By: Staff Writer
September 29, Colombo (LNW): The Committee on Public Enterprises (CoPE) recently disclosed that the Ceylon Electricity Board (CEB) recorded a jaw-dropping cumulative loss of Rs. 594.36 billion between 2014 and 2022 (excluding 2015), attributing much of the damage to internal inefficiencies and poor governance.
The revelations, made during a CoPE session chaired by MP Dr. Nishantha Samaraweera, have triggered renewed calls for deep structural reform and brought into sharp focus the proposed shift toward a cost-reflective tariff formula.
During the same hearing, the Auditor General’s performance review for 2022–2023 and related years laid bare other malpractices: irregularities in shareholding arrangements of LTL, West Coast, and ESOT entities; a failure to deliver six vehicles worth Rs. 124 million for the Puttalam Coal Project; unauthorized provident fund loans exceeding Rs. 6.6 billion; and Rs. 507 million in allowances disbursed without Cabinet approval.
Of particular note: CEB lacked a permanent internal auditor for nearly a year before corrective action. CoPE has summoned LTL to appear before the committee next month.
While CoPE’s critique centers on past mistakes, the debate now extends to present-day policy: can CEB justify increasing tariffs under a cost-reflective model, given its more recent financial performance?
According to Central Bank of Sri Lanka data, despite steep tariff cuts and market headwinds, CEB reported a net profit of Rs. 148.6 billion in 2024, up 142.8 percent year-on-year.
The 2024 result was aided by foreign exchange gains of Rs. 11.7 billion and a capital gain of Rs. 26 billion from the sale of shares in LTL Holdings.
However, the grace did not last. In Q1 2025, after regulators implemented a 20 percent tariff cut in January, CEB’s revenue tumbled 44 percent (from Rs. 167 billion to Rs. 93.9 billion), and it posted a gross loss of Rs. 18.2 billion.
The cost of sales actually increased year-on-year, compounding the damage. In the following quarter (Q2 2025), CEB engineered a turnaround with a profit of Rs. 5.31 billion (group level profit Rs. 7.4 billion), largely by reinstating tariff adjustments mid-year and containing costs. +2
Yet, over the first half of 2025, CEB still faced a cumulative loss of Rs. 13.1 billion. These volatile swings in profitability highlight the precarious balancing act CEB must perform. On one hand, the legacy losses unearthed by CoPE suggest that unsustainable cross-subsidies and operational weaknesses plagued the utility. On the other, recent figures show that tariff cuts can swiftly reverse gains and plunge CEB back into red territory.
Proponents of a cost-reflective tariff formula argue that the utility must be priced to cover its production, transmission, and financing costs to avoid perpetuating state-sponsored losses. In Sri Lanka’s context, such a move is also seen as a structural necessity under the IMF-backed reform agenda to stabilize the power sector and limit contingent liabilities.
Critics, however, warn that frequent tariff hikes if not matched with efficiency improvements risk rubbing salt into consumers’ wounds in a country already under economic stress. Tariffs that oscillate with fluctuations in fuel costs or foreign exchange rates may prove politically unsustainable unless accompanied by stricter governance, prudent capital investment, and tougher accountability at all levels of the CEB.
As CoPE prepares to grill LTL and revisit CEB’s internal control failures, the public eye remains fixed on the tariff debate. Sri Lanka may soon confront a test: can the power sector be made self-sustaining and fair after decades of losses, mismanagement, and political interference?
