MONETABRIEF – Investors bidding for build operate own Battery Energy Storage System tender will get a one-time protection against Sri Lanka's depreciating currency, which has caused social and political unrest for decade.
The bidders will get an adjustment equal to 85 percent of capacity charge, for the difference in the exchange rate from the time bids were submitted to the time letter of award.
Sri Lanka has called bids for investors to supply 1000MWh of battery storage on 15-year build operate own concessions.
Sri Lanka operates an inflation targeting framework without a floating rate and the central bank prints money to push up the cost of living.
When the currency collapses from conflicting money and exchange policies, it escapes accountability for dishonoring its notes by claiming that it is operating a flexible exchange rate killing the usefulness of the rupee as a means of deferred payments.
As a result, suppliers have to keep large margins or spend money on hedging giving profits to banks.
In the first quarter of 2026, the rupee collapsed from 309 to 340 levels to the US dollar.
Up to February 2026 the central bank selectively gave convertibility to the Treasury but depreciated the rupee by selectively denying convertibility to citizens from whom the agency had earlier bought dollars to create excess liquidity (monetized the balance of payments), depreciating the rupee from around 292 to the US dollar to 309.
When a supply shock hits the credit system, the central bank dishonors the notes, triggering panic in forex markets, depreciation and a rise in inflation which destroys wages and pensions funds of the working class. (Colombo/July18/2026)