By: Staff Writer
March 03, Colombo (LNW): Sri Lanka’s Ceylon Electricity Board (CEB) is at a pivotal stage in its unbundling into six fully state-owned successor entities, with implementation delays, labor opposition, and regulatory hurdles pushing back the “appointed date” crucial for formal asset transfer.
The unbundling, envisioned under legislation passed in 2024–2025 as part of the IMF Extended Fund Facility (EFF) structural benchmarks, aims to divide the CEB into six companies: Electricity Generation Ltd (EGL), National Transmission and Network Service Provider (NTNSP), National System Operator (NSO), Electricity Distribution Ltd (EDL), CEB Energy Fund (CEBEF), and Electricity Ventures Ltd (EVL). While originally targeted for 2025, the appointed date was rescheduled for January 1, 2026, then February 1, 2026. As of late February, gazetting of the final date remained pending due to documentation delays.
The restructuring is closely tied to the Voluntary Retirement Scheme (VRS), with more than 2,150 employees opting for early exit. The Rs. 8,831 million cost of the VRS remains unfunded due to PUCSL’s refusal to pass it on to consumers. This funding gap risks delaying the creation of new entities and smooth transfer of assets.
Financial fragility remains a pressing concern. The CEB recorded losses exceeding Rs. 361 billion following a 2025 tariff reduction. Q1 2026 tariff proposals were rejected for technical errors, prompting a 13.56% Q2 hike request to cover operational and VRS costs. Meanwhile, under an IMF-approved plan, Rs. 71,830 million in legacy debt is to be recovered over 15 years through tariffs, offering a potential mechanism for VRS funding if Treasury intervention is approved.
Labor tensions compound the challenge. Twenty-four unions, including engineers, have threatened strikes, citing non-transparent unbundling processes and inadequate benefits. Business groups also raise concerns that the new electricity policy may insufficiently support renewable energy integration, risking investor confidence.
The Ministry of Energy has emphasized that finalizing the appointed date, transferring assets and liabilities, and stabilizing tariffs are critical to avoid disruptions in national electricity supply. Analysts warn that failure to complete these steps could erode public trust, destabilize the sector, and imperil compliance with IMF structural benchmarks.
As of early 2026, Sri Lanka’s electricity reform remains at a crossroads: balancing labor, regulatory, and financial pressures while seeking to implement a legally and operationally sustainable unbundling of the CEB.
