The Ceylon Electricity Board (CEB) is currently considering a proposal to increase electricity tariffs by 25 to 35 percent, as the International Monetary Fund (IMF) awaits the implementation of revised, cost-reflective rates.
According to CEB sources, the proposed tariff adjustments will be formulated based on a pricing formula mutually agreed upon by the CEB and the Public Utilities Commission of Sri Lanka (PUCSL). Once finalized, the proposals will be submitted to the PUCSL for approval.
Amid these developments, CEB Chairman Tilak Siyambalapitiya has tendered his resignation to the Minister of Energy. Reports indicate that his decision stems from alleged undue interference by political authorities and the PUCSL concerning cost-reflective tariff policies.
Earlier this year, despite the CEB’s recommendation to maintain existing rates, the PUCSL approved a 20 percent reduction in electricity tariffs in January. A senior CEB official stated that following this reduction, the utility began incurring losses once again—similar to the period before 2022.
“The CEB’s cumulative loss in 2022 was Rs. 473 billion. Amid the economic collapse that year, the government, in line with IMF directives, raised electricity tariffs twice. These adjustments enabled the CEB to return to profitability, recording Rs. 61 billion in profits in 2023 and Rs. 141 billion in 2024. Consequently, by the end of 2024, the cumulative loss had reduced to Rs. 271 billion. However, since February this year, losses have been climbing again, now surpassing Rs. 271.1 billion,” the official revealed.
The initial cumulative loss of Rs. 473 billion encompassed long-term loans, overdrafts from state-owned banks, interest payments, and outstanding dues to the Ceylon Petroleum Corporation (CPC) and private power producers.
The senior official further noted that the IMF has imposed two key conditions concerning Sri Lanka’s electricity pricing: first, tariffs must reflect actual costs; second, if the CEB’s monthly cash flow falls below Rs. 15 billion, a mandatory 10 percent tariff hike must be enacted immediately.
He also pointed out that had the 20 percent tariff cut in January not been implemented, a modest 5 percent increase would have been necessary in the second quarter of 2024.
In recent weeks, the IMF has issued two reminders to the Sri Lankan government, warning that the country is in breach of the structural benchmark requiring cost-recovery electricity pricing. The IMF cautioned that failure to comply may elevate financial risks.
The Sunday Times.
