By: Staff Writer
September 04, Colombo (LNW): The Ceylon Electricity Board (CEB) has posted a profit of Rs. 5.31 billion for the quarter ending June 30, 2025, bouncing back from a staggering Rs. 18.47 billion loss in the first quarter. While the turnaround signals some financial breathing space, industry experts warn that the profit masks deeper structural issues—chief among them the politically sensitive matter of electricity tariff revisions.
The profit recovery stems directly from the June 2025 tariff adjustment, which partially rolled back the 20% tariff cut introduced in January 2025. That politically popular move, implemented soon after the government assumed office, was widely criticized for being fiscally irresponsible. It left the CEB bleeding cash in the first quarter, forcing a rapid correction under pressure from both the Treasury and the International Monetary Fund (IMF).
Despite the recent profit, the latest figures still reflect an 85% drop compared to the Rs. 34.53 billion profit the utility posted during the same quarter in 2024. “This is a warning sign,” said an energy sector analyst, requesting anonymity. “The CEB’s profitability is not sustainable without a predictable, cost-reflective tariff mechanism. Otherwise, we will continue to see swings between massive losses and temporary profits.”
The IMF has repeatedly stressed that cost-reflective pricing where tariffs reflect the actual cost of generation, transmission, and distribution is a non-negotiable benchmark for Sri Lanka to unlock future disbursements under the Extended Fund Facility (EFF). In practice, this means electricity bills will inevitably rise when fuel prices and generation costs climb, while reductions are rare and politically fraught.
Currently, the Public Utilities Commission of Sri Lanka (PUCSL) follows a formula that takes into account fuel costs, hydropower availability, exchange rate fluctuations, and overall demand. Tariff adjustments are expected biannually in January and July but political intervention often delays or distorts the process.
With the next scheduled revision due in January 2026, speculation is rife on whether the government will allow a full pass-through of rising costs. Industry insiders note that global oil prices have been edging upward in recent months, while drought conditions are reducing hydropower output, factors that could push CEB’s costs higher.
“Tariff revisions are inevitable, but the key question is whether they will be timely and transparent,” said a former PUCSL official. “Delays not only undermine the utility’s financial stability but also risk derailing Sri Lanka’s IMF program.”
As households and businesses brace for the next round of revisions, the balancing act between public affordability, political expediency, and fiscal discipline is once again under scrutiny. The CEB’s second-quarter profit may buy the government some time, but without a depoliticized tariff formula, Sri Lanka risks sliding back into an endless cycle of subsidies, losses, and emergency hikes.
