February, 8, 2024
Sri Lankans pay 2.5 to 3 times more for electricity than South Asian neighbours
In 2023, Sri Lanka revised its electricity charges three times in February, July and October. The stated basis for the increase, was to recover the full cost of providing electricity. This analysis compares the electricity charges on households in Sri Lanka in December 2023 with what households are paying in other South Asian countries.
Two findings emerge that justify public concern on electricity bills in Sri Lanka:
1) Sri Lanka has the highest household electricity cost of any South Asian country (see Exhibit 1, comparing against the highest cost areas of supply in other countries).
2) Sri Lankan households are paying c. 2.5 to 3 times more for electricity than the average cost to their counterparts in South Asian countries (see Exhibit 2).
A tariff decrease is planned in Feb 2024; this new structure would result in cost reduction in the electricity bill of around 4% or less. Therefore, it will not make a dent in Sri Lanka occupying the position of paying the highest prices for electricity in the region at a multiple of 2.5 to 3 times of what is paid by households in South Asia.
The analysis is based on comparing households that consume between 100 to 300 units of electricity per month on single-phase lines (excluding any government taxation on electricity). Exhibit 2 shows that consuming 100 units in Sri Lanka costs LKR 5,280, while the average for South Asia is equivalent to LKR 2,078. Consuming 300 units in Sri Lanka costs LKR 21,860, while the average for South Asia is equivalent to LKR 7,340.