<ul><li>Tariff to rise from Rs. 19.73/kWh to Rs. 20.15/kWh</li><li>Proposed changes await AG clearance</li><li>Advance payments for machinery authorised</li><li>CPC to procure LNG from abroad, no India deal</li></ul> Three years after the tender was awarded, the Ceylon Electricity Board (CEB) has commenced negotiations to revise the draft Power Purchase Agreement (PPA) with Sahasdhanavi Ltd., a special-purpose project company created by Lakdhanavi Ltd., The Sunday Morning reliably learns.This company was created for the development of the second 300 MW Liquefied Natural Gas (LNG) power plant in Kerawalapitiya.These negotiations are focused on revising the initial draft PPA that was previously published with the Request for Proposal (RFP) and approved by the Standing Cabinet-Appointed Procurement Committee (SCAPC).It is also learnt that the need to revise the PPA draft arises from several policy changes, particularly the removal of Value-Added Tax (VAT) exemptions on machinery imports and the introduction of the Social Security Contribution Levy (SSCL), leading to increased construction costs.&nbsp;This has resulted in an upward adjustment of the levelised tariff from Rs. 19.7302/kWh to Rs. 20.1545/kWh.Furthermore, the proposed changes, including adjustments from the Technical Evaluation Committee (TEC) reports, are to be incorporated into the draft PPA but must be reviewed and approved by the Attorney General (AG). These changes encompass various aspects, including the definition of ‘change in law’.The establishment of the second LNG plant in Kerawalapitiya has been recognised as a key project under the Least-Cost Long-Term Generation Expansion Plan for 2018-2037.&nbsp;Following Cabinet authorisation on 16 September 2020, the CEB was tasked with developing the proposed power plant, as outlined in the Cabinet memorandum dated 25 August 2020.The procurement process for the project began with the invitation of proposals through an International Competitive Bidding (ICB) process on 21 June 2021, with the bid closing on 15 December 2021.&nbsp;After a thorough evaluation of the proposals by the Project Committee, the Cabinet-Appointed Negotiation Committee (CANC) granted approval on 25 April 2022 to award the contract to Lakdhanavi, which was selected as the lowest evaluated substantially responsive bidder.The SCAPC, based on recommendations from the TEC reports dated 10 and 26 December 2024, following negotiations with Lakdhanavi, had approved several changes to the draft PPA for the 300 MW LNG power plant in Kerawalapitiya.&nbsp;These changes were aimed at ensuring the successful implementation of the project, although they are subject to legal clearance from the AG.The Public Utilities Commission of Sri Lanka (PUCSL) had approved the draft project agreements, as required by the Sri Lanka Electricity Act, in April 2022.&nbsp;Additionally, in October 2023, the Cabinet had granted approval for the CEB to issue a Letter of Intent (LOI) to Lakdhanavi to construct the 300 MW combined cycle dual-fuel natural gas power plant on a Build-Own-Operate-Transfer (BOOT) basis.&nbsp;The Cabinet had also authorised the exploration of sharing infrastructure between two LNG power plants in Kerawalapitiya. The LOI was issued to Lakdhanavi Ltd. in December 2023 and the company had established a project-specific entity, Sahasdhanavi, in April last year to execute the project.The Sunday Morning also learnt that President and Minister of Finance Anura Kumara Dissanayake had reviewed the proposals presented to the Cabinet and had approved the advance payment for importing machinery and equipment, in line with regulatory requirements, subject to AG approval of the PPA amendments.&nbsp;The President had also agreed to allow the Ceylon Petroleum Corporation (CPC) to negotiate a Liquid Fuel Supply Agreement (LFSA) and for the Secretary to the Treasury to enter into an implementation agreement with Sahasdhanavi as part of the PPA.&nbsp;Moreover, he has approved advance payments to facilitate the smooth implementation of the project.When contacted by The Sunday Morning, Energy Ministry Secretary Prof. Udayanga Hemapala stated that a final decision regarding the unit cost of the second LNG power plant had not been made.“This was approved several years ago and if we go for re-tendering, it will take time. There have been changes in many financial aspects of the agreement. Therefore, the CEB was advised to negotiate with the company. However, we have not decided on the final unit cost yet,” he said.Furthermore, Prof. Hemapala claimed that there had been an attempt to hand the project over to India under the previous Government, but the current administration had resumed it and instructed the relevant authorities to continue with the LNG project, which had been shortlisted through the tendering process.Clarifying the LFSA, the Secretary noted that there would be no supply agreement with India. LNG will have to be procured from outside as Sri Lanka has no LNG and therefore the CPC was instructed to negotiate the LFSA.

300 MW LNG power plant in Kerawalapitiya: Negotiations begin for PPA revision  

The renewable energy developers shortlisted through an Expression of Interest (EOI) process in 2021 by the then Government have been presented with two options to move forward with 49 proposed projects following a review by an expert committee, The Sunday Morning learns.&nbsp;The committee, appointed in January to assess the Cabinet memorandum issued on 26 December 2024, has provided these options to ensure that the projects comply with the Sri Lanka Electricity Act No.20 of 2009.Accordingly, Option 1 includes the introduction of a standardised tariff and Standardised Power Purchase Agreement (SPPA) for renewable energy projects exceeding the threshold of 10 MW in accordance with Section 43(4)(b) of the Sri Lanka Electricity Act No.20 of 2009 (as amended) to bring the EOI projects within the statutory exemption.&nbsp;This was proposed in Cabinet Memorandum No. 24/2324/825/012 dated 26 December 2024. Additionally, the preparation of a standardised tariff and SPPA was proposed in the same memorandum, which developers are required to accept.&nbsp;This option may be the shortest possible solution given the time constraints and solid legal background.Option 2 recommended by the committee is to proceed with limited competitive bidding under the National Procurement Guidelines applicable to private sector investments for infrastructure projects (Part 11, Chapter XIV, 1998) among the shortlisted/prequalified 49 proponents/developers.&nbsp;This option aims to regularise the procurement process in line with the provisions of the Sri Lanka Electricity Act No.20 of 2009 (as amended) with consultation from the relevant authorities.However, as learnt by The Sunday Morning, the expert committee has recommended Option 1 for further action on EOI projects.The expert committee has also recommended that the standardised tariff be reviewed by a Cabinet-appointed committee and approved by the Cabinet of Ministers, as per Section 43(4)(b) of the Sri Lanka Electricity Act No.20 of 2009 (as amended), to address potential cost overruns due to the lack of competition in the process, ensuring transparency.When recommending the tariff, the committee shall consider the tariffs of recently awarded renewable energy projects through open competitive procurement processes, economies of scale, and prevailing market conditions, given that the economy has recovered to pre-crisis levels.The Energy Ministry has recommended allowing investors to select either Option 1 or Option 2 according to their preferences, considering the time constraints. The ministry has also recommended that the tariff for Option 1 be determined using a standardised formula updated periodically, based on geographic location, technology, and plant factors for investors choosing Option 1.&nbsp;Additionally, the ministry has recommended authorising the Secretary to the Ministry of Finance, Planning, and Economic Development to appoint a Project Committee (PC) and Cabinet-Appointed Negotiating Committee (CANC) for Option 1 and a Bid Evaluation Committee (BEC), Standing High-Level Procurement Committee (SHLPC), and High-Level Procurement Committee (HLPC) for Option 2 as applicable to manage the procurement process.In 2021, the State Ministry of Solar, Wind, and Hydro Power Generation Projects Development initiated an EOI process inviting investors to develop renewable energy projects with a capacity of 50 MW or more under a Build-Own-Operate (BOO) model.&nbsp;The goal was to generate electricity from solar, wind, hydro, and biomass sources to supply the Ceylon Electricity Board (CEB). A total of 533 proposals were received, 136 of which were specific to particular locations. Out of these, 49 investors confirmed their financial capability and interest in proceeding with the projects.Several key Cabinet decisions were made to facilitate the EOI process, including the approval of a methodology for determining renewable energy tariffs in March 2023, followed by the introduction of a new tariff calculation methodology in May 2023.&nbsp;In December 2023, a 700 MW solar power project at Poonakary Tank, with battery storage in Kilinochchi, was approved. In March 2024, a 100 MW solar power project in Oddamavadi in the Batticaloa District was approved, followed by a proposal in June 2024 for implementing renewable energy projects from the EOI.

EOI projects: Developers offered two options

Two months after the lifting of the ban, the Finance Ministry says the vehicle import trend is in line with the Government’s expectations and is confident of receiving the expected tax income of nearly Rs. 300 billion.Speaking to The Sunday Morning, Ministry of Finance Secretary Mahinda Siriwardana stated that around Rs. 300 billion was expected to be raised from excise taxes, Value-Added Tax (VAT), and other taxes on vehicle imports within this year.“We are expecting a positive outcome,” he said. “I am happy to note that the vehicle import trend is very much in line with expectations.”Five years after its ban, the relaxing of motor vehicle import restrictions is expected to generate significant tax revenue, supporting the mobilisation of Sri Lanka’s revenue in 2025.Working as a key step in the country’s post-crisis recovery, it is anticipated that a primary surplus of 2.3% of GDP by the end of 2025 can be achieved through the easing of vehicle import restrictions.In accordance with the Budget 2025 speech, the bulk of revenue gains are expected to be delivered by the liberalisation of motor vehicle imports that took place on 1 February.This process is being carefully monitored to ensure that the import of vehicles does not result in undue negative impacts on external sector stability.Additionally, Budget 2025 estimates Government tax revenue from luxury motor vehicles to be Rs. 36 billion within 2025-2027, with Rs. 10 billion of the revenue estimated for just this year.Meanwhile, Government tax revenue for luxury motor vehicles for 2024 stands at Rs. 3.01 billion.Relatedly, the Budget speech added that amendments to the VAT Act No.14 of 2002 included the disallowance of an input tax deduction on capital goods such as machinery, equipment, or vehicles imported for projects where the VAT at the time of import was different.Further, Sri Lanka has reportedly spent $ 1.9 billion on vehicle imports in 2018 and $ 1.4 billion in 2019. With the total Government external debt as at the end of September 2024 amounting to $ 38.3 billion, the country’s fiscal obligations remain a major concern amidst the allowing of imports.However, according to statements made by the Central Bank of Sri Lanka Governor in this regard, it was confirmed that payments of Rs. 3-4 billion annually over the next 10 years would be manageable if foreign reserves reached Rs. 7 billion by the end of this year, following the completion of the debt restructuring process.

Vehicle imports: Govt. positive about Rs. 300 b tax income

The Government plans to interlink bank accounts to prevent people from evading the tax net without obtaining a Tax Identification Number (TIN), Deputy Minister of Finance and Planning Dr. Harshana Suriyapperuma said at a meeting of the Committee on Public Finance (COPF).Upon being questioned by COPF Chairman MP Dr. Harsha de Silva about the implementation of the TIN during the meeting, Department of Fiscal Policy Tax Policy Adviser Thanuja Perera revealed that since the relevant act was still being amended, there was currently no requirement for taxpayers to produce a TIN.&nbsp;The COPF had raised concerns over the limited tax net coverage, questioning why only around 800,000 individuals registered with the TIN were subject to income tax despite Sri Lanka’s workforce comprising approximately eight million people.The matter was discussed during a committee meeting held in Parliament on Tuesday (18), chaired by MP Dr. Harsha de Silva, as part of deliberations on the Inland Revenue (Amendment) Bill, which seeks to amend the Inland Revenue Act No.24 of 2017.&nbsp;Officials from the Ministry of Finance, along with Deputy Minister Suriyapperuma, explained that the existing tax structure allowed only around 800,000 individuals to meet the taxable income threshold.“We know that only 10% of people are paying their taxes, either voluntarily or withheld at source, so let’s start by categorising this,” Dr. de Silva had said.Deputy Minister Suriyapperuma responded to this by explaining how the Government planned to expand the tax net eventually.&nbsp;“There are many ways to track the capability of individuals to pay taxes. If you look at bank accounts, that would also be an indicator. However, these are not interlinked, which is why they are capable of getting away with avoiding paying taxes. Therefore, we plan to interlink them in future, slowly and steadily increasing the number from 800,000,” he said.One of the key proposals under the bill is an increase in the Personal Income Tax (PIT) relief threshold from Rs. 1,200,000 per annum to Rs. 1,800,000 per annum. Additionally, the proposed amendments include an increase in the income tax rate on the betting and gaming, tobacco, and liquor industries from 40% to 45%.

TIN: Govt. to interlink bank accounts to widen tax net  

With preparations for the upcoming Local Government (LG) Elections in full swing, authorities are implementing robust security measures to ensure safety and minimise incidents of violence during the election period.Speaking to The Sunday Morning, Police Media Spokesman Buddhika Manatunga outlined that security steps were being carried out at local Police stations and divisional level across the country.“Our election branch is actively monitoring violations of election laws and reports of violent activity nationwide. We are taking prompt action against any violations and all incidents are being recorded,” he said.As part of ongoing security measures, special precautions were implemented during the nomination process for the LG Polls.&nbsp;At present, routine Police security operations are underway, with additional teams being stationed in vulnerable areas as election day approaches.These teams will be tasked with safeguarding election activities, including overseeing the confidential printing of ballot papers in Colombo.Manatunga also highlighted the priority given to preventing shooting incidents during the election period. He emphasised that specialised units, such as the Police Special Task Force and tri-forces personnel, would be carrying out coordinated operations to reduce violent incidents.Deputy Minister of Provincial Councils and Local Government Prabha Ruwan Senarath reassured the public that the ministry was committed to conducting the LG Elections smoothly and securely.&nbsp;“We are dedicated to ensuring that all necessary security measures are put in place to facilitate a safe election process,” Senarath stated.While acknowledging the challenges posed by previous electoral tensions, the Deputy Minister confirmed that efforts were being made to ensure a fair and transparent election. “We are working towards making this election process as fair and effective as possible,” Senarath added.In preparation for the elections, heads of political parties were invited to a meeting yesterday (22), where discussions were held regarding the implementation of security measures and other key aspects of the election. Senarath indicated that a formal statement outlining the decisions from this meeting would likely be released to the media in the coming days.As the election date draws closer, authorities are expected to continue ramping up security measures, working to maintain peace and order during this crucial democratic exercise.

LG Elections: Police to intensify security

Hydropower generation in Sri Lanka has dropped to as low as 21%, according to the latest statistics from the Ceylon Electricity Board (CEB), following a prolonged dry spell.&nbsp;According to CEB Spokesman Eng. Dhammike Wimalaratne, the hydro storage levels are being closely managed by the Mahaweli Authority and the Agriculture Department, with priority given to drinking water and agricultural needs.&nbsp;This has resulted in significantly reduced capacity for hydroelectric power generation.The latest data from 21 March shows varying levels of water storage across Sri Lanka’s key reservoirs.&nbsp;In the Mahaweli system, reservoirs such as GDR (Kotmale), Victoria, and Randenigala are at 69.6%, 71.6%, and 90.2% of their full capacity, respectively.&nbsp;However, others like Rantembe and Bowatenna are at critically low levels, with storage at just 37.3% and 36.1%, respectively. Notably, Moragahakanda is nearly full at 97.9%, while Kalu Ganga has already reached spill levels.The Kelani system is facing similar issues, with Castlereagh at just 5.9% capacity and Maussakelle at 54.5%. Meanwhile, the Walawe system fares better, with Udawalawe almost at full capacity at 99.3%, while Samanalawewa remains at 54.2%.&nbsp;The irrigation system shows more favourable conditions, with several reservoirs such as Rajangana, Tissa Wewa, Hurulu Wewa, and Giritale nearly at full capacity.Despite these mixed conditions, many reservoirs have already opened their spill gates to maintain water levels.In the meantime, as per statistics, the CEB continues to rely on thermal power generation to compensate for the low hydro generation.&nbsp;As per the night peak data on 21 March, the CEB thermal coal plants generated 816.7 MW of active power, while CEB thermal oil contributed 332.2 MW. Additionally, wind and small hydro plants provided smaller amounts of power.

Electricity generation: Hydropower drops to 21%

The European Union (EU) delegation expected in Sri Lanka from 28 April to 7 May as a part of a monitoring mission to study the country’s compliance with the requirements for the EU’s GSP+ facility is expected to meet with the Ministries of Foreign Affairs, Environment, and Labour as part of its mission, a senior official of the Ministry of Foreign Affairs stated.Sri Lanka’s Generalised Scheme of Preferences Plus (GSP+) trade benefits with the European Union are set to undergo changes starting in 2027, with possible withdrawal of the facility.&nbsp;The EU plans to introduce new guidelines for the scheme, which will require beneficiary countries to meet stricter obligations, including compliance with international conventions on human rights, labour, environmental protection, and good governance.A new study by the Institute of Policy Studies (IPS) warns that Sri Lanka could lose up to $ 1.23 billion if it loses its GSP+ trade benefits with the EU.&nbsp;Without GSP+, Sri Lanka will face higher tariffs, potentially losing 36.7% of exports to the EU.&nbsp;The study highlights impacts on sectors like high-tech products (e.g. transformers), with a potential 10% export decline, and the wearing apparel sector, which could see tariffs rise by nearly 10%.&nbsp;This decline in exports could lead to significant job losses, particularly in the manufacturing sector, affecting 73,574 workers, mostly women and low-skilled employees.&nbsp;The report stresses that losing GSP+ at Sri Lanka’s current development stage would be more damaging than at a later stage when the economy is stronger.&nbsp;

GSP Plus trade concessions: Foreign Minister to meet EU delegation

The Ministry of Justice is yet to receive any bill or amendment to existing laws from the Ministry of Finance to establish a regulatory body for gaming and online casinos, Minister of Justice Harshana Nanayakkara told The Sunday Morning.The parliamentary Committee on Public Finance (COPF) had repeatedly requested the establishment of a regulator for the gaming industry, citing loss of tax revenue from the gaming industry and online gaming sites over the past few years.&nbsp;The previous Government under President Ranil Wickremesinghe had pledged to establish such an authority, but had failed to do so by the end of its tenure.The COPF, during its meeting on Tuesday (18), had also raised concerns over the proposed increase in the income tax rate for the betting, gaming, tobacco, and liquor industries from 40% to 45%, highlighting the ministry’s failure to establish a casino regulatory body.&nbsp;Additionally, COPF Chairman Dr. Harsha de Silva also expressed dissatisfaction with the Inland Revenue Department (IRD) for not providing the requested data on casino revenue over the past five years.Attempts to contact Deputy Ministers Prof. Anil Jayantha Fernando and Dr. Harshana Suriyapperuma, Ministry of Finance Secretary Mahinda Siriwardana, and officials of the IRD for comment proved futile.

Online gaming tax: Justice Ministry yet to receive regulator’s law

The upcoming Local Government Elections will see three new candidates contesting for the position of mayor of Colombo.The Samagi Jana Balawegaya (SJB) has nominated Dr. Ruvaiz Haniffa as its mayoral candidate.&nbsp;The party has stated that his leadership aims to drive Colombo’s development towards a modern urban centre.&nbsp;Opposition Leader Sajith Premadasa described Dr. Haniffa as a qualified professional with the skills and determination needed to lead the Colombo Municipal Council (CMC).The National People’s Power (NPP) has named Vraie Cally Balthazaar as its candidate.&nbsp;The announcement was made by JVP General Secretary Tilvin Silva, who also highlighted the party’s plan to include women in 25% of its nomination lists for Local Government bodies.Hassan Alaldeen has been selected as the candidate for the Sarvajana Balaya alliance. His nomination was announced by Party Leader MP Dilith Jayaweera during an Iftar ceremony in Dehiwala on 21 March.&nbsp;Alaldeen has previously served as a member of the alliance’s Executive Council and as Media Secretary.The Sri Lanka Podujana Peramuna (SLPP) and the United National Party (UNP) are yet to nominate their respective candidates for the CMC mayoral race.

300 MW LNG power plant in Kerawalapitiya: Negotiations begin ...

EOI projects: Developers offered two options

EOI projects: Developers offer ...

Vehicle imports: Govt. positive about Rs. 300 b tax income

Vehicle imports: Govt. positiv ...

TIN: Govt. to interlink bank accounts to widen tax net

TIN: Govt. to interlink bank a ...

LG Elections: Police to intensify security

LG Elections: Police to intens ...

Electricity generation: Hydropower drops to 21%

Electricity generation: Hydrop ...

GSP Plus trade concessions: Foreign Minister to meet EU delegation

GSP Plus trade concessions: Fo ...

Online gaming tax: Justice Ministry yet to receive regulator’s law

Online gaming tax: Justice Min ...

Colombo Municipal Council: Three new candidates enter mayoral race

Colombo Municipal Council: Thr ...

EOI projects: Developers offered two options

EOI projects: Developers offer ...

Vehicle imports: Govt. positive about Rs. 300 b tax income

Vehicle imports: Govt. positiv ...

TIN: Govt. to interlink bank accounts to widen tax net

TIN: Govt. to interlink bank a ...

LG Elections: Police to intensify security

LG Elections: Police to intens ...

Electricity generation: Hydropower drops to 21%

Electricity generation: Hydrop ...

GSP Plus trade concessions: Foreign Minister to meet EU delegation

GSP Plus trade concessions: Fo ...

Online gaming tax: Justice Ministry yet to receive regulator’s law

Online gaming tax: Justice Min ...

Colombo Municipal Council: Three new candidates enter mayoral race

Colombo Municipal Council: Thr ...

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EOI projects: Developers offered two options

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Vehicle imports: Govt. positive about Rs. 300 b tax income

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TIN: Govt. to interlink bank accounts to widen tax net

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LG Elections: Police to intensify security

LG Elections: Police to intens ...

Electricity generation: Hydropower drops to 21%

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GSP Plus trade concessions: Foreign Minister to meet EU delegation

GSP Plus trade concessions: Fo ...