By: Staff Writer
January 06, Colombo (LNW): Sri Lanka’s proposed electricity tariff increase of around 11 percent for the first quarter of 2026 marks a significant moment in the country’s ongoing energy sector transformation, as the government attempts to balance financial stability, institutional reform, and long-term renewable ambitions.
The tariff revision, submitted by the Ceylon Electricity Board (CEB) to the Public Utilities Commission of Sri Lanka (PUCSL), is intended to cover electricity consumption from January to March 2026. If approved, the increase would apply across all customer categories, including domestic, industrial, commercial, and religious users. According to the CEB, the adjustment is necessary to offset an estimated Rs. 13.1 billion financial shortfall during the quarter.
A major contributor to this deficit is the cost of restructuring the state-owned utility. As part of the CEB’s ongoing carve-out process, the government has proposed a voluntary retirement scheme for 2,158 employees, funded through tariff revenue. The scheme, valued at Rs. 11.55 billion, offers payments ranging from Rs. 900,000 to as much as Rs. 5 million per employee. The cost has been converted into a five-year loan, with instalments beginning in early 2026.
Beyond workforce restructuring, the tariff proposal reflects broader financial pressures faced by the utility, including deferred payments to suppliers, rising interest costs, and damage caused by Cyclone Ditwah, which reportedly resulted in losses of nearly Rs. 20 billion to the electricity network.
Importantly, the timing of the tariff increase coincides with a pivotal phase in Sri Lanka’s renewable energy agenda. The year 2026 marks the final implementation stage of the Renewable Energy Resource Development Plan 2021–2026, which prioritises large-scale wind and solar projects and the development of renewable energy parks. To maintain momentum, the government has also unveiled a Green Energy Acceleration Plan for 2025–2030, aimed at fast-tracking clean energy investments and reducing reliance on imported fossil fuels.
Sri Lanka’s strategy extends beyond renewable electricity generation. The country is positioning itself as a regional hub for green hydrogen and green ammonia, supported by a National Renewable Hydrogen Policy launched in late 2025. The 2026 Budget further underscores this shift, announcing projects to produce green hydrogen using surplus renewable power during off-peak hours. Green ammonia, in particular, has been identified as a promising export fuel for the global shipping industry, leveraging Sri Lanka’s location along major maritime routes.
While the tariff hike remains subject to regulatory review and public consultation, it reflects the government’s attempt to reconcile short-term financial realities with long-term energy independence and sustainable economic growth.
