Sri Lanka SOE profits declined sharply in 2025 as a significant deterioration in the financial performance of the Ceylon Electricity Board (CEB) outweighed strong earnings growth across the broader State enterprise sector, according to the Finance Ministry’s Final Budget Position Report 2025.
Sri Lanka SOE profits decline despite stronger earnings from banks and CPC
The country’s 51 major State-owned enterprises (SOEs) reported a combined profit of Rs. 444.4 billion in 2025, representing a decline of 17.6% compared to the previous year. However, the overall picture was considerably stronger when excluding the electricity utility. Without the CEB, the remaining State-owned enterprises generated profits of Rs. 483.2 billion, an increase of 21.5% from Rs. 397.5 billion recorded in 2024.
The figures indicate that the fall in Sri Lanka SOE profits was almost entirely driven by the reversal in the CEB’s financial performance, while most major public enterprises continued to report healthy earnings growth.
The stronger profitability of commercially oriented State-owned enterprises also translated into higher Government revenue. Dividends and levies collected from SOEs increased by 37.5% to Rs. 56.5 billion in 2025, compared to Rs. 41.1 billion in the previous year.
The Finance Ministry highlighted several reforms undertaken during the year as part of the Government’s restructuring agenda for State-owned enterprises. These included Cabinet approval to merge, restructure, or close selected non-commercial entities, the liquidation of 33 non-functional organisations, and progress on a new Public Commercial Enterprises Management Bill aimed at strengthening governance, accountability, transparency, and commercial discipline.
State-owned banking institutions remained among the strongest performers. Bank of Ceylon emerged as the most profitable SOE, recording profit before tax of Rs. 120.8 billion. The Employees’ Trust Fund Board followed with profits of Rs. 68.5 billion, while People’s Bank reported earnings of Rs. 64.4 billion.
The Sri Lanka Ports Authority also delivered a strong performance, reporting profits of Rs. 57.3 billion, supported by continued growth in port operations and logistics activities. National Savings Bank recorded profits of Rs. 44.5 billion, further reinforcing the strength of the banking sector within the State enterprise landscape.
The Ceylon Petroleum Corporation (CPC) remained one of the largest contributors to public sector profitability. Profit before tax increased 6.6% to Rs. 36.5 billion despite lower revenue, benefiting from lower global oil prices, reduced costs, and the continued implementation of the fuel pricing formula.
On the other hand, CEB losses emerged as the biggest challenge facing the SOE sector. The utility reported a net loss of Rs. 38.7 billion in 2025, a dramatic reversal from the Rs. 141.6 billion profit recorded in 2024.
According to the report, the decline followed multiple electricity tariff reductions approved by the Public Utilities Commission of Sri Lanka. Tariffs were reduced by 21.9% in March 2024, 22.5% in July 2024, and a further 20% in January 2025. Although a 15% tariff increase was introduced in June 2025, it was insufficient to offset the revenue impact of the earlier cuts.
As a result, electricity sales revenue fell by 22.8% to Rs. 422.2 billion despite electricity consumption increasing by 5.9% during the year. Rising transmission, distribution, and corporate expenses further pressured profitability, leading to an operating loss of Rs. 26.1 billion.
Despite the financial setback, the report noted progress in power sector reforms. Increased rainfall and the addition of approximately 900 megawatts of renewable energy capacity reduced dependence on coal and fuel-based generation, lowering the average unit cost of electricity supplied.
Meanwhile, SriLankan Airlines remained another major loss-making entity. Although the national carrier improved operating performance and increased passenger revenue to Rs. 265.9 billion, foreign exchange losses and debt servicing obligations continued to weigh heavily on results.
Net loss before tax widened to Rs. 23.2 billion during the 2025/26 financial year, compared with Rs. 7.6 billion a year earlier. However, Government-backed restructuring measures helped reduce liabilities and improve the airline’s negative equity position.
The Finance Ministry said ongoing reforms across State-owned enterprises are intended to improve operational efficiency, strengthen governance standards, and enhance long-term commercial viability. The latest results suggest that while challenges remain within certain entities, particularly the CEB and SriLankan Airlines, many commercially focused SOEs continue to strengthen their financial performance and contribution to the national economy.
The performance of State-owned enterprises will remain a key indicator of the success of Sri Lanka’s broader public sector reform agenda as authorities seek to reduce fiscal risks and improve the sustainability of public finances.