Feb 10, 2010 (LBO) – Sri Lanka’s loss-making state power utility, whose rates have been held below cost by successive governments for political reasons, is running a ˜tariff deficit’ of 30 percent, an expert said. Breakeven is not the end of the story but another stage in the process of a more comprehensive tariff reform looking for a more efficient sector in the long-run.
The CEB has run up huge losses over the years as its tariffs hikes have not kept pace ith rising costs, especially of fuel.
The island’s is also heavily dependant on costly thermal power plants because it has not kept to its long-term generation plan which emphasized coal power and instead went for short-term options like building oil-based thermal plants.
However, coal plants are now being built. But the new more efficient power generation plan of the Ceylon Electricity Board (CEB) should lower the deficit in future, said Leonardo Lupano, a tariff expert hired by the Asian Development Bank to help with reforms in the power sector.
The bank is funding capacity development in the power sector to implement reforms under a new law that was passed by parliament recently.
It was important to address the supply of powe