December 08, Colombo (LNW): Increased demand and the lack of new, low-cost power generation plants in recent years have largely contributed to the government’s inability to reduce electricity tariffs for the next six months, Director General of the Power Sector Reforms Secretariat Pubudu Niroshan disclosed.
Upon query, Niroshan addressed concerns regarding the country’s energy situation, revealing that the electricity demand for the upcoming year is expected to rise by one billion units.
This surge in demand, combined with the failure to construct affordable power plants over the past five years, has created a situation where the additional units needed will primarily come from high-cost energy sources.
Niroshan elaborated that the estimated electricity requirement for 2025 is forecasted to reach 17.5 billion units. However, Sri Lanka’s hydro and coal power capacities have already been maximised, contributing 12 billion units, leaving a shortfall of 5.5 billion units.
To meet this gap, the country will need to rely on a combination of renewable energy sources and fuel oil.
He highlighted that approximately three billion units of this shortfall will be sourced from fuel oil, which is significantly more expensive than hydro or coal power.
This is one of the main drivers behind the current electricity tariff structure, as two-thirds of the electricity bill consists of generation costs, according to Niroshan.
In response to these challenges, Niroshan emphasised the need for urgent action to diversify the energy mix. He suggested that accelerating the development of competitive renewable energy sources, particularly wind and solar power, should be prioritised.
Additionally, he proposed the use of liquefied natural gas (LNG) as a transitional fuel to reduce dependency on more expensive fuel oil.
On the subject of the Ceylon Electricity Board’s (CEB) financial situation, Niroshan revealed that by the end of August 2024, the CEB had used Rs. 112 billion to cover loan repayments and other payables.
With only Rs. 41 billion remaining to cover the revenue shortfall for the year, the government has been left with no choice but to pass on the burden to consumers through the recent tariff adjustments.
