Sri Lanka state power utility back in the red, bank debt down

COLOMBO (EconomyNext) – Sri Lanka’s state-owned power utility fell back into the red in 2014 as drought in the early part of the year forced it to rely more on high cost fuel oil electricity generation but its debt burden fell.

“The Ceylon Electricity Board made an operating loss mainly due to the deterioration of hydro power generation in the first half of the year,” the Central Bank has noted.

According to provisional financial data, the CEB’s operating loss in 2014 was 11.7 billion rupees in contrast to an operating profit of 24.6 billion rupees in 2013.

“The high thermal power generation requirement raised CEB’s cost on fuel by 59.7 percent to 64.0 billion rupees in 2014,” the Central Bank said in its annual report released recently.

The CEB’s average unit cost at selling point stood at 20.45 rupees per unit while the overall average tariff was 18.55 rupees per unit, reflecting a loss margin of 1.90 rupees a unit.

However, CEB’s financial performance improved significantly during the second half of the year with improved low cost power generation as cheaper coal-fired power plants were commissioned.

The report said the CEB’s short term borrowing from banks and other short-term liabilities to the Ceylon Petroleum Corporation and independent power producers fell by 5.0 billion rupees to 84.8 billion rupees by end 2014.

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The utility’s long-term outstanding liabilities, mainly to the banking sector and the government, fell by 166.1 billion rupees to 256.0 billion rupees as at end-2014.

The commissioning of the second phase of the Norochcholai coal power plant with two units generating 600 MW increased total coal power generation capacity to 900 MW, strengthening low cost power generation capacity.

“Currently, coal power, which is four times cheaper than fuel oil power generation, can meet more than 50 percent of the total electricity requirement,” the Central bank said.

“As a result, the overall average unit cost of electricity is expected to fall significantly in the period ahead.”

The island’s energy security has been improved by reducing reliance on hydro power generation, which depends on rains.

“This will also improve the financial position of CEB through reduced dependence on more expensive fuel oil based power generation,” the report noted.