24 years on, another effort to restructure debt-ridden CEB
Sri Lankan authorities have been struggling for 24 years since 1998 to restructure the debt-laden Ceylon Electricity Board (CEB) and many efforts over the years to push through much-needed reforms have failed due to stiff opposition from workers and other quarters.
Now, another effort is being made and whether it would succeed is anybody’s guess.
The Energy Ministry has been directed by President Ranil Wickremesinghe to expedite the restructuring process of unbundling the CEB by setting up state-owned companies jointly with the private sector management to take over the generation, transmission, distribution and other functions.
There will be one joint venture each for generation and transmission and three or more for distribution, according to the CEB board paper devised recently for the approval of the board of directors before submitting it to the ministry to prepare the cabinet memorandum.
It has also been proposed to form separate power generation joint venture companies to undertake functions of the CEB relating to hydro electricity, thermal electricity, coal power and non renewable power generation, power generation, distribution, and other activities as well as Lanka Electricity Company.
These companies will serve as independent power producers (IPP) and will have to sell the energy they generate to the transmission company, along with other IPPs, the CEB board paper indicated.
A new Electricity Reforms Bill or an amendment to the Electricity Reforms Act No. 28 of 2002 will be drafted and presented in Parliament soon to regularise the restructuring process, a senior official of the Ministry of Energy said.
An 8- member committee headed by former Finance Ministry Secretary Dr. R.H.S. Samaratunge has been appointed to restructure the CEB, Energy Minister Kanchana Wijesekara disclosed this week.
Accordingly, the relevant committee will provide restructuring proposals with the technical support of various development institutions within a month.
After the failed effort in 1998, in 2002 the Electricity Reforms Bill was presented in Parliament and passed amidst protests of CEB workers. But the necessary order to give effect to the Act was not gazetted by the then Minister following intense pressure of workers and opposition political parties.
Successive governments had tried to introduce power sector reforms following recommendations of international agencies the World Bank, ADB and JICA after conducting comprehensive feasibility studies spending millions of dollars from time to time during the past two decades.
The CEB with a staff of 23,000 consisting of over 1400 professionals has become a liability to the government due to its massive losses since 2016 as it has been selling electricity to its consumers below cost price which is around Rs.20 per unit.
The CEB has massive hidden costs due to its inefficiencies in supply and administration, including over compensation and overstaffing, which are covered through subsidies by large-scale industrial and commercial clients and government guarantees, Ministry sources said.
Owing to the significant increase in the generation cost, CEB has incurred a large operating loss of Rs. 47.19 billion in the first four months of 2022 compared to the loss of Rs. 7.15 billion in the same period of 2021.
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