• Rs. 11.3 b loss in Feb., revenue down 40.3%
• Electricity generation losses hit Rs. 9.78/kWh
• Average generation cost Rs. 23.03/kWh, above selling price

The Ceylon Electricity Board (CEB) is currently facing a severe financial crisis, which may force the State-run utility to implement an electricity tariff increase of up to 40% in the upcoming month. 

According to reliable sources within the CEB, this situation has arisen due to significant financial losses incurred in February.

The CEB’s Approximate Profit/(Loss) Statement for February as seen by The Sunday Morning revealed a substantial loss of Rs. 11,367 million, marking a 40.3% decrease in revenue compared to the previous period. 

Despite generating a substantial 1,321 GWh of electricity, the total revenue for the month had reached only Rs. 28,211 million, with Rs. 26,211 million from electricity sales and Rs. 2,000 million from other income sources.

However, the total costs at the selling point had amounted to Rs. 39,579 million, encompassing generation, transmission, distribution, and corporate expenses, leading to a per-unit loss of Rs. 9.78/kWh.

It is further revealed that CEB Thermal, which had generated 159 GWh, incurred a total cost of Rs. 7,247 million, resulting in a per-unit cost of Rs. 45.44/kWh. 

On the other hand, CEB Coal had generated 433 GWh at a total cost of Rs. 8,238 million, resulting in a much lower per-unit cost of Rs. 19.02/kWh. 

The weighted average cost of electricity generation for February had been calculated at Rs. 23.03/kWh, which is significantly higher than the average selling price of Rs. 22.55/kWh, worsening the CEB’s financial deficit.

In addition to high generation costs, the CEB had experienced system losses of 158 GWh, representing 12% of total generation, further reducing the amount of electricity available for sale. 

Combined with the total generation costs of Rs. 30,384 million and a weighted average cost impact of Rs. 6.24/kWh (with 18.32% contributed by CEB Coal), the CEB is left in a financially precarious position, according to statistics.

In January, the Public Utilities Commission of Sri Lanka (PUCSL) approved and recommended an average 20% reduction in electricity tariffs for all categories for the first half of 2025, effective from midnight Friday (14). 

The decision followed extensive public consultations, with the PUCSL citing the need to ease the financial burden on consumers amidst the ongoing economic challenges.

In contrast, the CEB had initially claimed that only a 1.02% reduction was feasible, based on what it referred to as a “marginal revenue surplus” for the period from January to June. 

The CEB even proposed maintaining the existing tariff structure, arguing that even the forecast surplus was “within the error margin”.

However, despite resistance within the board, particularly from its top management, the PUCSL conducted a detailed evaluation of the CEB’s submission and ultimately recommended a 20% reduction. 

Calculations by the PUCSL predicted a revenue surplus of Rs. 44 billion for the CEB in the first half of the year.

Meanwhile, it is also reported that the CEB is preparing to submit its second tariff proposal of 2025 to the PUCSL, as the International Monetary Fund (IMF) review approaches.

The IMF has warned that Sri Lanka is breaching a structural benchmark, following the 20% reduction on tariffs by the PUCSL, potentially leading to losses for the board and violating the requirement for electricity to be cost-reflective under the IMF programme.

The tariff revision proposal, initially due by July, is now expected to be submitted in April as an IMF mission is scheduled to visit Sri Lanka for a review.

Minister of Energy Kumara Jayakody told Parliament on Friday (14) that tariffs must be revised every three months under industry guidelines. The CEB will assess the full impact of the tariff change by March or the middle of April before submitting the second tariff proposal for the next quarter.

Jayakody added that the tariff proposal by the CEB would consider various factors, including revenue from current tariffs, fuel costs, rainfall, hydro storage forecasts, maintenance schedules, interest rates, economic projections, and expected energy demand.

All attempts to contact CEB Chairman Dr. Tilak Siyambalapitiya were unsuccessful. 

When contacted, CEB Spokesman Dhammike Wimalaratne stated he was unaware of any such increase and would need to verify the matter with the board. However, there was no further response from Wimalaratne by the time of going to print.