Sri Lanka’s state-run Ceylon Electricity Board (CEB) has proposed a 6.8% increase in electricity tariffs, citing the need to align with a cost-reflective pricing formula agreed upon with the International Monetary Fund (IMF). This proposal, currently under review by the Public Utilities Commission of Sri Lanka (PUCSL), has sparked debate among stakeholders.
Financial Performance amidst Proposed Hike
Despite the tariff hike proposal, CEB’s recent financial performance raises questions about the necessity of such an increase. In the second quarter of 2025, the CEB reported a net profit of LKR 5.31 billion, a significant improvement from the LKR 34.54 billion profit in the same period the previous year. This turnaround is attributed to a combination of factors, including tariff adjustments and operational efficiencies.
However, the first quarter of 2025 saw a net loss of LKR 16.93 billion, primarily due to reduced revenues and increased costs associated with thermal energy generation. This fluctuation underscores the challenges faced by the CEB in balancing operational costs and revenue eneration.
Cost-Reflective Pricing and IMF Conditions
The IMF has emphasized the importance of implementing cost-reflective electricity pricing to eliminate ad-hoc hikes and shield consumers from inefficiencies. The proposed 6.8% increase is in line with this recommendation, aiming to ensure that electricity tariffs accurately reflect the cost of production and distribution.
Public Consultation and Stakeholder Concerns
The PUCSL has conducted public consultations across various provinces to gather feedback on the proposed tariff revision. Approximately 500 individuals participated in these sessions, expressing concerns about the potential impact of the tariff increase on consumers, particularly those in lower-income brackets.
Conclusion
While the IMF’s push for cost-reflective pricing aims to promote transparency and financial sustainability, the CEB’s recent profitability raises questions about the immediate need for a tariff hike. Stakeholders urge a comprehensive evaluation of the CEB’s financial health and operational efficiencies before implementing further increases in electricity tariffs. The PUCSL’s upcoming decision will be crucial in balancing the objectives of financial sustainability and consumer protection.
