News
Delay in Electricity Act operationalisation setback to long-overdue reform to sector
View(s):The deadline for the operationalisation of the Sri Lanka Electricity Act 26 of 2024 lapsed on Friday with none of the preconditions for its coming into effect having been met to date. The delay is a setback to the long-overdue process to reform and restructure the sector in order to offer the public better efficiency, competitiveness and cost-reduction in electricity supply.
The law was enacted on June 27, 2024, and states that it “shall come into operation immediately upon the expiry of twelve months from the date on which the Bill becomes an Act of Parliament”.
However, there is a proviso that the minister shall first be satisfied that the “Preliminary Transfer Plan, the National Electricity Policy, including the National Tariff Policy, the Annual Power Procurement Plan and the Long Term Power System Development Plan have been prepared, approved and are in place in accordance with the provisions of this Act”.
None of these conditions have been met.
For instance, the policies have to be formulated by the National Electricity Advisory Council (NEAC). This body was appointed last year but its members resigned with the change in government and have not been reappointed.
The Ceylon Electricity Board has also long since failed to inform employees — within a separate legally mandated deadline — which companies they would be assigned to when the utility is “unbundled” in terms of the new Act.
The Act says that all CEB employees should be given this information by the management within four months of the date of enactment of the Sri Lanka Electricity Act No. 24 of 2024. This deadline passed on October 27 last year. The companies haven’t been formed.
Meanwhile, the Power and Energy Ministry is scheduled to meet with development finance institutions (DFIs) — the World Bank, Asian Development Bank and Japan International Cooperation Agency — on Thursday to discuss concerns they expressed on four amendments proposed by the government to the Sri Lanka Electricity Act of last year.
It has been reported that these provisions were not in the version of the draft Electricity Act 2024 Amendments officially shared with the DFIs. The agencies believe that changes they expressed concern over “impede the original intent and spirit of the Act regarding sector efficiency, good governance, and financial sustainability, all with the ultimate objective of ensuring a high quality of service to consumers at affordable prices”.
Among the highlighted concerns is the proposal for the government, through the Treasury Secretary, to hold permanent, 100 percent ownership of several entities to be set up under the Act and the plan for the proposed distribution company to take over Lanka Electricity Company (LECO) which has been operating effectively as an independent entity.
“These changes could undermine the overarching objectives of the Electricity Act and the commitments made by the Government under the Asian Development Bank’s Policy-based Loan and the World Bank’s Development Policy Operation,” the DFIs warn. “It will also weaken the attractiveness of Sri Lanka for investors, contrary to the Government’s intentions.”
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