The Ceylon Electricity Board (CEB) is currently facing a severe financial crisis and may have to implement an electricity tariff increase of up to 40% next month, according to a report by The Sunday Morning newspaper.
Citing sources within the CEB, the report states that the board has suffered significant financial losses in February, leading to the possibility of a substantial tariff hike.
According to the CEB’s provisional profit-and-loss statement for February, the board incurred a significant loss of Rs. 11,367 million, marking a 40.3% decrease in revenue compared to the previous period.
Despite generating 1,321 gigawatt-hours (GWh) of electricity, the total revenue for the month stood at Rs. 28,211 million, of which Rs. 26,211 million was earned from electricity sales and Rs. 2,000 million from other sources. However, the total cost at the point of sale amounted to Rs. 39,579 million, which included generation, transmission, distribution, and corporate expenses, resulting in a loss of Rs. 9.78 per kilowatt-hour (kWh).
The report further reveals that CEB Thermal, which generated 159 GWh, incurred a total cost of Rs. 7,247 million, leading to a cost per unit of Rs. 45.44/kWh. Meanwhile, CEB Coal generated 433 GWh at a total cost of Rs. 8,238 million, resulting in a significantly lower cost per unit of Rs. 19.02/kWh.
The weighted average cost of electricity generation in February was Rs. 23.03/kWh, while the average selling price stood at Rs. 22.55/kWh, further worsening the financial deficit.
In addition to the high generation costs, the CEB recorded system losses of 158 GWh, accounting for 12% of total generation, further reducing the amount of electricity available for sale.
With a total generation cost of Rs. 30,384 million and a weighted average cost impact of Rs. 6.24/kWh (of which CEB coal contributed 18.32%), the figures highlight the CEB’s precarious financial position.
Tariff Reduction and IMF Review
In January, the Public Utilities Commission of Sri Lanka (PUCSL) approved a 20% average reduction in electricity tariffs across all categories for the first half of 2025, effective from midnight on February 14.
This decision followed extensive public consultations, with PUCSL citing the need to alleviate the financial burden on consumers amid ongoing economic challenges.
Initially, the CEB proposed only a 1.02% reduction, arguing that even a marginal surplus in revenue was within the margin of error. The board also suggested maintaining the existing tariff structure, warning that further reductions could harm financial stability.
Despite opposition from CEB’s top management, PUCSL conducted a detailed evaluation and ultimately recommended the 20% tariff reduction. According to PUCSL’s calculations, CEB was forecasting a revenue surplus of Rs. 44 billion in the first half of the year.
Possible Tariff Hike in April
With an upcoming International Monetary Fund (IMF) review, CEB is reportedly preparing to submit a revised tariff proposal to PUCSL.
The IMF has warned that Sri Lanka risks breaching a structural benchmark after PUCSL’s 20% tariff reduction, which could lead to losses for the CEB and violate the IMF’s requirement that electricity costs be self-sustaining under its program.
Although the next tariff revision was initially scheduled for July, it is now expected to be submitted in April, ahead of the IMF delegation’s visit to Sri Lanka for a financial assessment.
Energy Minister Kumara Jayakody told Parliament on March 14 that, under industry guidelines, electricity tariffs must be reviewed every three months. The CEB will assess the full impact of the tariff change by mid-March or April before submitting its next proposal.
Jayakody also stated that the upcoming tariff proposal would take into account several factors, including revenue from current tariffs, fuel costs, rainfall levels, hydropower storage forecasts, maintenance schedules, interest rates, economic projections, and expected energy demand.
Attempts to contact CEB Chairman Dr. Thilak Siyambalapitiya for comment were unsuccessful.
Meanwhile, CEB Media Spokesperson Dhammika Wimalaratne stated that he was unaware of any proposed tariff hike and would need to verify the claim with the board. However, no further response was received from Wimalaratne.
