CEB’s financial loss triggers IMF-backed tariff hike talks
The Ceylon Electricity Board (CEB) is facing a financial constraint at present and is considering a significant electricity tariff hike to recover losses mainly caused by the drastic electricity tariff cut of 20-22 per cent for domestic users from January to June 2025.
The process of the implementation of the cost-reflective pricing model agreed with the IMF pertains to the full cost recovery over a defined period. However Energy Minister Kumara Jayakody on Thursday in Parliament ruled out any immediate price increase.
The CEB recorded a profit of Rs. 51 billion during the January to June, 2024, available data shows.
However the Public Utilities Commission of Sri Lanka (PUCSL) as the regulator also has to determine whether the CEB recorded a profit or incurred a loss during the period January-June 2024 and the same period of 2025 in comparison for new tariff revision.
If a profit was recorded, it should be passed on to the public as a form of relief during the period January-June 2025. Conversely, if a loss was incurred, it should be offset through an increase in electricity tariffs.
Accordingly, when comparing the current operations for the month up to June, it is assumed that approximately an additional Rs. 90 billion in profits has to be earned compared to statistics last year
“Based on this profit, electricity tariffs should be reduced and the CEB cannot justify another tariff hike in the new electricity tariff revision,” Patali Champika Ranawaka, Leader of the United Republic Front and former Power and Energy Minister, explained. The PUCSL has recently requested the CEB to submit updated and accurate financial data for the Bulk Supply Transaction Bank Account (BSTBA) to assess its status, which is relevant to potential electricity tariff revisions.
The agency is compelled to expedite analysing the CEB’s new tariff proposal, which is expected to be submitted by May 15 and complete public consultations ahead of the scheduled adjustment fixed for July 1 this year.
This tariff revision, based on the cost-reflective formula agreed upon by the Sri Lanka government, is one of the structural benchmarks essential for the IMF executive board to disburse around US$ 344 million—the fifth tranche of the Extended Fund Facility for Sri Lanka by June, IMF Mission Chief Evan Papageorgiou revealed.
The International Monetary Fund (IMF) has expressed concerns about the CEB’s financial situation and the potential for losses in the coming months due to previous tariff cuts.
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