By: Staff Writer
June 15, Colombo (LNW): The International Monetary Fund (IMF) has expressed concern over Sri Lanka’s electricity tariff structure, highlighting it as a critical component in the country’s ongoing economic reform program. As part of the prerequisites for its $344 million funding tranche, the IMF is urging the government to adopt cost-reflective electricity pricing to support fiscal stability and facilitate debt restructuring.
According to IMF Communications Director Julie Kozack, the organization is currently assessing two key actions taken by the Public Utilities Commission of Sri Lanka (PUCSL): a 15% electricity tariff increase and the publication of revised bulk supply transaction account guidelines. These moves are among the structural benchmarks required for the IMF’s next disbursement.
At the heart of the issue is the Ceylon Electricity Board’s (CEB) deteriorating financial position. Official filings reveal a looming revenue shortfall of Rs 42.2 billion in early 2025. Despite a 15% tariff hike already approved for June 2024, internal projections show this measure is insufficient to bridge the deficit, prompting the CEB to request an additional 18.3% increase in tariffs for 2025.
Data shows that for the June–December 2024 period, CEB’s total approved cost stands at Rs 279.2 billion, while revenue under the current tariff regime is estimated at just Rs 234.4 billion. Even after accounting for Rs 11.9 billion in excess revenue from bulk supply transactions, the deficit remains at Rs 32.9 billion. The gap is expected to widen further in the first quarter of 2025, with an additional Rs 8.3 billion shortfall.
A major controversy surrounds the CEB’s handling of a Rs 38 billion clawback aimed at offsetting its excessive profits in the first half of 2024 — later revised to Rs 41 billion by PUCSL. In its latest filing, the CEB is attempting to recoup Rs 18.5 billion of this clawback by charging consumers again, effectively reversing the earlier adjustment. Simultaneously, the utility is proposing another Rs 11.8 billion clawback for the second half of 2025, creating confusion over the logic of its pricing mechanisms.
When the reversed clawback is excluded — as it contradicts tariff guidelines — the projected revenue deficit drops from Rs 42.2 billion to Rs 23.7 billion, indicating that only a 10% tariff hike would be justifiable under current cost assumptions.
Energy sector officials argue that the current tariffs are inadequate to cover rising costs in power generation, transmission, and distribution. Core cost drivers include Rs 201.6 billion for energy and capacity, Rs 63.5 billion for transmission and distribution, and Rs 14.1 billion in finance charges. These are being compounded by escalating global energy prices and loan servicing obligations.
While another tariff increase could stabilize the CEB’s finances, it is likely to trigger backlash from industrial users and households already grappling with inflation and high input costs. Experts warn that without phased and transparent pricing reforms, the utility’s sustainability — and the broader energy sector’s stability — remain at risk.
