By: Staff Writer

December 14, Colombo (LNW): Sri Lanka’s power sector has once again come under strain, with the Ceylon Electricity Board’s (CEB) latest financial results revealing a sharp deterioration that is reigniting concerns over electricity tariffs, IMF benchmarks, and the burden placed on consumers.

Interim accounts for the nine months ended September 2025 show the CEB sliding into a Rs. 9 billion loss, a dramatic reversal from the Rs. 152 billion profit recorded in the same period last year. The September quarter alone saw profit after tax collapse by 98% year-on-year to just Rs. 466 million, underscoring how rapidly margins have eroded.

Revenue for the nine-month period fell by 30% to Rs. 321.7 billion, largely due to tariff reductions, while costs remained stubbornly high. Cost of sales edged up to Rs. 322.9 billion, pushing the utility into a gross loss. Administrative expenses climbed 20%, further squeezing operating performance despite lower finance costs.

Quarterly data shows a steady decline throughout 2025. A Rs. 16.9 billion loss in the March quarter, followed by sharply weakened profits in June, culminated in near-breakeven results by September. While hydropower conditions helped moderate generation costs, they were insufficient to offset the revenue shock caused by aggressive tariff cuts.

Two revisions in 2025 a 20% reduction in January and a 15% increase in June — have left the tariff framework under scrutiny. According to the Finance Ministry, average revenue per unit sold dropped to Rs. 24.64 per kWh, compared to nearly Rs. 42 a year earlier, even as electricity demand rose modestly. This gap has turned the CEB into the largest loss-making state-owned enterprise in the first half of the year.

These developments carry direct implications for Sri Lanka’s IMF Extended Fund Facility. The IMF has repeatedly stressed that cost-recovery tariffs and energy-sector reforms are critical to preventing a return to taxpayer-funded losses. Mission Chief Evan Papageorgiou has warned that predictable tariff-setting is essential for long-term price stability and fiscal discipline, with tariff methodology revisions set as a key benchmark.

However, energy analysts argue that the headline losses mask deeper structural issues. Analyst Dr. Vidhura Ralapanawe points to inconsistencies in tariff filings, delayed clawback adjustments, and accounting mismatches particularly around the Bulk Supply Transaction Account that have distorted both profits in 2024 and losses in 2025. Political intervention in tariff decisions, he says, has further weakened transparency and investor confidence.

For consumers, the dilemma is stark. While lower tariffs offered short-term relief amid a cost-of-living crisis, the CEB’s renewed financial stress raises the risk of future sharp hikes, undermining the very predictability the IMF framework seeks to ensure. With retained losses exceeding Rs. 361 billion and restructuring underway under the Electricity Amendment Act, the utility’s outlook remains fragile.

Unless governance, data accuracy, and tariff discipline improve alongside unbundling reforms, Sri Lanka risks repeating a cycle where temporary consumer relief today translates into deeper financial and tariff shocks tomorrow.

By: Staff Writer

December 14, Colombo (LNW): The “Rebuilding Sri Lanka” Fund, launched in the wake of Cyclone Ditwah, has been promoted by the government as a bold public private partnership to accelerate national recovery. Yet for many civil society groups, it represents something far more troubling: the corporatisation of disaster governance.

The fund, now holding nearly Rs. 1.9 billion, is overseen by a powerful management committee blending senior state officials with some of the country’s most influential corporate leaders. While business participation in fundraising is not unusual during crises, critics argue that granting sweeping authority over national reconstruction to corporate executives crosses a critical line.

A prominent civil society organisation has issued a sharply worded warning, arguing that private-sector committee members are legally and professionally obligated to maximise shareholder wealth, creating what it calls an “imminent and unavoidable conflict of interest.” Unless these individuals step away from their corporate roles, the organisation says, public trust in recovery decisions will remain compromised.

The concern is not theoretical. Reconstruction inevitably involves large-scale infrastructure, procurement, and commercial projects. Roads, ports, housing, and irrigation systems translate into lucrative contracts. If companies linked to committee members stand to benefit directly or indirectly the risk of preferential tenders and misuse of state compensation funds becomes acute.

Equally contentious is the lack of inclusivity. The committee is entirely male and overwhelmingly Colombo-centric. There is no representation from women, disaster-affected communities, environmental specialists, agricultural experts, or grassroots humanitarian actors who work directly with victims.

This exclusion contradicts both the government’s stated commitment to citizen participation and the principles of the Sendai Framework for Disaster Risk Reduction, which Sri Lanka has formally endorsed. That framework emphasises inclusive, community-based recovery yet the current structure centralises decision-making among a narrow elite.

Supporters of the fund argue that private-sector expertise brings efficiency, credibility, and access to international donors. In a fiscally constrained state, they say, such partnerships are unavoidable.

But critics respond that efficiency without accountability is a dangerous bargain. They argue that disaster recovery must prioritise equity, gender justice, environmental sustainability, and social cohesion not speed alone.

The fear, as one activist put it, is that Sri Lanka is being transformed into “Sri Lanka Inc.,” where national trauma becomes an opportunity for elite-driven reconstruction rather than people-centred recovery.

As rebuilding moves from emergency relief to long-term development, the unresolved questions surrounding governance, conflicts of interest, and representation may prove just as consequential as the cyclone itself.

By: Staff Writer

December 14, Colombo (LNW): Sri Lanka’s once-distressed dollar bond market is showing renewed signs of life, but the resurgence is also reviving scrutiny over the legality and regulatory boundaries governing dollar-denominated investment funds.

At the centre of attention is the Ceylon Dollar Bond Fund (CDBF), which has delivered a robust 12.3 percent return in U.S. dollar terms year-to-date by mid-September 2025, riding on the recovery of restructured sovereign debt.

Managed by Ceylon Asset Management (CAM) and supported by Deutsche Bank as trustee and custodian, the fund’s performance reflects a gradual restoration of investor confidence following Sri Lanka’s successful debt restructuring in December 2024.

A senior official at Sri Lanka Insurance Corporation (SLIC), a key stakeholder in CAM, said the fund’s gains signal cautious optimism toward Sri Lanka’s sovereign instruments after years of default-induced pessimism.

CDBF is an open-ended unit trust regulated by the Securities and Exchange Commission of Sri Lanka (SEC). Its mandate limits investments to Sri Lankan International Sovereign Bonds (ISBs) and select dollar-denominated securities backed by bank guarantees and listed on international exchanges.

The structure offers investors protection from rupee depreciation while enabling repatriation of capital and income in foreign currency features that have made the fund particularly attractive to overseas Sri Lankans amid aggressive digital marketing campaigns.

CAM attributes the fund’s rally to improving macroeconomic fundamentals. The rebuilding of foreign reserves to around US$6.2 billion, moderating inflation, and relative currency stability have underpinned renewed interest in Sri Lanka’s restructured debt. Yield compression in sovereign bonds—from roughly 15 percent in early 2025 to near 10 percent by October—has further reinforced perceptions of reduced default risk.

Still alongside optimism, regulatory caution remains firm. The Central Bank of Sri Lanka (CBSL) has reiterated that while foreign-currency funds can help attract capital, it does not endorse individual investment products. Crucially, the central bank has clarified that funds held in Personal and Business Foreign Currency Accounts cannot be directly invested in CDBF, and banks have been instructed to enforce this restriction strictly.

This clarification has raised questions among investors over compliance and marketing practices, particularly as the fund targets diaspora and regional investors. Regulators warn that strong returns should not obscure inherent risks, including global interest rate movements, geopolitical shocks, and renewed market volatility.

Analysts note additional upside from new GDP-linked Macro Linked Bonds, which could deliver attractive returns if economic growth exceeds projections. However, authorities stress that systemic stability and investor protection take precedence over performance narratives.

For many market participants, CDBF has become a symbol of Sri Lanka’s tentative return to financial credibility. Still, its success underscores the need for clear regulatory guardrails to ensure that renewed confidence does not outpace compliance in a fragile post-crisis environment.