioneering PhD at the university of Waterloo, Canada, applying the finite element method (FEM) in the field of Geotechnical Engineering. His engineering career has always been at the Irrigation Department where he rose to a Deputy Director. That was when the department was in its golden years, and Vigneswaran was known for his technical mentorship, meticulous administrative skills, and for knowing the fine print of everything. While at the Irrigation Department, Vigneswaran married Ramya de Silva, a fellow irrigation Engineer. After 1983, Vigneswaran became a fulltime political activist and a powerful resource in Tamil politics, but with unwavering commitment to nonviolence, democracy and federalism. The family moved first to India and then Canada, and Vigneswaran has been shuttling between Canada and Sri Lanka.

Devolution: Tortuous Trajectory

Since 1987, the Indo-Sri Lanka Agreement, and the 13th Amendment, Vigneswaran has been a permanent fixture in all the politics and institutional dynamic of implementing 13A and establishing provincial councils. He served as Secretary to the only elected Provincial Government for the Northern and Eastern Provinces. After 1994 and the election of Chandrika Kumaratunga as President, Vigneswaran became a key participant in all the civil society efforts and government initiatives to restore the PCs and implement 13A, both during the Kumaratunga presidency and the succeeding administrations of Mahinda Rajapaksa and the Sirisena-Wickremesinghe duo.

Devolution efforts stalled after the election of Gotabaya Rajapaksa, who in so many words declared that he had no time for 13A or PCs in his presidential agenda, whatever it was. Only that his whole agenda turned out to be a wholesale disaster for the country. Already by then, all the nine Provincial Councils had fallen into abeyance with the cancellation of the 1988 PC elections by the Sirisena-Wickremesinghe duo, with the TNA standing by. The abeyance continues under the JVP-NPP government with no apparent end in sight after Tilvin de Silva’s statement in Jaffna.

I say all this to provide the proper context for Vigneswaran’s statement in Jaffna that the prospects for power devolution under the JVP-NPP government are becoming a political daydream. He said something else as well: that of all the government leaders he has encountered over the years, the only leader who has been genuinely sincere about power devolution is former President Chandrika Kumaratunga, and no one else. I am constrained to add that the insincere category would include Ranil Wickremesinghe, who for all his handsome promises, never matched any of them with experiential sincerity. The present JVP-NPP government still has time to show that they are not an insincere lot.

It is not my purpose to agree with or question Dr. Vigneswaran’s assertions, but to use them as cue and context to comment on the widening mismatch between the JVP-NPP government’s promises and its practices on the matter of power devolution and the restoration of the PC system. With a stalling economy, rising prices and external shocks, it is obvious that the government has all the economic matters to worry about, but that does not mean that it can ignore all the other government responsibilities. No government is put in power to solve a single problem or address a single issue. It is in the nature of governments to deal with multiple problems with varying priorities. Otherwise you could have a single cabinet minister to deal with one problem at a time. That is never going to be the case.

The economy is of course the top of mind priority for the government even as it is a top of mind concern for the people. Even on the economic front, the government is holding steady but is showing little progress. And there are other government initiatives where political accountability will call for answers: to wit, the catchall Clean Sri Lanka programme, ambitious educational reforms, contentious energy sector reforms and, yes, power devolution as well as the overpromised constitutional reforms. Not to mention the sprawling unforced errors over substandard coal imports, foreign exchange fraud, and the chronic neglect of developing the renewable energy sector. Correcting these fields of errors may require a separate ministry for each.

Devolution: Daydream or Deliverable

On the PC system and constitutional reform, there has been scant progress in spite of handsome promises. On both, the government is inadvertently deepening the holes that it had dug itself into through indifference, inaction or procrastination, or all of them and more. In the matter of devolution and provincial councils, the government can simply defuse the situation by directing the Election Commission to conduct elections at the earliest opportunity that is logistically possible. Making his statement in Jaffna, Mr. Tilvin Silva alluded to funding shortfall and legal complications as reasons for the necessity to postpone PC elections until next year. Neither reason holds water.

The funding question would seem to have been put to rest by the statement of Health Minister and Cabinet Spokesman Nalinda Jayatissa, presumably reflecting cabinet consensus, that there are no funding issues and if needed additional funds could be arranged through supplementary allocations. It is also disingenuous to cite legal complications as a reason. The so called legal complications arose because of the collective stupidity of the Sirisena-Wickremesinghe parliament that included the then miniscule NPP and the politically-lost TNA. The JVP-NPP has now ballooned from a handful MPs to a two-thirds majority and it can expedite any legislation that it wants to enable the PC elections to be held without delays.

Alternatively, the elections can be held under the old arrangement of proportional representation with assurance by political parties to honour their commitment to fielding more female candidates. Already at a gathering of all political parties, including the NPP (but not the JVP), and civil society groups, convened by People’s Action For Free & Fair Elections (PAFFREL), the political parties jointly committed to a 25% quota for women and youth under the old electoral system. The ongoing parliamentary committee exercise studying the legal matter, headed by the overstretched Foreign Minister Vijitha Herath, is also an unnecessary red herring. The Election Commission is ready to go under whatever law or electoral system that is before it. So, there is no reason to hide behind legal complications to further delay the PC elections.

Somewhat amusingly, Public and Parliamentary Affairs Minister Ananda Wijepala has trotted out the argument that the NPP government has already conducted two nationwide elections during the one and a half years it has been in office, and that unlike the Ranil Wickremesinghe government the JVP-NPP is not in the business “to delay elections for our personal benefit” – whatever that means. Unfortunately, the good minister is missing the point. The question is not how many elections can the JVP-NPP hold in how many years, but how many years do people in the provinces have to wait before they vote in another provincial election? How many more years? That really is the question.

We know the current situation in the provinces. There are provincial governments but no elected provincial councils. The government administration in every province is being run by the President of the Republic through his handpicked governors and unelected government officials. This is a travesty of democracy and the euthanizing of the PC system. Already under 13A, the office of the provincial governors has been constitutionally and legally compared to the office of the Governors of old Ceylon who represented the monarch in what was then a crown colony. The irony is that a JVP-NPP President may have inadvertently positioned himself as the monarch of all he provincially surveys, courtesy of the Thirteenth Amendment!

The JVP was in the forefront of the litigation that caused the demerger of the Northern and Eastern Provinces. If Dr. Vigneswaran’s assertion were to prove correct, a potential dissolution of the provincial system under the JVP-NPP government would be the consummation of the JVP’s original opposition to the introduction of the provincial council system itself. The whole system may not be eradicated, but it could be devoured of its democratic essence while preserving the administrative shell as the medium for the country’s president to overreach into the provinces. That would be worse than a daydream, a real nightmare.

by Rajan Philips ✍️

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