CEB reforms set aside – for the moment

Power sector to be regulated

By Bandula Sirimanna

The government has set aside controversial changes to the Ceylon Electricity Board (CEB) – in the wake of criticism from trade unions, the JVP and a Supreme Court decision – but the state body will be subject to regulation by the Public Utilities Commission (PUC). Officials said there are currently no plans to privatise the country’s power services including the CEB following years of protests but a licensing regime will come into force that is compulsory for all power providers.

Also, under the new regulatory regime of the PUC relating to the power sector, consumers can seek help from the PUC and not rely only on the CEB to seek redress on outstanding issues like disputed electricity bills, delayed connections and delays in repairs.
The new regulator will operate like the Telecommunications Regulatory Commission and its relationship with consumers and telecom companies.

The power sector regulatory reforms will be introduced to ensure an appropriate balance between the interest of the producers and those of the consumers, Director General of the Public Utilities Commission Prof. Priyantha Wijeyatunge told The Sunday Times FT.

He said the government will establish a transparent regulatory framework and enact the enabling legislation under the PUC. The regulatory framework will provide a sound basis for the establishment of power sector economic, financial, environmental and service policies. Wijeyatunga said regulation of the sector operations is important in view of the inherent natural monopolistic nature of transmission and distribution and also because of the critical role electricity plays in all economic activities.

The new reforms will come in the form of a bill to be introduced. Wijeyatunge noted that the PUC as the power sector regulator will be vested with the responsibility in formulating guidelines on electricity tariff, issuing of licences to new providers among other consumer-related issues. Currently the CEB and Lanka Electricity Co (LECO) operations come under the Minister of Power and Energy who is also the regulator of the power sector. Officials said donor agencies including the ADB had responded positively to the government’s decision to go ahead with power sector regulatory reforms as against unbundling of the CEB.

Head of the CEB Power Reforms Programme Nihal Wickremasooriya told The Sunday Times FT that the aim of the government is to better manage the power utility and reduce inefficiencies in power delivery. He said the earlier structural reforms of the power sector such as the unbundling of the CEB into several sections won’t happen under this new initiative. The PUC role while introducing competition and commercialization and encouraging private sector participation will also help address the drain on national resources arising from the financial deterioration of the state owned utility. The CEB services 2.69 million customers and is responsible for more than 90 percent of the country’s power generation, all of the transmission, and 85 percent of the distribution.

Power sector trade unions have vehemently opposed the implementation of the earlier restructing of the CEB but are in favour for the new initiative, ministry sources said. Last year the Supreme Court ruled that several clauses in the electricity reforms bill were unconstitutional resulting in the government deciding instead to set up a regulator to regulator the power sector. The Court had ruled that the formation of six companies dividing the CEB would violate the constitution and said a 2/3rds majority was needed to pass the bill in its present form.