Operational costs of Sri Lanka’s key State-owned entities – the Ceylon Electricity Board (CEB) and the Ceylon Petroleum Corporation (CPC) – have ignited a debate over their impact on the welfare of thousands of employees.
With electricity and fuel price hikes causing a ripple effect on the nation’s economy, questions abound whether these institutions have adequately managed their operational expenses before transferring the burden to the public.
CEB
Since the tariff increase in 2022, electricity consumers have faced difficulties in paying their monthly bills, while questions have arisen on whether the board’s expenses are continuing as usual or whether steps have been taken to minimise them.
Trade Unions (TUs) attached to the CEB allege that certain decisions by those in power at the CEB – such as the non-implementation of the Long-Term Generation Expansion Plan (LTGEP) and the failure to add more power plants to the grid – have led to significant losses over the past decade.
Despite CEB statistics indicating that the board is not currently incurring losses and has covered previous losses through increased electricity prices, concerns persist whether those responsible for malpractices and mismanagement have been held accountable before passing the burden on to the public.
In its latest available annual report, as at the end of 2019, the CEB had 20,512 permanent employees, 2,406 casual employees, 218 contract employees, and 2,978 trainees under a four-year apprenticeship training scheme, totaling 26,114. While the comprehensive human resource approach aims for an effective workforce, the sheer number and associated costs raises eyebrows.
The CEB’s diverse workforce spans from 20 to 60 years in age, with varying service durations, from less than three years to over 30 years. The workforce is further categorised into various grades, including executives, middle-level technical service, skilled technical service, junior and unskilled technical service, clerical and allied services, and other non-technical staff service grades.
Even though the board incurs massive losses, it is yet to re-evaluate its services and workforce; instead, it is alleged that it has continued providing all welfare facilities to all staff members.
Circuit bungalows
However, Lanka Viduli Sevaka Sangamaya (LVSS) President Ranjan Jayalal charges that these welfare facilities are predominantly enjoyed by those in higher positions, rather than the employees in lower grades who genuinely deserve these benefits for risking their lives during work.
Jayalal, speaking to The Sunday Morning, said: “There are numerous instances in the past where those in the highest positions enjoyed these facilities – such as CEB circuit bungalows – free of charge at the expense of public money. These facilities were designed to encourage employees who risk their lives to provide electricity supply, but now these institutions have become safe havens for some politicians and those with links to them.”
As reliably learnt by The Sunday Morning, all past chairmen of the CEB were allowed to stay in these circuit bungalows with free food.
It is observed that even though the loss incurred due to these facilities being provided is quite small compared to the losses incurred by the CEB, these still matter. An average citizen now pays taxes for each and every need in addition to the taxes automatically deducted from their salaries and they also have to incur massive expenses to travel within the country on vacation. Meanwhile, a set of privileged people at the CEB spend their holidays at no cost, paid for by the taxes collected from the people.
According to the annual report, there are 32 CEB circuit bungalows throughout the country owned and maintained by the Welfare Unit of the CEB and continuous improvements have been done by the unit to ensure these facilities are on par with the standards of the hospitality industry in order to ensure that employees who visit enjoy an unforgettable experience.
CEB Provident Fund
Furthermore, the CEB Provident Fund operates as a private provident fund under the provisions of the Employees’ Provident Fund Act No.15 of 1958. It is administered by a management committee consisting of seven members. The chairman of the committee is the ex-officio chairman of the CEB and the ex-officio deputy chairman is the general manager of CEB. The finance manager and deputy general manager (personnel) are other ex-officio members and three other members are nominated by the CEB. The secretary and accountant of the fund is appointed by the board to be responsible for day-to-day administration and so is the treasurer.
As stated in the report, the total contribution to the fund during 2019 amounted to Rs. 4,889 million, out of which Rs. 1,956 million has been contributed by the employees of the board. The total number of members at the end of 2019 was 25,262 while 692 were new members. During the year, 714 members were terminated from the fund due to retirement, resignation, dismissal, and death. The total accumulated fund as at 31 December 2019 amounted to Rs. 61,103 million – an increase of 9.19% over the previous year.
The annual report further stated that the main income of the year was from interest income of fixed deposits and loans to members. The fund has earned an income of Rs. 6,822 million during the year through its investments and a dividend rate of 10% was declared for 2019.
Loans granted to its members were valued at a total of Rs. 2,896 million and the total refunded sum to terminated members was Rs. 4,471 million during 2019. A sum of Rs. 500 million has been paid as income tax on the earnings of the fund for the year of assessment (2018/’19).
As the fund’s total accumulated amount reaches Rs. 61,103 million, concerns linger over its utilisation and transparency.
As per the annual report, the CEB’s expenditure on salaries, wages, and other benefits amounts to Rs. 39.71 million.
When contacted, a senior official in the CEB management, who wished to remain anonymous, said that a number of measures had been taken to reduce in-house administrative costs in parallel with the increase in electricity tariffs.
“We have not only increased tariffs, but also reduced them whenever possible. We are not a profit-earning company but a State-owned institution and our main objective is to provide 24/7 electricity at an affordable rate,” he said.
CEB Spokesman Deputy General Manager Noel Priyantha stated that for the past two or three years, CEB staff had not been provided any bonuses, salary increments, loans, or medical bonuses: “No new recruitments have been made since 2020. We used to receive a medical bonus when we did not utilise medical benefits during the year, but that has also stopped; there is no overtime, no fuel reimbursements, nothing.”
CPC
Similarly, the CPC is currently in the spotlight due to the extremely high fuel prices in the country.
The corporation, which has incurred massive losses over many decades due to bad decisions and mismanagement by previous administrations, has passed on the burden of these losses to the public, as alleged by the trade unions attached to the CPC. They allege that the corporation earns massive profits at present and that these profits are being divided among several higher officials in the management through salary increases and other perks and privileges.
Speaking to The Sunday Morning, Ceylon Petroleum Common Workers’ Union (CPCWU) President Ashoka Ranwala said that the CPC was no longer a loss-incurring institution and it had covered up all previous debts and losses by passing the burden on to the citizens by increasing fuel prices.
“This is not magic done by the management or the country’s higher administration. I can also manage the CPC by passing the burden on to the public. We import fuel, sell it, and earn profits. It is not just the CPC; the other two players, including Sinopec and LIOC are also earning this huge profit. Nobody talks about this mafia.
“This is a State institution, not a private company meant to earn profits. If it earns profits, that has to be passed on to the consumers. People are starving. Fuel price increases affect every aspect of the country. The administration can easily reduce the prices, but nobody does anything. Fuel is being sold at extremely high rates and people are suffering while only a very limited set of people at the CPC and the Government are enjoying the benefits,” Ranwala explained.
“Even when the CPC incurs losses, it has only spent nearly 0.2% on its employees. The lowest wage-paying country is India, which is 2%, and Middle Eastern countries allocate nearly 6%, while the US spends nearly 4%. We receive a bonus and a medical scheme. If an employee works without getting sick leave, the CPC pays a medical incentive. However, current Minister of Power and Energy Kanchana Wijesekera has stopped all welfare facilities, claiming that the corporation incurs losses. But at a time when the CPC earns profits, employees are not being given that cut-down welfare. We don’t know what is happening to the massive profits earned by the CPC,” Ranwala said.
The CPC’s expenditure on salaries, wages, and other benefits amounts to Rs. 6,891 million, as per the CPC’s latest available annual report.
The CPC comprises 38,270 employees, with 1,008 of them having over 20 years of continuous service experience. CPC employees are entitled to benefits from the Employees’ Provident Fund (EPF) and Employees’ Trust Fund (ETF). The corporation contributes 15% to EPF and 3% to ETF to secure their future after retirement. Additionally, the corporation provides gratuity at retirement according to the Gratuity Act and additional retirement benefits through a thrift society.
According to the Annual Report of 2021, the CPC had implemented various facilities such as staff transport and the provision of sanitisers for official and personal use to support staff well-being and enhance livelihoods during the pandemic period. The corporation has also offered a range of loan schemes at concessionary interest rates to all employees, aiming to improve their living standards and acknowledge their contributions to the corporation. Throughout the year, CPC had also granted them numerous loans and advanced facilities.
Meanwhile, when contacted, CPC Chairman Saliya Wickramasuriya explained that CPC’s operational costs primarily arose from the procurement of crude oil and products, the refining of crude oil into useable products that are then stored alongside imported products, the distribution of products to various regions, administrative overheads, and financial costs.
He said: “The latter has reduced significantly since the Government took the policy decisions of removing accumulated debt from the corporation’s balance sheet – mostly stemming from non-payment of CPC bills by other State actors and unrecovered subsidy costs for some products – and introducing cost-reflective pricing in the market.”
“While these two measures greatly improve the ability of the CPC to continue serving its retail and corporate customers – the Sapugaskanda Refinery produces nearly 50% of the country’s Lanka auto diesel consumption, 90% of JetA1 fuel sold at the BIA, and 90% of the fuel oil used by the CEB – the Government also took a policy decision to increase competition in the market to three, and possibly four, retail brands,” he added.
Furthermore, Wickramasuriya highlighted that while this step was advantageous for the public, it required the CPC and Ceylon Petroleum Storage Terminals Ltd. (CPSTL) to take steps to maintain sustainability.
“Since the Manufacturer’s Suggested Retail Price (MSRP) of products in the market is currently set monthly by the ministry based on historic costs provided by the CPC, it is our responsibility to guide these prices down in the long term to benefit consumers by increasing efficiency in all areas.”
