- Sales drop to Rs. 434 b in Q1 2025, down Rs. 685 b from 2024
- CEB proposes 18.3% tariff hike to cover Rs. 42.2 b revenue shortfall
- Projected costs of Rs. 276.5 b
- Energy expenses alone hit Rs. 156.6 b
Hydropower sales have registered a sharp 61% decline in the first quarter of 2025, compared to the same period last year, Government statistics reveal.
According to the ‘Report on Financial Performance of the Government Upto 1st Quarter Ending 31 March 2025,’ sales fell to Rs. 434,406 million, down from Rs. 1,119,999 million in Q1 2024 – a decrease of Rs. 685,593 million.
In such a backdrop, the Ceylon Electricity Board (CEB) has incurred significant operational losses and proposed an 18.3% increase in electricity tariffs for the final seven months of this year.
The proposal, submitted to the Public Utilities Commission of Sri Lanka (PUCSL), seeks to address a forecasted Rs. 42.2 billion revenue shortfall, driven by rising operational costs, legacy debt, and regulatory constraints.
For the June to December 2025 period, total estimated expenditures for the CEB and Lanka Electricity Company (LECO) are Rs. 276.5 billion – comprising Rs. 156.6 billion in energy expenses, Rs. 45 billion in capacity costs, and Rs. 14.1 billion in finance charges – while expected revenue under the current tariff stands at Rs. 230.7 billion.
The tariff revision reflects updated fuel prices of Rs. 274 per litre for auto diesel, Rs. 167 for furnace oil, Rs. 131 for naphtha, and Rs. 45.41 per kg for coal, alongside an exchange rate of Rs. 303.33 per US Dollar. Finance costs have been recalculated based on the latest Average Weighted Prime Lending Rate (AWPLR) of 8.45%, estimating Rs. 14.06 billion in finance expenses for the period.
The CEB has also raised concerns over the PUCSL’s application of the clawback mechanism on operational expenditure (OpEx) in January 2025 and unresolved transmission revenue discrepancies. Revised distribution revenue caps for the second half of 2025 were set at Rs. 5.57 billion (DL1), Rs. 10.96 billion (DL2), Rs. 5.10 billion (DL3), and Rs. 5.79 billion (DL4).
To address its financial position, the Government approved debt management measures in February 2025 under Sri Lanka’s International Monetary Fund (IMF)-supported Extended Fund Facility (EFF) programme, including debt swaps, extended repayments, syndicated financing, and the restructuring of outstanding liabilities.
When The Sunday Morning inquired as to why the CEB had reduced hydropower generation in the first quarter of this year compared to the same period last year – especially given the losses incurred during this time – CEB Spokesman Eng. Dhammike Wimalaratne explained that hydropower generation was not entirely under the CEB’s control.
“At Laxapana and Mahaweli, electricity generation depends on water releases needed for drinking water supply. This decision is not made by the CEB,” he said.
He noted that a meeting was held every five days involving the CEB, Department of Irrigation, Mahaweli Authority, and Environment Ministry to determine how much water must be released.
“The CEB has to release a certain quantity of water and then generate power. Power generation is not the priority,” he pointed out.
Wimalaratne also explained how fluctuating weather patterns affected generation capacity: “We have early and seasonal weather patterns. Within a period of four years, some years are very dry. We can’t meet the total demand of 1,400 MW to 2,600 MW, so we have to have other sources.”
He added that during nighttime, with no solar power available, the country depended on thermal power plants and Norochcholai, which were more expensive to run.
“Thermal power is costly. Hydro is the lowest cost, but when there’s less hydro, we still have to release water for environmental reasons. Only what’s left is used for power generation,” he explained.
“If we don’t release water from Laxapana, then Labukele and other areas will be affected,” he added, confirming that the decision involved multiple stakeholders including the Mahaweli Authority, Environment Ministry, and CEB.