The Ceylon Electricity Board (CEB) is considering a steep electricity tariff increase of 25% to 35%, in a move to realign with cost-reflective pricing principles demanded by the International Monetary Fund (IMF). This proposal, now in the drafting phase, will be formulated based on the tariff formula jointly developed by the CEB and the Public Utilities Commission of Sri Lanka (PUCSL), and subsequently submitted for regulatory approval.
The tariff revision talks come against a backdrop of internal strife, as CEB Chairman Tilak Siyambalapitiya has tendered his resignation to the Minister of Energy. Sources suggest his departure stems from mounting political interference and regulatory pushback against implementing IMF-aligned cost-based pricing. The PUCSL had earlier slashed tariffs by 20% in January 2025, despite the CEB’s objections—a decision that reversed the utility’s path to financial recovery.
A senior CEB official warned that the January rate cut has plunged the board back into financial distress, after having significantly reduced its losses over the previous two years. “CEB’s accumulated loss stood at Rs. 473 billion in 2022. Following IMF-backed tariff hikes in that year, the board turned around to post profits of Rs. 61 billion in 2023 and Rs. 141 billion in 2024. This helped reduce the loss to Rs. 271 billion by the end of 2024,” the official said. However, since February 2025, the loss has begun climbing again due to the reduced tariff structure.
The CEB’s massive debt includes long-term loans, overdrafts from state banks, interest burdens, and outstanding payments to the Ceylon Petroleum Corporation (CPC) and private power producers.
According to IMF guidelines, Sri Lanka must ensure two key benchmarks for electricity pricing: maintaining a cost-reflective tariff and triggering an automatic 10% increase if the CEB’s monthly cash flow dips below Rs. 15 billion. The official noted that if the January cut had not occurred, only a modest 5% adjustment would have been necessary for the second quarter.
Despite a scheduled quarterly revision in April, the government failed to implement any changes, prompting the IMF to issue back-to-back warnings. The Fund cautioned that Sri Lanka had breached structural benchmarks tied to electricity pricing, raising serious fiscal risk concerns.
With tariff revision delayed and the utility’s financials deteriorating, all eyes are now on the PUCSL’s next move and the government’s ability to meet IMF targets while balancing political pressures and public resistance.