roadBlockAd
brand logo

Power crisis: CEB struggling to make ends meet

27 Mar 2022

  • CEB near ‘financial turmoil’
  • Concerned that People’s Bank may not honour payments due to ODs
  • Calls for immediate decision on tariff
  • Concerns about arrears collection and losses in power generation
  • CEB struggles to pay salaries for March
By Asiri Fernando The State-owned power utility, Ceylon Electricity Board (CEB) last week raised concerns about the financial sustainability of the loss-making State-Owned Enterprise (SOE), citing pressure from the deteriorating economic climate the country is facing and massive amounts of customer arrears, urging the relevant parties to finalise the electricity tariff revision immediately and fast-track customer receivables.     In a letter dated 24 March (Thursday), the office of the CEB Finance Manager wrote to the CEB Managing Director, CEB Chairman, and Ministry of Power Secretary, recommending that the CEB continues to seek Treasury assistance and intervention to make payments to financial institutions (People’s Bank in particular), curtailment of CEB operations until bank overdrafts are paid, fast-track securing customer arrears, and to settle CEB’s payment to CPC based on the previous Cabinet decisions, among others, to arrest the “current financial turmoil”. “Curtail/defer CEB operation until excess OD is settled. Soliciting of General Treasury intervention for the arrangement of a financing facility from financial institutions, particularly direction to the People’s Bank. Carving out a short-term plan for CEB negotiation with all the divisions to operate within the constrained financial corridor available,” are some of the recommendations made in the letter. When contacted, Ministry of Power Secretary Wasantha Perera told The Sunday Morning that the request by the CEB for a tariff revision had not been considered by the Cabinet of Ministers yet.  “With recent fuel price hikes, the CEB is finding it extremely difficult to manage with the existing tariff, but the Government is not keen to pass on an additional pressure on to the public,” Perera said.  According to her, the Treasury has been offering assistance and has promised to issue some relief to the CEB to honour payments. According to the office of the CEB Finance Manager, the CEB’s obligation to settle fuel bills to the Ceylon Petroleum Corporation (CPC) expeditiously has become a “major burden” as the CEB is making a Rs. 14/ loss per unit of power generated using fuel as the price of diesel has increased significantly. It was confirmed that the CEB had to pay a higher price for coal shipments, as no bidders had come forward to take up the tenders issued, a matter The Sunday Morning reported earlier. “…During the last couple of months, CEB had to oblige for settlement to CPC with its continuous demand and stoppage of fuel supply to the power plants. This has caused a major burden to the CEB at this juncture due to CEB incurring a loss around Rs. 14.40 per unit. CEB has settled CPC around Rs. 25 billion through the facilities obtained from People's Bank and Rs. 15 billion by the General Treasury. Further, import of coal had taken place on crash shipment schedule due to non-participation of bidders for the tenders. Therefore, CEB had to pay for the coal import within a shorter period of time at higher prices,” the Finance Manager of the CEB stated. “Under these circumstances, the bank may not honour any payment until the bank recovers the excess amount of Rs. 17 billion from CEB through the daily collections,” the letter warned. “...if arrears of the CEB to the People’s Bank are not settled quickly, the bank may not honour payments for existing orders of coal. The CEB is expected to make payments of Rs. 33 billion for coal shipments for the month of March and will need to seek financing to pay Independent Power Producers (IPP).” According to the letter, the revolving finance facility for coal import also has been fully exhausted, leaving around Rs. 23 billion unpaid-for coal shipments. Another payment, valued at Rs 10.5 billion for a coal shipment due on 30 March, needs to be honoured when the consignment is unloaded later this week, the office of the Finance Manager warned. It is also understood that the CEB had difficulties making salary payments for this month due to the excess overdraft at People’s Bank. When contacted, CEB Spokesman and AGM Andrew Nawamuny told The Sunday Morning that the CEB was finding it difficult to continue operations with the losses it was incurring due to power generation using fuel.  “There is a significant amount of arrears that need to be settled. An early settlement of arrears will enable the CEB to streamline our payments and keep operations going smoothly,” Nawamuny said. He declined to comment about salary payment issues. Attempts to contact CEB Chairman M.M.C. Ferdinando regarding the concerns raised in the letter failed.   


More News..