• Govt. rejects privatisation, emphasises state control over electricity generation
• Focus on renewable energy and addressing financial woes through state control

Neither Sri Lanka’s Ceylon Electricity Board (CEB), nor any of its power plants are to be privatised under the existing National People’s Power (NPP) government, but they will be unbundled into five state-owned entities, Member of Parliament Lakmali Hemachandra told parliament yesterday (3).

“The private sector is already involved in electricity generation, and will have further opportunities within the segment in the future. However the government is not ready to privatise government power plants or the CEB,” Hemachandra said.

“We can all agree that the CEB as it is does face certain setbacks in its operation. However, we do not agree that privatising the entity is the solution.”

Hemachandra stated that the government at present is seeking to unbundle the entity into five entities, continuing the restructuring process begun by the previous government.

The entities include; electricity generation, transmission and distribution, with the government having sole ownership.

“Even within the transmission segment, the transmission agency will be formed 100% by the government. The private sector will still however be able to avail to opportunities within the segment through government PPPs or privately owned investments.”

“However, in the general sense, it is of utmost importance that the state holds ownership and control over electricity generation.”

The move marks a clear shift from the previous administration’s approach, which sought to unbundle the CEB into 12 entities with a broader scope for privatisation. Hemachandra criticised the earlier plan, noting that it lacked clarity on whether transmission and distribution would remain under state control.

“They did not specify whether the transmission or distribution entities were to be privatised or kept as national entities, however the Act was formed in a way that there is scope for it to take place.”

“The previous government formulated this Act with the intent of privatising the entity, removing it of its independence,” she said. “Under our government, we seek to reinstate independence and keep it from privatisation.”

The CEB’s financial woes have been a persistent drag on Sri Lanka’s economy. Over the past five years, the utility has reported staggering losses, exacerbated by rising fuel costs, inefficiencies, and outdated infrastructure. In 2022 alone, the CEB recorded losses of over LKR 100 billion (approximately $ 330 million), driven by soaring global energy prices and the depreciation of the Sri Lankan rupee.

The government’s decision to restructure the CEB has been a long coming effort to address these losses while ensuring a stable and affordable energy supply.

Hemachandra emphasised that the reforms were developed after extensive consultations with key stakeholders, including the Institute of Engineers Sri Lanka (IESL), the Asian Development Bank (ADB), the Japan International Cooperation Agency (JICA), the World Bank, and industry groups such as the Ceylon Chamber of Commerce and the Federation of Renewable Energy Developers.

“Our policy on electricity had been introduced before the presidential election,” Hemachandra said. “Even as we won the popular mandate, we still held stakeholder consultations to ensure a balanced approach.”

The Sri Lankan government has faced criticism for the CEB’s reliance on expensive fossil fuels, which has strained public finances. In response, the government has also been pushing for greater investment in renewable energy, with plans to increase the share of renewables in the energy mix to 70% by 2030.