Wednesday, March 29, 2023

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ADB WB, USAID and JICA support CEB restructure setting up 4 companies

The Asian Development Bank (ADB), World Bank (WB), USAID and JICA have assured their assistance for the restructuring process of the Ceylon Electricity Board (CEB), Power and Energy Minister Kanchana Wijesekara said.

The Minister tweeted that “Progress on the restructuring of CEB was discussed yesterday and these four international agencies have communicated on the assistance they can offer.

Roadmap and timeline will be submitted to the Cabinet. Reforms that can be implemented before the final Act, will be initiated next week”.

Sri Lanka’s Ministry of Power & Energy has held talks on the progress of restructuring the state-run Ceylon Electricity Board (CEB) with a number of multilateral and other development agencies communicating on the assistance they can offer.

Successive governments had tried to introduce power sector reforms following recommendations of international agencies the World Bank (WB), ADB and JICA after conducting comprehensive feasibility studies spending millions of dollars from time to time during the past two decades.

As a last ditch attempt , Energy Ministry has been directed by President Ranil Wickremasinghe to expedite the restructuring process of unbundling the CEB by setting up of state owned companies jointly with the private sector management to take over the generation, transmission, distribution and other functions.

There will be one joint venture each for generation and transmission and three or more for distribution, according to the CEB cabinet memorandum.

It has also been proposed to form separate power generation joint venture companies to undertake functions of the CEB relating to hydro electricity, thermal electricity, coal power and non renewable power generation, distribution, and other activities as well as Lanka Electricity Company (LECO).

These companies will serve as independent power producers (IPP) and will have to sell the energy they generate to the transmission company, along with other IPPs.

On Friday, the Ministry of Power & Energy entered collective agreements with trade unions of the two state-owned enterprises (SOEs) for a 25-percent salary increment every three years minus annual bonuses, allowances and other benefits.

Minister Wijesekara said that the bonuses, allowances and other benefits will not be continued or renewed.

The government will be implementing power sector reforms to restructure Ceylon Electricity Board (CEB) to make it a profitable entity serving the people.

In the first eight months of 2022, the CEB has suffered a loss of Rs 108.6 billion rupees, and It anticipates a loss of RS.108 billion rupees in the fourth quarter despite electricity tariff reforms that were implemented in August, Minister Wijesekera said

Explaining the reasons for the long-running losses of the CEB, the minister noted that a delay in imposing cost-reflective pricing was the main reason for the utility provider to make losses.

He disclosed the CEB achieved an additional income of Rs.15 billion following tariff revisions in August this year.

The CEB with a staff of 23 000 members consisting of over 1400 professionals has become a liability to the government due to its massive losses since 2016 as it has been selling electricity to its consumers below cost price which is around Rs 20 per unit.

CEB has massive hidden costs due to its inefficiencies in supply and administration, including over compensation and overstaffing, which are covered through subsidies by large-scale industrial and commercial clients and government guarantees.

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