CEB posts Rs. 39 b loss in 2025 despite tariff revisions

 CEB posts loss despite tariff hikes; liabilities rise to Rs. 617.4 b

 Electricity demand and generation grow 5.8% amid economic recovery

The Ceylon Electricity Board (CEB) remained under financial strain in 2025 despite cost-reflective tariff adjustments, the Central Bank said in its Annual Economic Review.

The CEB recorded an overall loss of Rs. 38.7 billion during the year, reflecting the impact of tariff reductions and elevated generation costs. Electricity tariffs were revised downward by an average of 20% in January 2025 following earlier reductions in 2024, but higher thermal generation costs during the dry spell weighed on financial performance in the first quarter. A subsequent upward revision of 15% in June 2025 provided some relief, though it was insufficient to offset earlier losses. 

As a result, the CEB’s short-term borrowings and liabilities increased to Rs. 206.2 billion by end-2025 from Rs. 174.3 billion a year earlier, while long-term liabilities rose to Rs. 411.2 billion from Rs. 409.0 billion. A further upward tariff revision of 10.3% was implemented with effect from April 2026, based on cost and revenue projections for the second quarter. 

Electricity demand and generation both expanded by 5.8% in 2025, in line with the recovery in economic activity. Demand growth was observed across all major consumer categories, with the domestic segment recording stronger growth from the second quarter. However, demand moderated towards the latter part of the year due to disruptions caused by Cyclone Ditwah. 

On the supply side, favourable hydropower conditions supported generation, with reservoir levels averaging 69.6% during the year. The generation mix comprised hydro (35.5%), coal (27.4%), fuel (12.5%) and non-conventional renewable energy (24.7%). Solar power generation expanded notably, with rooftop solar installations nearly doubling during the year. 

The Central Bank also highlighted structural reforms in the electricity sector, including the enactment of the Sri Lanka Electricity (Amendment) Act, No. 14 of 2025, and the restructuring of the CEB into four state-owned entities responsible for generation, transmission, distribution and system operations. These measures, alongside the approval of a National Electricity Policy and tariff framework, are expected to improve governance, enhance efficiency and promote competition in the sector. 

In parallel, infrastructure development projects, including hydropower, wind, solar and battery energy storage initiatives, progressed during the year, with funding secured from the Asian Development Bank for key renewable energy investments. 

The Central Bank noted that maintaining cost-reflective pricing, alongside structural reforms and investment in renewable energy, will be critical to ensuring the long-term sustainability of the energy sector.

In February, Treasury Secretary Dr. Harshana Suriyapperuma told International Sovereign Bond (ISB) holders that the Government would adhere strictly to the 17th International Monetary Fund (IMF) program targets and structural reform commitments, during a scheduled investor call focused on macro-linked and governance-linked Bonds issued under the restructuring.

He said fiscal consolidation remains anchored to agreed primary surplus targets, with medium-term debt sustainability parameters unchanged.

 The Government remains committed to meeting the IMF’s debt-to-GDP target of 95% by 2032 and maintaining average gross financing needs within program limits.

On State enterprise reform, Dr. Suriyapperuma described the unbundling of the Ceylon Electricity Board (CEB) into separate entities as a core reform that would proceed. Cost-reflective electricity pricing will continue as part of eliminating quasi-fiscal losses.