Electricity tariff hike, NPP promises and ill-advised moves

The Public Utilities Commission of Sri Lanka (PUCSL) granted approval to increase electricity tariffs by 10% overall, with effect from yesterday for the second quarter of this year. 

As per the IMF Standby Agreement, electricity tariffs need to be revised periodically to maintain a cost-recovery pricing model and ensure the financial viability of the CEB. For the financial year 2025, the CEB incurred a loss of Rs. 38.7 billion, compared to a profit of Rs. 141.6 billion during 2024. 

Before coming into power, NPP politicians vowed to bring down electricity charges while slamming the then Government for hiking energy bills to overcome financial pressures caused by escalations in both direct and indirect costs. During the Presidential election campaign, Anura Kumara Dissanayake, who was an Opposition MP at the time, declared that electricity bills would be reduced by one-third under an NPP-led administration. The then Presidential candidate claimed that electricity bills could be reduced by eliminating theft, reviving the LNG-powered power plant system, and prioritising renewable energy. Moreover, JVP/NPP politicians were able to convince voters that electricity bills were raised by previous administrations due to fraud and various corrupt activities.Aggravating the chaotic situation in the energy sector, reduced hydropower generation owing to the prevailing dry season has necessitated increased power generation from comparatively expensive sources such as coal and fuel to ensure an uninterrupted power supply. However, as a result of low-quality coal purchased by the CEB for the Norochcholai Lakvijaya Power Plant, the country’s largest coal-fired facility with a capacity of 900 MW, in late 2025 and early this year, the generation capacity of the plant has declined, and the PUCSL has warned of a possibility of power cuts. 

To compound matters, the prevailing instability in the Middle East has created doubts about the ability to source fuel from the world market, as the Strait of Hormuz—an essential and largely irreplaceable conduit for oil exports from the Middle East to global markets—remains effectively closed, causing uncertainty over the availability as well as the adequacy of fuel for electricity generation.

Right from the beginning, decisions made by the Government in relation to the electricity sector, in terms of policy choices and key personnel appointments, were slammed by industry experts. Upon assuming power, the administration appointed Dr. Tilak Siyambalapitiya as Chairman of the CEB. As Dr. Siyambalapitiya is considered one of the strongest proponents of coal in the country, as well as a fierce opponent of renewable energy, his appointment to the influential post was severely criticised by energy experts, given the national objective to achieve 70% of the island’s electricity generation via renewable energy sources by 2030. Some of the CEB’s decisions subsequent to his appointment were perceived as detrimental to the renewable energy sector. 

The Government has also faced significant criticism and accusations of discouraging solar energy, particularly rooftop solar, in favour of conventional, large-scale power projects. Last year, the CEB reduced feed-in tariffs for renewable energy projects, and many renewable energy developers opined that the move was detrimental in terms of attracting investment into clean energy, in addition to disrupting the country’s drive towards renewable energy. The appointment of Kumara Jayakody, who had to leave his previous employment over alleged financial impropriety, to head a highly critical Ministry such as Power and Energy, too represents a serious misjudgement on the part of the Government. Given the significance of the energy sector to the economy, the Government is well advised to ensure that the key state entities associated with power and energy are led by individuals who are devoid of allegations of misconduct and who pursue the betterment of all citizens in the country.