Despite the Sri Lanka Electricity (Amendment) Bill being passed in Parliament, uncertainty and unrest continue to grip the sector’s workforce as no concrete transfer plan has yet been finalised for the 23,000 employees of the Ceylon Electricity Board (CEB).
Promised communication about the transfer process, originally scheduled for 26 August, has failed to materialise, leaving workers anxious and unsure about their future roles, placements, and job security. Adding to the growing tension, employee benefits, including vehicle loans, have been abruptly suspended, fuelling discontent and frustration across the industry.
Reliable sources confirm that while the Government is pushing ahead with the restructuring of the electricity sector, critical details regarding employee transitions and branch operations remain unclear. This opacity has sparked significant concerns among employees who fear job losses and the erosion of their rights amidst the sector’s ongoing reorganisation.
The assignation process
Furthermore, as reliably learnt by The Sunday Morning, as per the detailed list of prerequisites that must be fulfilled by the Power Sector Reform Secretariat (PSRS) and the Ministry of Energy before any assignation letters can be issued to CEB employees, transferring them to successor companies under Section 18 of the Sri Lanka Electricity Act No.36 of 2024, including the issuance of assignment letters – mandated to take place within 14 months of the act’s enactment on 27 June 2024 – is contingent upon a clear, transparent, and fair process that safeguards employee rights and provides certainty about their future.
It is demanded that all officers and servants be fully identified and informed of their assignation, with due promotions, permanency, and employment attributes clarified beforehand. Employees should be given the opportunity to transfer between prospective successor companies prior to the issuance of assignation letters, or at least once afterward, without affecting service continuity, seniority, or entitlements.
It is also reliably learnt that the assignation process must strictly reflect employees’ duties and designations immediately prior to transfer, with special provisions for staff from offices deemed nonoperative post-restructuring.
Crucially, the preliminary transfer plan prepared by the PSRS – including essential sections on company formation, HR policies, organisational structures, initial operations, assets, liabilities, and corporate strategies – must be made available to employees to help them make informed decisions regarding their careers and job security.
Also, clear communication on HR policies is required, particularly regarding promotions, cadre preservation, transfers within successor companies, and career opportunities. Assignation letters must guarantee no break in service, no reduction in grade or seniority, and no loss of employment benefits, including pension and provident fund continuity as stipulated under Section 18(4).
Letters must clearly specify the successor company, working location, designation, and reporting structure, as well as confirm that conditions of employment are no less favourable than those previously enjoyed. The collective agreement between employees and the Government of Sri Lanka must be explicitly referenced as binding.
For employees opting out of transfer, fair and reasonable voluntary retirement schemes must be finalised and communicated, offering compensation, preservation of pension rights, gratuity, and all accrued terminal benefits. Employees should be granted a minimum two-month period to review, seek clarification, and obtain guidance before consenting to their assignation.
It is emphasised that issuing assignation letters before these prerequisites are met would be premature and could jeopardise the smooth transition and rights of the workforce. There is a clear call for the ministry and relevant authorities to act promptly to ensure a fair, legally compliant transfer process.
The 2024 act
The Sri Lanka Electricity Act introduced in 2024 by former Power and Energy Minister Kanchana Wijesekera brought several significant changes.
The amendment updated provisions related to the incorporation of limited companies, specifically those listed in Schedule I, replacing references to “the transfer plan” with “the preliminary transfer plan”.
It mandates that within one year of publishing the final transfer plan, the activities, assets, liabilities, and functions of certain companies must be further unbundled and transferred to other specified entities. The amendment also revises share allotment provisions, granting the Secretary to the Treasury an initial allotment of 100% shares in successor companies, with permanent Government ownership retained particularly for hydropower generation firms.
The administration and management of these successor companies are entrusted to boards of directors appointed by the minister. Each board comprises five members, including Government officials and experts with at least 15 years of experience in fields such as electricity generation, transmission, distribution, procurement, financial management, economics, accounting, or commercial law.
Board members, including the chairperson, serve three-year terms and may be reappointed for a second term. These boards are tasked with drafting essential corporate policies on enterprise management, investment, risk, finance, anti-corruption, human resources, and strategic communications. These policies must be submitted to the minister and approved by the cabinet of ministers before the companies can operate under them.
Amendments to the principal enactment
After the new Government assumed office, it proposed amendments specifically targeting Section 17 of the principal enactment.
The amendments focus on restructuring key electricity companies by unbundling their activities, assets, liabilities, duties, and functions according to the final transfer plan, particularly for companies listed under items (a) and (g) of Schedule I. The minister is empowered to appoint board members for companies mentioned in items (a), (e), (g), and (h)(ii) of Schedule I.
Furthermore, the boards are assigned the responsibility to draft key policies for cabinet approval through the minister, marking a significant step towards reforming governance and operational structures within the sector.
Following Supreme Court determinations, it was clarified that the unbundling of the CEB – originally planned to happen in a single phase – will now proceed in two stages under the new bill.
The original act required simultaneous transfer of all assets, functions, and employees with protections for workers’ rights and voluntary retirement options. The bill, however, introduces a phased approach: the first phase consolidates all electricity generation activities – including hydro, coal, thermal, and wind – under one Government-owned company.
The second phase proposes further unbundling of this generation company into separate entities for each energy source. While the Government retains full ownership of the hydropower company, shares in coal, thermal, and wind energy companies will be offered to private investors.
Employee concerns
Petitioners raised concerns that the bill lacked clear provisions safeguarding employees’ rights during the second phase of unbundling, potentially violating constitutional protections related to equality and fair treatment.
The Supreme Court concurred but noted these gaps could be addressed through amendments during the parliamentary committee stage. Proposed changes would ensure employees are notified in a timely manner and given options to transfer to successor companies or to accept voluntary retirement schemes with terms comparable to those in the original act.
Additionally, the bill introduces a new company to manage the provident and pension funds of CEB employees. The court pointed out that the proposed board composition excluded employee representatives, contradicting existing provisions meant to protect employee retirement benefits. It further recommended including current and former employee representatives on the board to align the governance structure with constitutional rights.
The Supreme Court’s observations indicate that with these amendments at the committee stage, the bill – particularly Clause 13 – can be passed while safeguarding employee rights and ensuring consistency with constitutional protections.
This development marks a crucial juncture in Sri Lanka’s electricity sector reforms, balancing the need for structural change with vital labour and governance concerns. Yet, until the Government finalises and communicates a clear transfer plan, uncertainty and unrest among the workforce are likely to persist.