Sri Lanka power tariff reforms are now under close review as the International Monetary Fund (IMF) engages with government and opposition officials ahead of a key November 2025 deadline. The discussions centered on balancing cost recovery, renewable energy expansion, and affordability for consumers, while ensuring financial sustainability in the energy sector.
IMF, MPs, and officials debate tariff reforms to balance costs, renewables, and affordability
Sri Lanka power tariff reforms have taken center stage in the country’s energy policy discussions, with an IMF technical team meeting government and opposition representatives to evaluate the Ceylon Electricity Board’s (CEB) tariff methodology. The meeting, held ahead of the November 2025 deadline under the IMF Extended Fund Facility, emphasized the urgent need to balance cost recovery, renewable investments, and affordability for households and businesses.
Led by IMF’s Delphine Prady, the technical team engaged with members of the Committee on Public Finance, the Committee on Public Enterprises, the Sectoral Oversight Committee on Infrastructure, and key officials from the Energy Ministry, Finance Ministry, CEB, and the Public Utilities Commission of Sri Lanka. While the session was a technical review rather than a policy-making exercise, Sri Lankan officials stressed that tariffs must reflect the actual cost of serving consumer demand while also protecting vulnerable groups.
Cost recovery was highlighted as essential to ensure the sector’s financial health and attract much-needed investment. Without it, inefficiencies multiply, discouraging private and foreign investors. Cost reflectiveness, on the other hand, ensures consumers are charged fairly, reducing reliance on cross-subsidies and ensuring transparency in pricing.
A key focus of the review was Sri Lanka’s renewable energy target of 70% by 2030. Experts underscored the importance of building infrastructure, mobilizing financing, and creating incentive frameworks to accelerate solar, wind, and hydro energy adoption. The integration of storage solutions and new technologies such as green hydrogen will also be critical.
At the same time, officials warned about the risks posed by thermal power, which remains highly volatile and dependent on global price movements. While renewables are becoming more cost-competitive, significant upfront investments are required to unlock their long-term benefits. This makes a reliable and predictable tariff structure crucial for guiding investment decisions.
Parliamentarians at the discussion also stressed the importance of shielding vulnerable households through targeted subsidies, while ensuring workers affected by restructuring are supported. Concerns were raised regarding weak governance, gaps in power purchase agreements, and a lack of transparency in cost reporting, which could hinder the success of tariff reforms.
Participants agreed that electricity tariff reforms must go beyond technical adjustments. They must align with broader policy goals—ensuring the financial viability of the sector, meeting renewable energy targets, protecting communities, and strengthening regulatory independence. Achieving this balance will be vital if Sri Lanka is to build a sustainable, affordable, and future-ready energy sector.