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Rs 11.5bn CEB ‘golden handshake’ to be funded with tariff increase
View(s):By Kapila Bandara
A multibillion rupee ‘golden handshake’ for state workers choosing voluntary early exit will be funded by raising electricity tariffs from January to March, the Ceylon Electricity Board has proposed.
The generous payout for 2,158 employees is estimated at Rs 11.554 billion.
It is offered as a part of the CEB shakeup into four different business units.
This is among other proposals and factors such as costs, expenditure, and revenue in particular, supporting CEB’s position to raise electricity charges.
CEB said in filings to the regulator, Public Utilities Commission of Sri Lanka, seeking an increase in tariffs in the first three months that “the compensation payments are to be funded through the first tariff revision of 2026, subject to the appointed date falling within the first quarter of the year’’. The total package “has been converted to a 5-year loan’’ and that instalments to March is Rs 874.23 million. The borrowing details were not disclosed.
CEB proposes to increase tariffs by an overall 11.57% to bridge an estimated Rs 13.094b financial deficit from January to March. Revenue for the quarter based on existing tariffs is estimated at Rs 113.161b.
For a domestic user, the 6.30 p.m. to 10.30 p.m. peak period charge will rise from Rs 67 to Rs 78.82, an increase of more than 17.6%. The fixed charge rises from Rs 1,200 to Rs 2,470.34.
The proposed electricity charges were presented on a directive in October by the regulator, which reminded the CEB to review tariffs every quarter.
CEB proposes that the Rs 20b cost of the cyclone damage to assets will have a bearing on tariffs as well. A cost of Rs 7.016b will be attributed to the first quarter.
External concessionary financing is being explored to fund rehabilitation costs, which are not included in the tariff submission, CEB says. But, the costs will have to be recovered from tariffs in the second quarter if funding is not secured, CEB reckons.
Infrastructure rebuilding costs are bound to increase, experience shows.
The proposal follows unprecedented economic devastation from cyclone Ditwah on November 27, in which the utility’s assets including transformers, and transmission and distribution lines were wrecked.
Tariff revisions followed a three-month cycle from October 2023 versus every six months previously. A year ago in January 2025, the regulator reduced tariffs by 20.08% unilaterally. Then on 12 June, tariffs were raised by 15%.
Filings by the General Manager K S I Kumara dated 24 December, cites finance costs of Rs 7.638b up to March. This does not include the finance costs of borrowing for the voluntary retirement payout.
The finance costs take into account the 8.15% average weighted prime lending rate.
CEB says it is expected to make full payment of US$1.8m (Rs 40m) in February to the contractor of Broadlands hydropower project. The payment has been included in the bulk supply tariff. Bulk supply is relevant to customers including industrial (such as manufacturing and water supply), hotels (approved by the Sri Lanka Tourism Development Authority), and Government (such as schools, hospitals, and universities) where contract demand is 42 kVA.
CEB also says it has to pay by March a loan instalment of Rs 2.725b on borrowings for the Thambapawani wind power plant. The amount “has also been levelized (sic)’’ from January to June for calculating tariffs.
The utility forecasts 4,453 gigawatt hours of net energy generation up to March based on annual demand growth of 3.72% in line with the economic growth forecast.
Reservoir storage is “healthy’’ and provides “a strong foundation’’ for fulfilling forecast energy demand earlier in the year, CEB notes. Despite uncertainties over rain, “hydropower inflows are expected to be near normal’’.
The Rs 11.554b payout to workers was offered to trim the fat. In addition staff also stand to benefit from the Employees Provident Fund, and Employees’ Trust Fund at retirement age. But they will not be recruited to the new state companies — system operator, transmission network service provider, electricity distribution, and electricity generation.
Part VI of the Sri Lanka Electricity Act 2024 (as amended) allows limited companies to be incorporated under the Companies Act, No. 07 of 2007. The voluntary retirement scheme is provided for under Section 18(3)(f) of the Act.
Some staff could be eligible for up to Rs 5m. The minimum is Rs 900,000.
The terms were gazetted 25 August 2025 by Minister of Energy, Kumara Jayakody.
Permanent workers with 10 years service or more will be eligible for two months’ salary for every completed year of service, and 1.5 months’ salary for every year of service they will forgo.
Permanent staff who have worked for less than 10 years will be eligible for five months’ salary for every completed year of service. Those who are not permanent, and excluding workers on contracts, may get two months’ salary for every year of service. They will be eligible for a minimum 12 months’ payout based on daily wage.
Some CEB workers draw salaries that exceed Rs 3.4m a year.
Salaries for some jobs in 2025 are an indicator. An electrical or mechanical engineer recruit with chartered credentials can earn up to Rs 284,670 a month, along with EPF, ETF and other benefits.
Engineers and accountants are expected to be among those signing up for the ‘golden handshake’.
The CEB has yet to wrap up fuel supply agreements and has informed the regulator that it is “actively engaged in the formulation’’ of the agreements and points to “practical challenges’’ over “complex negotiations with the Ceylon Petroleum Corporation on pricing mechanisms and the alignment of legal and contractual frameworks between the parties’’.
For the nine months ended September 2025, the CEB booked a loss of Rs 9.5b on revenue of Rs 311.4b. Net finance cost was Rs 9.5b.
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