CEB losses narrow significantly due to lower generation cost

• September quarter losses at Rs.1.4bn, down from Rs.11.6bn a year ago 

The Ceylon Electricity Board (CEB) has cut its losses in the three months to September as revenues rose while the generation costs fell on the back of heavy rains received in the catchment areas making it possible to increase the share of cheaper hydro power in the total power generation mix during the period. 

The State utility, which engages in generation, procurement, transmission and distribution of electricity, reported a net loss of Rs.1.39 billion in the July-September quarter compared to Rs.11.57 billion in the corresponding period last year. 

The company generated revenues of Rs.78.93 billion for the three months, up 6.5 percent from a year ago while the cost of sales declined by 4.6 percent to Rs.71.16 billion, making it possible to advance the performance. 

However, its subsidiaries had made profits as seen from the consolidated financial results. 

The group has subsidiaries LTL Holdings (Pvt) Limited, Lanka Electricity Company (Pvt) Limited, Sri Lanka Energies (Pvt) Limited, Lanka Coal Company Private Limited and the joint venture company, Trincomalee Power Company Limited. 

In the nine months to September, the CEB reported a net loss of Rs.2.31 billion on revenues of Rs.218.92 billion, compared to a net loss of Rs.31.39 billion reported in the same nine months last year. 

The State utility is prevented from market pricing its unit of electricity sales and thus its financial performance is largely at the mercy of the rain gods and oil price. 

During times of prolonged droughts, the CEB is compelled to either increase the generation of expensive thermal power or purchase such thermal power from independent producers in the private sector among other conventional and non-conventional renewable energy such as solar and wind. 

While Sri Lanka has coal power and is among the least cost generation sources, the country will not commission any more coal power plants considering its damage to the environment and its commitment to generate 70 percent of power through renewable energy sources by 2030. 

At the United Nations Climate Change Conference titled, ‘COP26’, which concluded a fortnight ago in Glasgow in Scotland, the global leaders reached a consensus not to pursue any new coal powered power plants given their environmental harm, and pledged to ‘phase down’, the use of existing plants among a host of some other urgent actions to cut carbon emissions and to reduce temperature rising to 1.5oC by the end of 2022. 

However, the developing countries demand over a trillion dollars from the wealthy nations to make the transition and also to safeguard them from the worst effects of climate change while the critiques argue that the hastiness of the shift showed at the Summit could put the entire world at the risk of facing steep escalation in costs of energy which will trickle down into all other activities. 

CEB in April this year sold listed bonds worth Rs.20 billion to settle part of its dues to independent power producers. By the end of the September, the CEB as a group had Rs.194.4 billion in payables, Rs.391.29 billion in long term borrowings and Rs.42.8 billion in short term borrowings.