CEB restructuring process begins soon amidst decline in electricity demand
The Sri Lankan Government intends to restructure the Ceylon Electricity Board (CEB) by September 2023, instead of running all the related entities under one institution and will unbundle all related institutions separately, Minister of Power and Energy Kanchana Wijesekera disclosed.
“Under the CEB restructuring process, the management structure of the CEB will be undergoing reforms and this would also enable renewable energy generation to be promoted in the country with the support of government and private and public partnerships,” he said.
At a time of CEB ‘s transformation towards a modern management structure, electricity demand fell by 22 per cent to 4,516 Gwh during the first four months of 2023 from 4,935 Gwh in the corresponding period of 2022, Finance Ministry statistics disclosed.
According to the Public Utilities Commission, the number of households who have refrained from using electricity and therefore have a zero meter reading after the increase in electricity tariffs has increased from 350,000 households to over 500,000 households.
Even though the electricity tariff was increased, CEB incurred an operating loss of Rs. 29.79 billion in the first four months of 2023 due to the delayed tariff increase being inadequate to fully compensate for the significant increase in generation cost, a senior CEB official told the Business Times.
Nonetheless, the revenue generated from electricity sales for the respective period more than doubled primarily due to the second upward price revision that took place with effect from February 15, 2023, with an average increase of 66 per cent reflecting cost recovery adjustments.
Accordingly, the revenue generated from electricity sales was recorded as Rs.180.12 billion for the first four months period of the year 2023.
In the future, CEB will implement a regular, bi-annual end-user tariff modification based on a forward-looking cost recovery basis in order to make CEB financially viable and minimise the budgetary burden on the government, CEB sources confirmed.
However, as a result of higher fuel and coal prices in rupee terms, the direct generation cost was increased by 55 per cent to Rs. 177,468 million in the first four months of 2023 compared to Rs. 114,460 million during the same period in 2022.
Further, due to the increase in interest rates on the bank borrowings for the working capital requirements, the finance cost has increased to Rs. 23,264 million in the first four months of 2023 compared to Rs. 5,876 million during the same period of 2022.
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