- Doubts over whether CEB can afford proposed salary reforms; TUs oppose
- CEB has accumulated financial losses totalling Rs. 412.1 b from 2013-2023
In the wake of recent announcements by Power and Energy Minister Kanchana Wijesekera regarding upcoming salary reforms at the Ceylon Electricity Board (CEB), the State-run utility has found itself in the eye of a storm.
The planned introduction of a new salary structure, performance-based incentives, and a revised promotion system has sparked strong criticism from Trade Unions (TUs) and raised serious questions about the financial viability of such measures, especially given the CEB’s precarious financial state.
A stormy backdrop
Minister Wijesekera’s announcement comes at a politically sensitive time, with national elections on the horizon. TUs, particularly the Janatha Vimukthi Peramuna (JVP)-affiliated Lanka Viduli Sevaka Sangamaya (LVSS) and the CEB Engineers’ Union, have condemned the move as a political gimmick.
LVSS President Ranjan Jayalal has been particularly vocal, accusing the Minister of sidestepping major unions and holding a perfunctory meeting without substantive discussion or documentation. “The Minister dumped the main TUs. Even those who participated in the discussion said they were not given a single document. It was just merely a meeting,” Jayalal told The Sunday Morning.
He contends that the timing of the announcement is suspiciously aligned with the upcoming elections, suggesting that it may be a ploy to garner public support.
Financial woes
The CEB’s financial situation is dire. According to a recent letter from CEB Acting General Manager Eng. Dr. Narendra De Silva to the Public Utilities Commission of Sri Lanka (PUCSL), the CEB has accumulated financial losses totalling Rs. 412.1 billion from 2013 to 2023. Despite a reported profit of over Rs. 61 billion in the last fiscal year, the CEB continues to grapple with significant debts and operational challenges.
The breakdown of the CEB’s debts is staggering, with Rs. 1,229 million owed to the Ceylon Petroleum Corporation (CPC), Rs. 16,547 million to Independent Power Producers (IPPs), and Rs. 9,085 million to Non-Conventional Renewable Energy (NCRE) developers. The CEB also has Rs. 51,906 million in outstanding loans with People’s Bank, Rs. 63,673 million in Treasury sub-loans, and Rs. 100,445 million owed to the Asian Development Bank (ADB).
Despite a notable profit in the fiscal year ending December 2023, the CEB faced unexpected financial challenges in March 2024 due to extreme dry weather conditions, which escalated fuel and thermal generation costs by Rs. 10.3 billion for that month alone.
TU outrage
The exclusion of major trade unions from discussions about the proposed salary reforms has fuelled their ire.
Jayalal emphasised that the CEB employees’ salaries were supposed to be reviewed every three years, with the last review conducted in 2021. The next review is pending this year, and Jayalal argues that the Minister’s proposed timeline for implementing salary reforms is unrealistic.
“We feel that he is playing as he has made this announcement when the country is on the edge of an election. As soon as the elections are declared, the Minister can easily get away from this,” Jayalal stated.
A senior engineer from the CEB Engineers’ Union, who wished to remain anonymous, echoed these sentiments, accusing the Minister of attempting to disgrace the employees by dragging the salary issue into the public eye.
The engineer pointed out that, contrary to the Minister’s claims, employees at other semi-Government institutions such as the Sri Lanka Ports Authority and the National Water Supply and Drainage Board received higher salaries than CEB employees.
A question of sustainability
The question remains: can the CEB afford another salary increase given its current financial state?
Despite a substantial profit reported for the last fiscal year, the CEB’s costs continue to outstrip its revenues. Fuel expenses alone rose sharply by Rs. 7.6 billion in March, while costs associated with IPP thermal generation increased by Rs. 2.7 billion compared to the previous month.
In the first quarter of 2024, the CEB’s total revenue reached Rs. 198,674 million, a significant increase from Rs. 124,446 million in the same period the previous year. This was driven by higher electricity sales revenue and a one-time gain from the divestiture of a subsidiary. However, total costs for the same period amounted to Rs. 114,002 million, indicating ongoing challenges in cost management.
The CEB’s financial reports highlight a notable increase in net generation and sales, with cumulative net generation for the first quarter at 4,106 GWh and sales amounting to 3,694 GWh. However, the average selling price per unit was Rs. 45.43, while the average revenue per unit was Rs. 53.79 and the average cost per unit was Rs. 30.86, resulting in a net loss per unit of Rs. 22.92.
The path forward
Given the CEB’s substantial debt and ongoing operational challenges, the feasibility of implementing significant salary increases is highly questionable. While the proposed reforms may aim to motivate and retain employees through performance-based incentives and promotions, the financial burden on the CEB cannot be overlooked.
The current financial turmoil raises critical questions about the sustainability of such measures.
Can the CEB realistically afford to revise its salary structure and introduce new incentives without exacerbating its financial woes? Or is this move merely a political manoeuvre to secure votes ahead of the national elections?
As the debate rages on, a senior management official at the CEB claimed: “One thing is clear: any decision on salary reforms must be carefully weighed against the CEB’s financial health and long-term sustainability.”
The official further claimed that without a clear and sustainable financial strategy, the proposed salary increases risked plunging the CEB into deeper financial distress, ultimately undermining its ability to serve the public and meet its obligations.