The Ceylon Electricity Board (CEB) is currently grappling with a significant financial crisis, which may compel the state-run utility to impose an electricity tariff hike of up to 40% next month.
Sources within the CEB have disclosed that the financial difficulties stem from substantial losses incurred in February.
The CEB’s Profit/(Loss) Statement for February, obtained by The Sunday Morning, indicates a major loss of Rs. 11,367 million, reflecting a 40.3% decline in revenue compared to the prior period.
Although the CEB generated 1,321 GWh of electricity, the total revenue for February amounted to Rs. 28,211 million—Rs. 26,211 million from electricity sales and Rs. 2,000 million from other income sources.
However, the total costs for generating, transmitting, and distributing electricity amounted to Rs. 39,579 million, leading to a per-unit loss of Rs. 9.78/kWh.
Further details reveal that CEB Thermal, which generated 159 GWh, incurred a total cost of Rs. 7,247 million, resulting in a per-unit cost of Rs. 45.44/kWh. In comparison, CEB Coal generated 433 GWh at a total cost of Rs. 8,238 million, yielding a much lower per-unit cost of Rs. 19.02/kWh.
The weighted average cost of electricity generation for February was calculated at Rs. 23.03/kWh, which is higher than the average selling price of Rs. 22.55/kWh, further exacerbating the CEB’s financial deficit.
In addition to high generation costs, the CEB experienced system losses of 158 GWh, representing 12% of total generation, which further reduced the electricity available for sale.
When factoring in the total generation costs of Rs. 30,384 million and a weighted average cost impact of Rs. 6.24/kWh (with 18.32% contributed by CEB Coal), the CEB is in a precarious financial position, according to available data.
Earlier, in January, the Public Utilities Commission of Sri Lanka (PUCSL) approved and recommended an average 20% reduction in electricity tariffs for all categories in the first half of 2025, effective from midnight Friday (14). This decision followed extensive public consultations, with the PUCSL emphasizing the need to alleviate the financial burden on consumers amid the ongoing economic crisis.
However, the CEB had initially argued that only a 1.02% reduction was possible, citing what it described as a “marginal revenue surplus” for the period from January to June. The CEB even proposed maintaining the current tariff structure, arguing that the forecasted surplus fell “within the error margin.”
Despite resistance from within the board, particularly its senior management, the PUCSL conducted a thorough evaluation of the CEB’s submission and ultimately recommended a 20% reduction. Calculations by the PUCSL projected a revenue surplus of Rs. 44 billion for the CEB in the first half of the year.
Meanwhile, reports indicate that the CEB is preparing to submit its second tariff proposal of 2025 to the PUCSL as the International Monetary Fund (IMF) review draws near. The IMF has raised concerns that Sri Lanka is breaching a structural benchmark due to the 20% tariff reduction, which could lead to further losses for the board and violate the IMF’s requirement for electricity to be cost-reflective under the current program.
The tariff revision proposal, initially due in July, is now expected to be submitted in April, coinciding with the IMF mission’s visit to Sri Lanka for a review.
Energy Minister Kumara Jayakody informed Parliament on Friday (14) that tariffs must be revised every three months as per industry guidelines. He noted that the CEB would assess the full impact of the tariff change by March or mid-April before submitting the second tariff proposal for the upcoming quarter.
Minister Jayakody also stated that the tariff proposal would take into account various factors, including revenue from current tariffs, fuel costs, rainfall, hydro storage forecasts, maintenance schedules, interest rates, economic projections, and expected energy demand.
Attempts to reach CEB Chairman Dr. Tilak Siyambalapitiya for comment were unsuccessful. CEB Spokesman Dhammike Wimalaratne, when contacted, stated he was unaware of any planned increase and would need to verify the matter with the board. However, no further response was received from Wimalaratne by the time of publication.
