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Power crisis: CEB at risk of bankruptcy

30 Apr 2022

 
  • Seeks urgent approval for 100% power tariff hike
  • Ferdinando says PUCSL dragging its feet
  • Says fossil fuel power generation has risen to Rs. 38 per unit
  • Coal prices soar in international markets 
By Maheesha Mudugamuwa The Ceylon Electricity Board (CEB) is on the verge of bankruptcy, with the State-owned utility provider trying to secure an overdraft to honour employees’ pay, The Sunday Morning learns. When contacted by The Sunday Morning, CEB Chairman M.M.C. Ferdinando stressed that there was an urgent need to increase the electricity tariffs as the Board was now struggling to pay the salaries of its employees. “We are now in a bankrupt situation. The salaries of employees cannot be paid without an overdraft. Even the overdraft has now been suspended by the banks,” he stressed. It is learnt that the CEB is currently incurring a loss of over Rs. 300 billion per year as its expenditure had now increased to over Rs. 500 billion, while revenue is said to be only around Rs. 200 billion. According to the Chairman, the CEB had requested a 100% tariff increment from the Public Utilities Commission of Sri Lanka (PUCSL). The PUCSL had recommended a tariff increment, but had not approved the request yet. The CEB and the utility regulator have been in a tug-of-war on revising the electricity tariff. “We have not increased tariffs since 2013. The 2013 increase was negated by the tariffs of 2014 after the commission of the Norochcholai Power Plant. Back then, we promised everybody that once the power plant was commissioned, we would reduce the tariffs since the costs had been reduced substantially. Also, we gave a further undertaking to the general public that the tariffs would be further reduced by the commissioning of 600 MW of the Sampur Coal Power Plant. The tariffs were to be reduced by around 25%. But, since 2014, after the Norochcholai Power Plant, no power plants have been commissioned in the country,” Ferdinando explained. He went on to say that even though the cost of electricity production had increased over the past several years, electricity tariffs had not been revised since 2013.  Earlier this year, Ferdinando in a letter to the Power Ministry Secretary called the power crisis a “man-made” one and highlighted discrepancies and delays in implementing power generation projects, including a number of renewable energy projects by elements within the CEB. “The generation cost has now gone to more than Rs. 38 per unit. From each and every unit we are losing Rs. 18.88. Therefore, there is an urgent need to increase the tariffs because we are now in a bankrupt situation. Also, most of the coal payments cannot be paid because the coal prices have also gone up from $ 60 to $ 390 per MT. With the recent increase of diesel prices, the production cost of some of the diesel-fired power plants such as Kelanitissa has now increased to around Rs. 130,” Ferdinando stressed.   “We agree that the entire accumulation of cost cannot be passed to the consumers at once and the price hike should be a reasonable hike as per the Electricity Act. But now there is a tussle between us and the PUCSL as it does not agree with the effective cost that we have suggested and we are not in agreement with the cost it has suggested,” he added. Meanwhile, when contacted by The Sunday Morning, Power and Renewable Energy Ministry Secretary K.D.S. Ruwanchandra noted that the request for a electricity tariff hike had been submitted to the PUCSL but there had been no approval from the Commission as yet.  

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