By Rathindra Kuruwita
The off peak electricity tariff has increased by about 400 percent and this is an obstacle to garment factories to operate 24-hours a day, Deputy Chairman of the Joint Apparel Association Forum (JAAF), Felix Fernando, says.
Fernando said that raw materials are the main expenses of a garment factory, followed by salaries, and electricity. The increase in electricity tariff, since August 2022, have had a significant impact on the bottom-line of garment factories, he added.
“We don’t know if energy prices will drop by June but things are looking bad now. There is a 20 to 25 percent reduction in the orders received by factories in general. Most factories now operate around 16-18 hours a day. We need to run a factory 24 hours to make a profit. But there is a problem in running a factory for 24 hours now. Off peak charges have increased by about 400 percent. We spent about six rupees per unit of electricity, during off peak, in June 2022. Now we spend over 30 rupees,” he said, adding that Sri Lanka’s main competitors in the region are Bangladesh, Vietnam and India. In these countries the cost of electricity is about 09 to 10 cents U.S dollars, per kilowatt hour.
“It was the same case in Sri Lanka but now we spend about 12 cents U.S dollars, per kilowatt hour. This is not good. The JAAF has added 200 MWs through solar energy to the national grid but we haven’t been paid for seven months by the Ceylon Electricity Board (CEB),” he said.
The JAAF Deputy Chairman added that its members are not parking their dollar earnings outside the country, however, the state has to take action if anyone does that.
“We need to take steps to extend the GSP + facility. However, the EU is not too happy with Sri Lanka because of the restrictions on imports. We need to diversify. We need trade agreements with India and China. These are big markets. For example, we export only about eight million units of clothing to India, per annum, but Bangladesh sends so much more clothes to India,” he said.