Annual Report 2008 - Ministry of Finance and Planning

4. Reform Initiatives
175
under SAFTA for developing member countries as well
as for least developed member countries of SAARC were
implemented. In addition, certain tariff revisions required in
terms of various policy changes of the Government in order
to provide an impetus to local industries and further improve
domestic economic activities were also introduced in 2008
after a process of stakeholder consultations.
Revision of bus and railway fares and electricity and water
tariffs, effected during 2008/ early 2009 are notable pricing
reforms implemented in 2008. Having commenced in 2001.
200 busses were made road worthy, improving public sector
transport more efficient.
For the first time since 2005 August, railway fares were
revised on average by 61 per cent in March 2008 with a view
to reduce operational losses. Marking a notable improvement
in the recent history of Railways, around 100 carriages
and several diesel locomotives were added to the existing
fleet, strengthening railway service delivery. Significant
improvements were made to railway tracks, signal system
as well railway bridges.
The National Transport Commission proceeded to revise bus
fares in March 2008 in the backdrop of high costs impacting
the transportation sector by stipulating maximum bus fare
for specified distances. With this revision the Private Sector
Bus fares on average increased by 27.2 percent while the
public sector fares were increased by an average of 19
per cent. Further, the National Transport Commission has
since May 2008 introduced integrated rotated timetables
for operators on long-distance bus routes. These timetables
have provided for the dispatch of buses on the basis of
the actual observed demand patterns, where both state
owned and private buses have been integrated to reduce
any over supply and intense on-road competition with each
other. In the case of the private sector which is made up
of individual operators, time slots are rotated daily so that
all operators would be provided with an equitable chance
of earning revenue. These time tables have also resulted in
reducing illegal operations, accidents, intense over loading
etc. Further since April 2009, pilot bus companies have been
registered and allowed to handle supervised management
of time tables, public relations, public complaints etc. as
a move to improve the management of bus routes. The
Ministry of Transport together with the National Transport
Commission has finalized a Policy Documents on Transport
in 2008. This sets out intended reforms in terms of expansion
of regulation to cover all modes of transport, studies were
carried out on how transport planning could be used to
manage urban congestion through more efficient road
utilization and promotion of public transport. More than 200
new buses were added to the existing fleet while a further
In the water sector, the Water Board had taken steps to ensure
its commercial viability. Costs associated with the provision
of pipe borne water showed a continuous increase over the
past years and in 2008 it recorded a 13 per cent increase
over 2007. In this backdrop, adjusting water tariff was felt
as an acute need to recover a larger portion of the cost of
operations & maintenance and also to explore the possibility
of reinvestment on assets. Havin made findings in 2008, the
water Board revised its tariff from January 2009 to reduce the
prevailing gap between the cost of delivery and the amount
recovered from consumers after giving a cash grant to the
vulnerable groups of the society to be able to meet related
costs. Although prior to 2008, the cost of operations of the
sewerage network of the Water Board was recovered from
the income derived from national water tariff, with effect
from April 2008, a national tariff was introduced for 10,000
consumers who have sewerage connections managed by
the Water Board outside Colombo. Water Board has earned
around Rs. 30 Mn. in 2008 through this measure and has
consequently been able to recover 18 percent of the cost of
its sewerage operations. With a view to increase the overall
efficiency in operations of the Water Board, a program is in
place from 2008 stipulating operational performance targets
to its regional centers.
Work in relation to the finalization of a new Electricity Act
was completed in 2008. The Act inter alia provides for the
regulation of generation, transmission, distribution, supply
and use of electricity in order to ensure that an economical
and efficient service is provided to consumers. The Act
Ministry of Finance and Planning Sri Lanka
Annual Report 2008