Electricity tariffs have burdened Sri Lanka’s apparel exporters. In most factories electricity is the third highest cost incurred, after materials and salaries.

The price of electricity has increased by some 65 percent. So not only small and medium scale enterprises, but even large-scale companies are in trouble. Before the August 2022 electricity hike the cost of production was slightly lower in Sri Lanka than in its competitors.However, now the country is at a Vietnam cost level. The industry fears that with more hikes in the electricity tariff, its costs will be higher and it wouldn’t be able to compete.

Customers especially in a global downturn would not want to spend more on Sri Lankan products. Sri Lanka produces energy using highly costly sources, such as diesel, and there has been no attempt to move to cheaper alternatives.There is no plan to boost renewable energy production though there was a plan to move to 70 percent renewables by 2030. Before the tariff hike in August 2022, the daily demand for electricity was around 48 gigawatt hours but by December 2022, the demand had dropped to 36 gigawatt hours. Factory owners have curbed their use of electricity because they can’t afford to pay.