CAPACITY DEVELOPMENT WORKSHOP ON FOSSIL FUEL AND RENEWABLE ENERGY (FFRE) FOR INDIAN OCEAN AND AFRICAN SIDS Organized by United Nations Office for Sustainable Development (UNOSD) and Commission Maurice Ile Durable (MID Commission), Mauritius Clos Saint-Louis, Domaine Les Pailles, Mauritius, May 2014 Subsidies for Fossil Fuels in Sri Lanka Thusitha Sugathapala Director General Sri Lanka Sustainable Energy Authority Ministry of Environment & Renewable Energy

OVERVIEW  Sri Lanka at a Glance  Fossil Fuel Sector  Taxes / Subsidies of Fossil Fuels 2

SRI LANKA AT A GLANCE 3  Socio-Economic Population 20.2 Million No. of HHs 4.7 Million Per Capita GDP 2,900 US$ GDP Growth rate ~ 6 to 8 %  Energy Sector Main Sources of Energy: Biomass, Petroleum, Coal, Large hydro, Other REs (Small hydro, wind, solar) Total Consumption: MToE Industry 24 % Transport 28 % Domestic & Commercial 48 %  Electricity Sector Total Installed Capacity: 3180 MW Peak Load: 2150 MW Gross Generation: 11,800 GWh HH Electrification:94 % Installed Capacities by Source Hydro 1,357 MW Thermal 1,638 MW NRE 384 MW Elect.Generation by Source Hydro 30 % Thermal 64 % New RE 6 %

 Primary Energy Supply by Source 4 FOSSIL FUEL SECTOR Hydro Coal Oil Biomass New RE

 Electricity Sector – Gross Generation 5 FOSSIL FUEL SECTOR Hydro Coal Oil New RE

 Importation of Fossil Fuels 6 FOSSIL FUEL SECTOR

 Future Demand  Petroleum Oil (000’ bpd) 7 FOSSIL FUEL SECTOR

 Future Demand for Coal (Grid Electricity) 8 FOSSIL FUEL SECTOR

 Government Policies  Until recently, furnace oil and kerosene were provided to the customers at subsidized rates Promote industrial growth / competitiveness Reduced energy cost for rural (non-electrified) households  Further, increasing share of oil in electricity sector resulted in cost escalation and therefore fiscal instruments were used in managing the product prices.  However, increasing importation of oil to cater for demand growth severely affected the national budget that the government was forced to remove almost all the subsidies.  Yet, compared to other imported commodities, the taxes imposed for fossil fuels are lower in general. 9 TAXES / SUBSIDIES OF FOSSIL FUELS

 Government Policies  Cost revisions 10 TAXES / SUBSIDIES OF FOSSIL FUELS

 Taxes on Fossil Fuels  Transport  Heat / Power. 11 TAXES / SUBSIDIES OF FOSSIL FUELS

Thank You 12