Tuesday, June 25, 2024

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CEB loss for 2023 estimated at Rs. 33 billion even after two tariff hikes 

By: Staff Writer

Colombo (LNW): The Ceylon Electricity Board (CEB), which is being restructured to be more cost-effective, is to incur around Rs. 33 billion in losses this year even after the introduction of the two new tariff revisions.

Apart from this, the outstanding amount due to be paid for the generation of renewable energy currently stands at a total of Rs. 29.7 billion.

In a letter to the Public Utilities Commission of Sri Lanka (PUCSL), the CEB has requested approval for a price revision for the third time saying failure to do so will force the CEB to face serious losses.

The letter, which was made public by the PUCSL, also notes that the CEB will not be able to settle its arrears for renewable power generation and to its debtors.

The total tariff reduction cost as proposed by the CEB for the next six months was around Rs. 10 billion, but the new tariff reduction will have to minimize losses. 

The Public Utilities Commission of Sri Lanka (PUCSL) has rejected a recent request made by the Ceylon Electricity Board (CEB), seeking another revision of electricity tariffs, in a bid to cover their losses.

The new tariff set by the PUCSL deviates from the cost reflective nature of the End User Tariff. Electricity demand fell by 22 percent to 4,516 Gwh during the first four months of the year 2023 from 4,935 Gwh in the corresponding period of the year 2022.

Nonetheless, the revenue generated from electricity sales for the respective period was more than doubled primarily due to the second upward price revision that took place with effect from February 15, 2023, with an average increase of 66 percent reflecting cost recovery adjustments, Finance Ministry report revealed.

Accordingly, the revenue generated from electricity sales was recorded as Rs.180,117 million for the first four months period of the year 2023.

In the future, CEB will implement a regular, bi-annual end-user tariff modification based on a forward-looking cost recovery basis in order to make CEB financially viable and minimize the budgetary burden on the government.

However, as a result of higher fuel and coal prices in the rupee terms, the direct generation cost was increased by 55 percent to Rs. 177,468 million in the first four months of 2023 compared to Rs. 114,460million in the same period in 2022.

Further,due to the increase in interest rates on thebank borrowings for the working capital requirements, the finance cost has increasedto Rs. 23,264 million in the first four monthsof 2023 compared to Rs. 5,876 million in the same period of 2022.

Even though the electricity tariff was increased, CEB incurred an operating loss of Rs. 29,797 million in the first four months of 2023 due to the delayed tariff increase being inadequate to fully compensate for the significant increase in generation cost.

Further, the cost per unit at the selling point also has considerably increased to Rs. 47.44 per KWh during the first four months of 2023 against Rs. 26.95 per KWh in 2022.

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