FTZMA proposes activation of power wheeling to reduce costs

• Says move will accelerate SL’s renewable energy build-out at no cost to Govt.

The Free Trade Zone Manufacturers’ Association of Sri Lanka (FTZMA) has called on the Public Utilities Commission of Sri Lanka (PUCSL) to use the current Extraordinary Electricity Tariff Review as the moment to operationalise power wheeling under Section 13 of the Sri Lanka Electricity Act, No. 36 of 2024. The Association presented this position formally at the Commission’s public consultation held at the Bandaranaike Memorial International Conference Hall (BMICH) yesterday.

The FTZMA in a statement said it is not seeking subsidies, concessions, or special treatment of any kind. The Association is asking on behalf of Sri Lanka’s industrial base, the renewable energy sector, and the country as a whole for the activation of a market-based mechanism that the Parliament of Sri Lanka has already enacted, and that every regional manufacturing competitor of Sri Lanka already provides to its industries.

FTZMA Chairman Dhammika Fernando said: “We are not asking the Government for a single rupee. We are asking that industry be permitted to help itself, and in doing so, save the country meaningful foreign exchange, year after year, while accelerating the national transition to clean energy. The law has already been passed. The opportunity now lies in the hands of the regulator.”

The FTZMA said: 

“Power wheeling, known internationally as ‘open access’ or the ‘direct power purchase agreement’ mechanism, is the right of an industrial consumer to purchase electricity directly from an independent renewable generator (such as a solar or wind project) and have that electricity delivered through the national transmission grid, paying a transparent regulated charge for the use of the grid. It is the mechanism by which private investment, clean generation, and industrial demand are matched on commercial terms, without any claim on the public purse.

Every country with which Sri Lankan manufacturers compete on international markets already permits industrial open access. Sri Lanka, despite having the legal framework in place, does not. 

The legal framework for open access in Sri Lanka is already in place. Section 13 of the Sri Lanka Electricity Act, No. 36 of 2024 expressly provides for it. The principal provisions of the Act came into operation on 9 March 2026 with the corporate restructuring of the former Ceylon Electricity Board (CEB) into six successor companies, including a separate transmission company. 

What remains is for the Energy Minister to appoint, by gazette, the operational date for Section 13, and for the PUCSL to issue the regulatory framework, the wheeling charge methodology, eligibility criteria, technical code, and standard agreements that give the law operational effect.

The activation of Section 13 is not a concession to any one sector. It creates a measurable benefit to four distinct stakeholders simultaneously, with no claim on the Treasury and no displacement of any existing subsidy or social protection:

• The country saves foreign exchange: Every unit of electricity that an industrial consumer purchases directly from a Sri Lankan solar, wind, or mini-hydro generator is a unit that the National System Operator does not need to generate from imported coal or fuel oil. The savings are recurring, hard-currency, and accrue to the national balance of payments year after year. They grow as the wheeling market matures, and they cost the Treasury nothing.
• Industries gain access to cheaper and cleaner power on commercial terms: Sri Lankan manufacturers across all sectors, including those serving the export market and those serving domestic industry, agriculture, hotels, and services gain the right to negotiate competitive electricity supply from renewable sources. Industries also gain access to the verifiable green-energy credentials that international buyers and multinational supply chains increasingly require under their corporate sustainability commitments. The absence of such documentation is, today, a barrier to retaining and attracting orders that has nothing to do with headline tariff levels.
• Renewable energy developers gain a second route to market: At present, a Sri Lankan renewable developer has effectively one buyer, the National System Operator, under a queue-based procurement process. Wheeling creates a second, market-based route: a direct commercial contract with an industrial buyer at a negotiated price. This unlocks private capital for projects that the State cannot finance and accelerates Sri Lanka’s path to the renewable energy targets committed in the Renewable Energy Resource Development Plan 2025–2030 and in the country’s Nationally Determined Contributions submitted to the UN Framework Convention on Climate Change (UNFCCC) in September 2025.
• The new transmission company benefits, not loses: Following the unbundling on 9 March, the transmission network is operated by the National Transmission Network Service Provider, a separate corporate entity from the generation and distribution companies. The transmission company earns a regulated wheeling charge on every unit transported, regardless of who the seller and buyer are. Wheeling adds to its revenue. The structural conflict of interest that historically caused the vertically integrated CEB to resist open access was resolved by the very corporate restructuring completed on 9 March.

Sri Lanka’s industrial sector consumes a substantial share of the country’s electricity generation each year. Even a measured shift of a portion of that demand to wheeled renewable supply, phased over five years and consistent with the early-stage uptake observed in Vietnam and Bangladesh, would deliver recurring annual savings to the country’s foreign exchange position in the order of tens of millions of US dollars, every year, growing as the market matures. Cumulatively, over a decade, the savings to the national balance of payments are very substantial.

These savings are not a one-time gain. They compound. Every year of delay in operationalising Section 13 is a year of foregone foreign exchange savings that the country cannot recover later, and a year in which Sri Lankan manufacturers fall further behind regional competitors who already have this mechanism.”

FTZMA requests

In its written and oral submissions to the PUCSL yesterday, the FTZMA respectfully requested the following matters squarely within the Commission’s regulatory authority, requiring no new legislation and no fiscal allocation:

• That the Commission issue, within 90 days, the regulatory framework giving operational effect to open access under Section 13, including the wheeling charge methodology, eligibility criteria, technical and commercial code, and standard agreement templates.
• That the Commission formally recommend to the Energy Minister that Section 13 be brought into operation by gazette at the earliest practicable date, with phased eligibility commencing at a reasonable industrial threshold consistent with established international precedent.
• That the Commission coordinate with the new National Transmission Network Service Provider and the National System Operator to publish indicative wheeling charges concurrently, so that industrial consumers and renewable developers may commence commercial discussions without further delay.
• That, in parallel, any extraordinary tariff increase be calibrated equitably, made explicitly time-bound, and accompanied by a transparent true-up mechanism so that any over-collection is returned to the categories that funded it.

The FTZMA emphasised that this is not an issue confined to its own membership. Every industrial enterprise in Sri Lanka, manufacturing, processing, agro-industry, tourism and hospitality, information technology, large commercial establishments, and the renewable energy sector itself stands to benefit from the activation of Section 13. The country stands to benefit through reduced fuel imports and accelerated clean energy investment.

The FTZMA respectfully invited its sister industry chambers, The Ceylon Chamber of Commerce, the National Chamber of Exporters, the National Chamber of Commerce, the Federation of Chambers of Commerce and Industry, SLASSCOM, The Hotels Association of Sri Lanka, the Joint Apparel Association Forum, and all other industry associations to consider adding their voice in support of the prompt operationalisation of Section 13. This is a matter of national economic interest that transcends sectoral boundaries.

The FTZMA recorded its appreciation of the PUCSL’s open consultative process and of the substantial work undertaken by all parties in completing the corporate restructuring of the electricity sector on 9 March. The Association stands ready to support the Commission, the new transmission company, the National System Operator, and the Energy Ministry in any technical or commercial consultation that would assist in the rapid operationalisation of Section 13.

This is not a moment for confrontation. It is a moment for execution. The legislation has been passed. The corporate structure has been put in place. The international precedents are unambiguous. The benefits to the country are concrete and recurring. The FTZMA respectfully urges that this national opportunity be unlocked without further delay for the benefit of the country, the industries that earn its foreign exchange, the renewable developers ready to invest in clean generation, and every Sri Lankan whose cost of living ultimately rests on the strength of the country’s external account.