CEB turns red in March quarter as tariff cuts hit revenues

The Ceylon Electricity Board (CEB) reported a sharp decline in its top-line and recorded a gross loss for the quarter ended March 2025.

These results underscore the financial challenges facing Sri Lanka’s state-owned utility giant, prompting the International Monetary Fund (IMF) to reiterate its call for cost-reflective electricity pricing before releasing the next tranche of its support programme.

For the January-March quarter (1Q 2025), CEB reported revenues of Rs. 97.92 billion, a significant 45.5 percent decrease from the corresponding period in 2024.

However, the cost of sales rose by a modest 2.6 percent to Rs. 112.93 billion. This resulted in a gross loss of Rs. 15.02 billion for the period, indicating that the Board incurred a loss on every unit of electricity sold, even before considering other operational costs.

Following its fourth programme review at the staff level under the Extended Fund Facility (EFF) with Sri Lanka on April 25, the IMF noted that the implementation of cost-recovery pricing for electricity tariffs had not yet been met. This was despite most other structural benchmarks due by end-April being either met or implemented with some delay.

“The continuous structural benchmark on cost-recovery electricity pricing remains to be met,” the IMF Staff Mission stated upon concluding its review.

It appears that the upcoming fifth programme tranche, valued at US$ 344 million,  could be delayed, potentially leaving the EFF programme in limbo if this benchmark is not met.

Sri Lanka has been under a US$ 2.9 billion, four-year EFF since March 2023. The programme is designed to help restore economic stability after the country faced a severe crisis in 2022, triggered by the depletion of usable foreign currency reserves, which led to widespread economic, social, and political turmoil.

Against this backdrop, the CEB last week presented a proposal to the Public Utilities Commission of Sri Lanka (PUCSL) seeking an 18.3 percent increase in electricity tariffs for the period from June through December 2025.

This proposal will be subject to a public consultation process before a final decision is made.

If implemented from June, the tariff hike would effectively roll back nearly the entire 20 percent average tariff reduction that was granted in January of this year (2025).

In submitting the new tariff proposal, the CEB stated that its analysis considered factors such as current tariffs, fuel availability, future fuel prices, hydro capacity, plant operational schedules, interest rates, economic recovery projections, energy demand forecasts, transmission and distribution adjustments, and government policy.

Based on this analysis, the Board has estimated a deficit of Rs. 42.19 billion for the period from June to December 2025, which has prompted the 18.3 percent tariff increase proposal.

Meanwhile, at the operating level, the CEB recorded a loss of Rs. 14.11 billion for the first quarter, a stark reversal from the operating profit of Rs. 97.80 billion in the same period in 2024.

There was a substantial decline in net finance costs, which fell to Rs. 2.77 billion in the quarter from Rs. 7.99 billion in 1Q 2024.

Consequently, the CEB reported a net loss of Rs. 17.46 billion for the January-March 2025 period, compared to a net profit of Rs. 86.50 billion in the corresponding period of 2024.