ECONOMYNEXT – Sri Lanka’s Ceylon Electricity Board has sought a tariff hike to increase revenues by 18.3 percent including a recovery of part of the losses in the last quarter, under the instructions of the Treasury.
Sri Lanka’s Public Utilities Commission ordered a 20 percent reduction in tariff when the utility asked for a 3 percent reduction leading to an 18 billion loss in the state-owned utility in a country that is recovering from sovereign default.
Energy utility losses – mostly driven by currency depreciation due to a faulty operating framework of the central bank – which were covered by bank borrowings contributed to the default.
Due to the un-asked for tariff cut by the regulator an IMF program review has been delayed.
Projections
The CEB said it expected to sell 10,116 GigaWatts of energy in in the 7 months from June to December 2025.
As a result, the CEB was projecting its own hydro generation at 3,224 GWh (which cost very little as most plants are depreciated), thermal 3814GWh and other renewables, 2810GWh.
CEB said it was considering the energy cost of CEB owned plants and its own wind plant at zero.
Up to March 2025, the driest period of the year, the CEB made an 18 billion rupee loss.
The CEB said it had had the benefit of extra rainfall this year and had good hydro storage and rainfall forecasts by the Meteorological Department was favourable.
During May rainfall rain was forecasted at normal to above normal, June below normal and July could be above normal.
Two coal plants (unit 1 and 3) would be out for 25 days in June and July for Level C scheduled maintainance. Unit 2 would be out for 60 days for Level B maintainance, in Octorber and November 2025. The cheapest base load, after hydro comes from coal.
Kelantissa Combined Cylce 2 would be out for 12 weeks from November. Unit 2 of Kotmale would be out of 7 weeks for tunnel inspection and repairs. Unit 1 or Ukuwela hydro plant would be out for 3 moths for head cover replacement.
Unit 3 of Victoria woud be out for 6 weeks for generator transformer replacement.
The Sobabadhanavi 312MW IPP would start combined cycle mode from June 2025. It is however an expensive plant running on diesel though capable of LNG.
The estimated revenue for the final seven months of 2025 was 230 billion rupees at existing tariffs.
IMF Program
“Under the IMF’s EFF arrangement, a key structural benchmark is the implementation of cost-reflective electricity tariffs to ensure CEB’s financial sustainability,” the tariff filing said.
“However the 20-pct tariff reduction by the PUCSL in January 2025, without a request from the CEB has led to CEB operational losses.
“Hence, the first quarter 2025 deficit, along with the necessary adjustments has been estimated and included as a negative balance of 8,283 million as per the directive received from the Ministry of Finance…”
Total costs for the balance seven months were estimated at 276 billion rupees. With 11.8 billion rupees excess revenue from the bulk supply tariff and recovery of 8.2 billion in losses, the CEB ended up with a deficit of 42.19 billion rupees.
Filling the gap required an increase of 18.3 percent in revenues from what is coming the current tariffs.
The tariffs distributed as follows.
