• Govt. considering another tariff hike within next two months
• CEB anticipates a loss of Rs. 152 billion by the end of this year
• August tariff revision was not sufficient for CEB: Ilangakoon
• CEB requests Rs. 865 b per year for uninterrupted power supply
• No more tariff hikes, CEB can manage generation: Ratnayake

By Maheesha Mudugamuwa  Yet another major electricity tariff hike is in the pipeline as the State-owned utility provider Ceylon Electricity Board (CEB) continues to incur losses even after a drastic price increase introduced recently, The Sunday Morning learns. In August, the CEB introduced a 75% overall hike for electricity bills for the first time in nine years. However, both Power and Energy Minister Kanchana Wijesekera and CEB Chairman Nalinda Ilangakoon have indicated that the utility provider is likely to continue to incur losses in billions of rupees, despite the recent tariff hike. The Sunday Morning reliably learns that the Government is considering yet another tariff hike of up to 30% for electricity within the next two months. However, it is understood that discussions with stakeholders are yet to commence. In August, the Public Utilities Commission of Sri Lanka (PUCSL) approved a new electricity tariff revision. Accordingly, the PUCSL granted approval to increase electricity tariffs by 75% and tariffs were increased based on five unit categories – units 0-30 by 264%, 31-60 by 211%, 61-90 by 125%, 91-120 by 89%, and 121-180 by 79%.   Losses   Last month, Minister Wijesekera told Parliament that the CEB anticipated a loss of Rs. 152 billion by the end of this year despite electricity tariff reforms that were implemented in August.  According to the statistics revealed by the Minister, the CEB has incurred a loss of Rs. 108.6 billion in the first eight months of this year. The CEB expects an additional income of Rs. 15 billion following the August tariff revisions. The continuous losses incurred by the CEB have been acknowledged by the CEB Chairman as well, who has stressed that the board is still operating at a massive loss. He told The Sunday Morning that the recent tariff revision was insufficient for the CEB, explaining that the CEB was currently incurring a loss of around Rs. 8 per unit following the tariff hike introduced in August.  “Earlier, it sold a unit of electricity which cost around Rs. 30 at Rs. 18 up to September and, following the tariff revision, a unit that cost around Rs. 35.80 is now sold at Rs. 27.50. We are still selling a unit of electricity at a loss of around Rs. 8.50,” Ilangakoon said. “We have requested Rs. 865 billion per year to provide an uninterrupted power supply considering the external factors such as the dollar rate fluctuations, fuel prices, etc. but the PUCSL has approved only Rs. 505 billion. We are still facing a loss of more than Rs. 300 billion approximately. We have to use a part of this revenue to pay off debts. In order to do so, we are planning to introduce a debt restructuring mechanism together with the State banks and the Ministry of Finance,” Ilangakoon further noted.   Subsidies still available   According to the CEB, as per the recent tariff revision, the consumer category with a consumption of less than 30 units is charged 25% of the cost and they still receive a 75% subsidy. The consumers who come under the category of above 31 units and below 60 units are charged 40% of the total costs and they receive a 60% subsidy. Only 50% of the actual cost is charged from the category of units above 61 and below 90 and a 50% subsidy is also given to that category. According to the utility provider, instead of the 116% tariff increase proposed by the CEB for industries, hotels, and general-purpose sectors with low electricity consumption, the approved tariff increase will be 39%. Further, only a 75% increase in rates has been approved for the industrial sector. Furthermore, the tourism sector has only seen a 50% increase in tariff rates. The remaining 50% tariff increase will come into effect after another three months as an incentive and relief to the dollar-earning sector. The move was aimed at facilitating the recovery of the tourism industry, the PUCSL explained. Even though the PUCSL approved the subsidised prices, it is not clear whether the subsidies provided under the recent tariff hike will be incurred by the CEB or by the Treasury. The CEB’s Annual Report 2020 (latest available) notes that the accumulated subsidies due from the Government for the tariff period from 2016 to June 2020 is Rs. 307.5 billion. It is stated in the report that the CEB had continued to remind the Treasury about monthly subsidies due as a result of the Government’s policy of not revising the tariffs for seven years from 2013.   Meanwhile, the Government has decided to impose a 2.5% Social Security Tax (SST) on electricity bills in addition to the increased tariffs. Last month, the PUCSL announced that the 2.5% SST would be added to the electricity tariff with effect from 1 October.   No more hikes   As per PUCSL statistics, there has been a reduction in the monthly losses incurred by the CEB in the past two months and a further reduction is expected by the end of December. When evaluating the statistics, it can be observed that the total generation cost incurred by the CEB in September was Rs. 29.23 billion and the transmission and distribution costs were Rs. 1.91 billion and Rs. 8.60 billion, respectively. In addition, Rs. 2.54 billion has been incurred for loans, resulting in a total cost of Rs. 42.28 billion. The total revenue is estimated at Rs. 40 billion and therefore, the total losses incurred by the CEB in September were Rs. 2.28 billion. Similarly, in October, the CEB incurred a loss of Rs. 0.44 billion and the anticipated losses calculated by the PUCSL for November and December were Rs. 3.01 billion and 1.90 billion. Therefore, the estimated loss is expected to be Rs. 114.75 billion and the total loss incurred by the board from January to August will be Rs. 108 billion. Furthermore, the total value of the subsidy provided by the CEB from January to December is estimated at Rs. 80 billion and therefore the total loss of the CEB by the end of December this year after reducing the subsidy is estimated at Rs. 34.75 billion. The calculations have been made by the PUCSL based on the assumptions that the hydro dispatch of 20 GWh/day for the months of November and December and the current daily demand of 40 GWh/day till the end of December will remain.     Corruption woes    Speaking to The Sunday Morning, PUCSL Chairman Janaka Ratnayake stressed that the commission would not entertain any more tariff hikes as the CEB could manage power generation with operational profits till the end of this year since adequate water and coal stocks were available.  “They need to prepare a good cash flow to manage increased income prudently,” he added.  Meanwhile, Lanka Viduli Sevaka Sangamaya (LVSS) General Secretary Ranjan Jayalal alleged that the Government was attempting to privatise the CEB by showing the public that the enterprise continued to owe a massive debt to the country. Highlighting that the CEB was in need of major restructuring, Jayalal claimed the current process was mainly to privatise the institution and not to make the institution a profitable entity.