FTZMA proposes activation of power wheeling to reduce costs as Sri Lanka’s manufacturing sector pushes for faster implementation of market-based electricity reforms aimed at lowering industrial energy expenses and accelerating renewable energy investment. The proposal was formally presented by the Free Trade Zone Manufacturers’ Association of Sri Lanka during the Public Utilities Commission’s Extraordinary Electricity Tariff Review consultation held at the Bandaranaike Memorial International Conference Hall.
FTZMA proposes activation of power wheeling to cut energy costs
The Association urged the Public Utilities Commission of Sri Lanka to operationalise power wheeling under Section 13 of the Sri Lanka Electricity Act No. 36 of 2024, arguing that the mechanism could significantly reduce foreign exchange outflows, strengthen industrial competitiveness and accelerate the country’s transition toward cleaner energy.
According to the FTZMA, the request does not involve subsidies, concessions or Government financial assistance. Instead, the Association says it is seeking implementation of a legal framework already passed by Parliament that would allow industries to directly purchase electricity from independent renewable energy producers using the national transmission grid.
FTZMA Chairman Dhammika Fernando said the move would allow industries to reduce energy costs while simultaneously helping Sri Lanka save foreign exchange by lowering dependence on imported fossil fuels.
Power wheeling, internationally known as an open access electricity market, enables industrial consumers to purchase power directly from renewable energy suppliers such as solar, wind or mini-hydro projects. The electricity is then transmitted through the national grid in exchange for a regulated wheeling charge paid to the transmission network operator.
The FTZMA noted that many of Sri Lanka’s regional competitors already provide such mechanisms to industries, allowing manufacturers to secure cleaner and more competitively priced electricity supplies. Despite the legal framework now existing locally, Sri Lanka has yet to operationalise the system.
Section 13 of the Sri Lanka Electricity Act became legally viable following the restructuring of the former Ceylon Electricity Board into six successor entities on 9 March 2026, including a separate transmission company. However, the FTZMA pointed out that the Energy Minister must still gazette the operational date for the section while the PUCSL must establish the regulatory framework, technical code and wheeling charge structure necessary for implementation.
Industry representatives argue that activating the mechanism would create multiple economic benefits simultaneously. The Association said Sri Lanka could reduce fuel imports and save significant amounts of foreign exchange as industries increasingly shift toward domestically generated renewable electricity.
The FTZMA also emphasised that industries would gain access to lower-cost and cleaner electricity on commercial terms, while improving their ability to meet sustainability requirements increasingly demanded by international buyers and global supply chains.
The proposal is closely linked to broader Sri Lanka renewable energy targets outlined in the Renewable Energy Resource Development Plan 2025–2030 and the country’s climate commitments submitted to the United Nations Framework Convention on Climate Change.
Renewable energy developers are also expected to benefit from the reform. Currently, many developers rely heavily on the National System Operator as their primary buyer under procurement-based arrangements. An operational wheeling mechanism would create a second commercial pathway by enabling direct agreements between renewable energy producers and industrial consumers.
The FTZMA stated that this could unlock private investment into renewable energy infrastructure without creating additional pressure on the national budget. Industry stakeholders say such reforms are particularly important as Sri Lanka seeks to expand clean energy generation while managing fiscal constraints and external debt pressures.
Another key argument presented by the Association relates to the newly established transmission company. Under a wheeling framework, the transmission operator would earn regulated fees for electricity transported through the grid regardless of the seller or buyer involved. According to the FTZMA, this means the transmission entity stands to gain financially from increased grid utilisation.
The Association estimated that even a gradual shift of industrial electricity demand toward wheeled renewable power could save Sri Lanka tens of millions of dollars annually in foreign exchange over time. Officials argued that delaying implementation would result in lost economic opportunities and reduced regional competitiveness for Sri Lankan industries.
During its submission to the PUCSL, the FTZMA requested the regulator issue the operational framework for Section 13 within 90 days. The Association also called for the publication of wheeling charges and technical guidelines to enable industries and renewable energy developers to begin commercial negotiations without further delays.
The FTZMA further invited major industry chambers and business associations, including export, technology, tourism and apparel sector groups, to support the rapid operationalisation of the law. The Association described the issue as one of national economic importance extending beyond individual industries.
Industry observers say the proposal reflects growing pressure from Sri Lanka’s private sector for structural energy reforms capable of reducing operational costs and improving export competitiveness. As energy costs remain a critical challenge for manufacturers, policymakers may face increasing calls to accelerate reforms that support cleaner, more affordable and market-driven electricity supply systems.