By: Staff Writer
November 04, Colombo (LNW): Sri Lanka’s State-Owned Enterprises (SOEs) recorded a sharp downturn in overall profitability during the first half of 2025, with total profits falling to Rs. 227.8 billion, down from Rs. 280.7 billion in the same period last year, according to the Finance Ministry’s Mid-Year Fiscal Position Report released on October 31.
The slump was primarily driven by the Ceylon Electricity Board (CEB), which reversed from a historic profit to a net loss following tariff reductions earlier this year. The CEB’s revenue from electricity sales plunged nearly 39% to Rs. 192.6 billion, despite higher demand, while the average revenue per kilowatt-hour fell from Rs. 41.97 to Rs. 24.64. As a result, the utility posted a net loss of Rs. 13.2 billion, compared to a profit of Rs. 119.2 billion in 2024.
Although favourable weather helped lower thermal generation costs by nearly 9%, the reduced tariff structure and delayed cost-reflective pricing eroded margins. The Government has since implemented structural reforms through the Sri Lanka Electricity (Amendment) Act, No. 14 of 2025, establishing four new SOEs for generation, transmission, distribution, and system operation in a bid to restore efficiency and transparency.
The CEB’s reversal overshadowed robust performances by other major SOEs particularly the three State banks, which collectively posted strong growth in profitability. Bank of Ceylon’s pre-tax profit surged to Rs. 61.1 billion, from Rs. 22.4 billion a year earlier, supported by a 78% rise in net interest income.
People’s Bank reported its highest-ever half-year profit before tax at Rs. 28 billion, while the National Savings Bank saw a 55% profit increase to Rs. 31 billion, reflecting lower impairment costs and stronger balance sheets.
Meanwhile, the Ceylon Petroleum Corporation (CPC) reported a 17.9% decline in profits to Rs. 17 billion, driven by reduced global oil prices and a stronger rupee. The CPC also made partial repayments under its “tea-for-oil” barter deal with Iran, lowering dues to the National Iranian Oil Company from $191 million to $131 million.
Other utilities fared better. The National Water Supply and Drainage Board posted a net profit of Rs. 17.7 billion, up 28%, aided by lower electricity costs and expanded coverage, while the Sri Lanka Ports Authority achieved a Rs. 29.2 billion pre-tax profit as container throughput and revenue climbed sharply. Airport and Aviation Services Ltd. recorded a 31% increase in revenue, though foreign exchange losses reduced overall profits.
However, SriLankan Airlines continued to weigh on the public sector balance sheet, reporting a Rs. 10.7 billion loss despite higher passenger volumes. The airline’s accumulated losses exceeded Rs. 628 billion, with negative equity of Rs. 415 billion prompting a new five-year restructuring plan focused on cost-cutting and fleet rationalisation.
The Finance Ministry cautioned that while the SOE sector remains marginally profitable, its fiscal contribution declined to Rs. 11.7 billion, from Rs. 14.9 billion last year. To address mounting financial and governance issues, the Government is advancing a Public Commercial Enterprises Management Bill, which aims to professionalise management, improve accountability, and align SOEs with commercial discipline.
With 2025 shaping into a critical reform year, the performance of Sri Lanka’s State enterprises will test the Government’s commitment to fiscal prudence and structural transformation amid fragile public finances.
