• CEB Chairman confirms tariff filing by 15 May; new rates effective 1 July
• Rs. 11.37 b loss in Feb.
• IMF raises alarm over Jan. tariff cuts

The Ceylon Electricity Board (CEB) is facing mounting financial pressure as it prepares for a tariff revision expected in July, following a devastating net loss of Rs. 11,367 million reported for February.

Internal sources revealed to The Sunday Morning that engineers within the organisation were increasingly worried that without urgent tariff adjustments, the utility provider could spiral into deeper losses in the coming months.

According to the CEB’s Approximate Profit and Loss Statement for February, the board continues to operate at a significant deficit, driven by a stark mismatch between electricity generation costs and the regulated retail price.

As per the financial statements, the average cost of electricity generation per unit (kWh) in February stood at Rs. 34.06, while the average selling price was only Rs. 22.55. 

Total gross generation for the month was 1,321 GWh, but after deducting a system loss of 158 GWh – approximately 12% of total generation – the net volume of electricity sold was just 1,162 GWh.

CEB engineers, who are closely monitoring these figures, warned that without a rapid tariff correction, losses could exceed sustainable limits.

“We are not just running a monthly loss; we are burning through our ability to remain financially viable,” said a senior CEB engineer on condition of anonymity.

The generation mix has also revealed troubling dependencies with hydropower, which accounted for 29% (383 GWh) of total generation, remaining the most cost-effective source at Rs. 2.32/kWh. 

However, coal, while making up the largest share at 33% (433 GWh), cost Rs. 19.02/kWh, contributing a high 18.32% weighted average cost impact.

Thermal power – both from the CEB and Independent Power Producers (IPPs) – continues to drain the board’s finances. 

IPP Thermal, producing just 10% of the power, had the highest unit cost of Rs. 70.45/kWh and a weighted cost impact of 20.85%. CEB Thermal, contributing 12% (159 GWh), was also costly at Rs. 45.44/kWh.

In contrast, renewable sources like rooftop solar and net metering contributed about 14% of generation, with costs ranging between Rs. 16.56 and Rs. 35.86/kWh. Wind energy, at 16.27 GWh, came in at Rs. 18.12/kWh, showing cleaner, lower-cost promise.

Adding to the generation costs of Rs. 30,384 million, the CEB also incurred transmission costs of Rs. 2,592 million (Rs. 2.23/kWh), distribution costs of Rs. 6,503 million (Rs. 5.60/kWh), and corporate overheads of Rs. 100 million, pushing the total cost at selling point to Rs. 39,579 million.

Revenue from energy sales in February stood at Rs. 26,211 million, supplemented by Rs. 2,000 million in other income. However, even with this, the board has reported a staggering monthly loss of Rs. 11.37 billion, a figure that engineers warned could grow unless immediate corrective action is taken.

Meanwhile, in a letter dated 24 March, addressed to Deputy Minister of Economic Development Prof. Anil Jayantha Fernando, CEB Chairman Eng. Dr. Tilak Siyambalapitiya has confirmed that the next tariff filing will take place by 15 May, with the Public Utilities Commission of Sri Lanka (PUCSL) expected to announce revised tariffs effective from 1 July. “The CEB will be filing the costs and the PUCSL will determine tariffs,” the letter stated.

The letter has also revealed that the Bulk Supply Transaction Bank Account (BSTBA) – a tool for monitoring sector cash flows – had crossed the negative threshold of Rs. 15 billion for the weeks ending 9 March and 16 March, automatically triggering tariff adjustment mechanisms under guidelines approved in June 2024.

In March, International Monetary Fund (IMF) Senior Mission Chief for Sri Lanka Peter Breuer raised concerns about the tariff reductions implemented in January, which, he said, had undermined the cost-reflective pricing framework.

“The tariff cut implies that the CEB wouldn’t be able to avoid losses on a forward-looking basis,” Breuer said. “Debt could start building up again in the electricity company, becoming a contingent liability for the Government. This is something Sri Lanka has experienced before.”

When The Sunday Morning reached out to CEB Chairman Dr. Siyambalapitiya to inquire whether the CEB was expected to revise tariffs from 1 April since the new rates would now be implemented from 1 July and if the losses incurred during this period would be passed on to consumers, he requested the newspaper to contact the PUCSL for further clarification.