By: Staff Writer
December 14, Colombo (LNW): Sri Lanka’s power sector has once again come under strain, with the Ceylon Electricity Board’s (CEB) latest financial results revealing a sharp deterioration that is reigniting concerns over electricity tariffs, IMF benchmarks, and the burden placed on consumers.
Interim accounts for the nine months ended September 2025 show the CEB sliding into a Rs. 9 billion loss, a dramatic reversal from the Rs. 152 billion profit recorded in the same period last year. The September quarter alone saw profit after tax collapse by 98% year-on-year to just Rs. 466 million, underscoring how rapidly margins have eroded.
Revenue for the nine-month period fell by 30% to Rs. 321.7 billion, largely due to tariff reductions, while costs remained stubbornly high. Cost of sales edged up to Rs. 322.9 billion, pushing the utility into a gross loss. Administrative expenses climbed 20%, further squeezing operating performance despite lower finance costs.
Quarterly data shows a steady decline throughout 2025. A Rs. 16.9 billion loss in the March quarter, followed by sharply weakened profits in June, culminated in near-breakeven results by September. While hydropower conditions helped moderate generation costs, they were insufficient to offset the revenue shock caused by aggressive tariff cuts.
Two revisions in 2025 a 20% reduction in January and a 15% increase in June — have left the tariff framework under scrutiny. According to the Finance Ministry, average revenue per unit sold dropped to Rs. 24.64 per kWh, compared to nearly Rs. 42 a year earlier, even as electricity demand rose modestly. This gap has turned the CEB into the largest loss-making state-owned enterprise in the first half of the year.
These developments carry direct implications for Sri Lanka’s IMF Extended Fund Facility. The IMF has repeatedly stressed that cost-recovery tariffs and energy-sector reforms are critical to preventing a return to taxpayer-funded losses. Mission Chief Evan Papageorgiou has warned that predictable tariff-setting is essential for long-term price stability and fiscal discipline, with tariff methodology revisions set as a key benchmark.
However, energy analysts argue that the headline losses mask deeper structural issues. Analyst Dr. Vidhura Ralapanawe points to inconsistencies in tariff filings, delayed clawback adjustments, and accounting mismatches particularly around the Bulk Supply Transaction Account that have distorted both profits in 2024 and losses in 2025. Political intervention in tariff decisions, he says, has further weakened transparency and investor confidence.
For consumers, the dilemma is stark. While lower tariffs offered short-term relief amid a cost-of-living crisis, the CEB’s renewed financial stress raises the risk of future sharp hikes, undermining the very predictability the IMF framework seeks to ensure. With retained losses exceeding Rs. 361 billion and restructuring underway under the Electricity Amendment Act, the utility’s outlook remains fragile.
Unless governance, data accuracy, and tariff discipline improve alongside unbundling reforms, Sri Lanka risks repeating a cycle where temporary consumer relief today translates into deeper financial and tariff shocks tomorrow.
