News
No electricity price reduction until June 2025 inspite of profits earned since the 75% tarrif hike
View(s):- Profits used to settle debts with CPC, power producers and solar sector
- CEB says decision to maintain the prevailing tariff structure due to inherent uncertainties linked to hydropower generation predictions for 2025
By Namini Wijedasa
The Ceylon Electricity Board (CEB) on Friday notified the Public Utilities Commission of Sri Lanka (PUCSL) that it proposes to maintain the prevailing tariff structure for the first six months of 2025.
If the regulator accepts this proposal, there will be no electricity price reduction – or increase – till June next year. The CEB attributed its decision to “inherent uncertainties associated with hydroelectric generation predictions for the year 2025”.
Asked what the utility had done with the massive profits it earned since the 75 percent tariff hike in August 2022, Pubudu Niroshan, Director General of the Power Sector Reforms Secretariat, said that Rs 112bn from the profits was spent by August this year to settle debt accrued with the Ceylon Petroleum Corporation (CPC), independent power producers (IPP) and the solar power sector, as well as loans.
“Only Rs 41bn is left as the revenue difference in 2024 and it’s given to the consumers in this tariff revision,” he said. Mr Niroshan is also a member of the consultative committee of the Ministry of Energy. “There is another Rs 332bn to be settled or restructured.”
A restructuring plan for CEB debt is now with the ministry, he added, but provided no further details of what percentage of debt it would apply to. For the segment of debt that will not be restructured, “we will follow a settlement plan with the minimum burden to the electricity consumers and to bills,” he said.
Energy sector sources said, however, that it was not correct that the CEB used its profits to settle its dues to the CPC. “The government wrote off the CPC’s debts,” said Vidhura Ralapanawe, energy analyst.
Published data show that the CEB had indeed received a total equity investment of Rs 206.2bn for CPC fuel payments from the government by the fourth quarter of 2023. The CEB payables sheet as at June this year reveals that it owed the CPC a mere Rs 1bn.
The CEB’s latest tariff revision proposal applies to 2025. But the utility first “messed up” by sending an incomplete document to the PUCSL for approval in October, then asking for two more extensions before submitting its final one on Friday – to suggest there will be no revision.
The CEB contends that approximately 1 billion additional electricity units are required in 2025 when compared with demand in 2024. However, there has been no construction on new low-cost, large power plants in the last five years, Mr Niroshan said. This means additional units will have to be generated from “high-cost sources” – typically oil-based thermal energy.
“Estimated electricity requirement, therefore, is 17.5 billion units in 2025,” he said, adding that hydro and coal capacities have reached capacity. “The balance five to 5.5 bn units must come from a mix of renewable energy and oil. Considering available and ongoing renewable energy development – from which we can expect less than 2.5 billion units – approximately 3 billion units will have to be sourced from oil.”
Seventy-five percent of the electricity bill is generation cost, Mr Niroshan said: “The answer to why we can’t reduce tariffs is that we have to face the truth of not having new or ongoing low-cost power plants. The solution is to start or speed up competitive renewable energy additions, both wind and solar, and use LNG as a transition fuel.”
The government will float a 100mw wind power tender to be sited at Silawathura (Silavathurai) in Mannar, he also said. As for the proposed Adani wind project, there is no power purchase agreement yet, and no ongoing negotiations to arrive at one. “It will be a government decision, not at the institutional level,” he maintained.
He revealed that internally the CEB had asked, not for an electricity price reduction, but a hike of 37 percent. This was averted. Separately, he said that to increase transparency, energy transactions, procurement, resource sharing/allocations (land, routes) will be on a digital platform by the first quarter of next year.
The best way to say that you found the home of your dreams is by finding it on Hitad.lk. We have listings for apartments for sale or rent in Sri Lanka, no matter what locale you're looking for! Whether you live in Colombo, Galle, Kandy, Matara, Jaffna and more - we've got them all!