Business

‘The devil is in the details’ in electricity sector reforms

Published

1 year ago

2025/02/11

Thilina Walpola

Prof. Asanka Rodrigo: ‘Precision needed in reforms

By Ifham Nizam

Sri Lanka’s electricity sector is undergoing a seismic transformation with the proposed amendments in the Electricity Act No. 36 of 2024. With the primary aim of restructuring the Ceylon Electricity Board (CEB), these reforms promise to reshape the country’s energy landscape. But experts, including Professor Asanka Rodrigo from the Department of Electrical Engineering at the University of Moratuwa, caution that while the reforms hold potential, they could also lead to unintended consequences if not executed with clarity and precision.

The Institution of Engineers, Sri Lanka (IESL) initiated an open dialogue on the Ministry of Energy’s proposed amendments to the Electricity Act. Aiming to engage diverse stakeholders, the workshop titled ‘Power Sector Reforms: IESL Perspective’, was held last Friday at the IESL auditorium.

Rodrigo said that the proposed changes seek to restructure the current CEB into 12 independent entities, including four generation companies, a 100% government-owned National System Operator (NSO), a National Transmission and Network Service (NTNS) company, and four independent distribution companies. This restructuring intends to pave the way for a competitive wholesale electricity market within five years. However, despite the Act’s ambitious goals, the transition remains murky, with critics arguing that it lacks the comprehensive guidelines needed to ensure smooth implementation.

Rodrigo, an authority on electrical engineering, acknowledges the need for reform but emphasizes the importance of strategic planning. “The reform is undoubtedly necessary to foster competition and improve operational efficiency. But the devil is in the details, and right now, we lack the specifics on how to achieve these lofty objectives,” he states. One of his key concerns is the weak clauses within the Act regarding the transformation process, which could potentially undermine the very competition the reforms aim to establish.

In addition to restructuring, the Act also calls for the formation of a National Electricity Advisory Council tasked with advising the minister on energy policy. However, Rodrigo warns that certain provisions may allow for direct ministerial interference in regulatory affairs, raising concerns about the independence of the sector. “While governance should certainly be accountable, excessive ministerial control over the National System Operator is troubling. The sector needs an independent regulator to ensure impartiality and the long-term sustainability of the market,” he says.

The complexities deepen with the concept paper’s more intricate proposal, which suggests creating 14 state-owned companies instead of the initial 12. These include holding companies for generation, transmission, and distribution, along with a company for the CEB fund. Yet, questions remain about the necessity of additional holding companies that do not engage in core electricity sector operations. “Introducing more layers of bureaucracy without clear functions risks complicating the system instead of simplifying it,” he notes. “We need to ensure that each new entity has a distinct role and contributes to sector efficiency rather than creating redundancy.”

Perhaps one of the most contentious proposals is the reduction of the standardized power purchase agreement (SPPA) limit to plants not exceeding 1 MW, down from the current 10 MW. This decision has raised alarms among renewable energy advocates, who fear it will hinder the integration of solar, wind, and other renewable sources into the grid. “Renewable energy investments require stability and long-term planning, says Rodrigo. “By reducing the SPPA limit too drastically, we risk stalling progress and discouraging future investments in renewable energy.”

Rodrigo believes that the country must maintain a balanced approach to renewable energy integration. “While the reduction of the SPPA limit is intended to support smaller-scale projects, it should not come at the expense of larger, more impactful renewable energy investments, he advises. A gradual approach to reducing the SPPA limit, with clear incentives for renewable energy developers, would create a more favorable environment for long-term investment.

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Business

Middle East tensions may hit tourism and energy sectors

Published

22 hours ago

2026/03/17

Sahan Weerasooriya

Tourists admiring nature’s abundance in Sri Lanka.

Escalating geopolitical tensions in the Middle East involving Iran are beginning to raise concerns here, with analysts warning that the fallout could affect not only the island’s tourism industry but also its energy sector.

Tourism stakeholders say the first signs of a slowdown in visitor arrivals have begun to emerge as airlines and travel operators adjust to disruptions across key Middle Eastern aviation corridors.

According to Harsha Suriyapperuma, Chairman of the Sri Lanka Tourism Development Authority, the current tensions could temporarily influence travel flows mainly due to disruptions affecting major transit hubs in the Gulf region.

A significant share of travellers heading to Sri Lanka from Europe and other long-haul destinations transit through aviation hubs such as Dubai, Doha and Abu Dhabi.

Industry analysts say that when geopolitical tensions escalate in the Middle East, airlines often revise flight paths, cancel services or adjust schedules due to security concerns and airspace restrictions, which can slow tourism flows to destinations like Sri Lanka.

According to a Tourism industry leader, global travel demand is highly sensitive to geopolitical developments affecting major aviation corridors.

He noted that disruptions to Middle Eastern airspace could result in longer travel routes, higher airline operating costs and increased airfares, which may influence the travel decisions of tourists planning long-haul holidays.

At the same time, economists and energy analysts warn that the conflict could also create ripple effects in global energy markets.

Sri Lanka is heavily dependent on imported fuel, and any instability in the Middle East — particularly involving a major oil producer like Iran — could push global crude oil prices upward.

Energy sector sources said rising oil prices would increase the cost of fuel imports and place additional pressure on the country’s foreign exchange reserves.

Higher global oil prices could also raise operational costs in the power generation sector, particularly for thermal power plants operated by the Ceylon Electricity Board, which relies on fuel and coal imports to meet electricity demand.

Analysts say increased fuel costs could eventually translate into higher electricity generation costs and additional financial pressure on the national power utility.

The tourism sector had entered 2026 on a strong recovery trajectory after attracting more than two million visitors last year, with authorities targeting three million arrivals this year.

However, industry experts caution that prolonged geopolitical instability in the Middle East could slow the momentum of Sri Lanka’s tourism recovery while simultaneously creating new challenges for the country’s energy sector.

Despite these emerging risks, officials remain cautiously optimistic that the impact will be temporary if tensions in the region stabilise in the coming weeks.

They stress that Sri Lanka continues to be viewed internationally as a safe and attractive destination, while authorities are closely monitoring developments in global energy markets and aviation networks.

By Ifham Nizam

Business

NDB raises Sri Lanka’s largest Basel III-Compliant Thematic Bond

Published

22 hours ago

2026/03/17

Sahan Weerasooriya

Kelum Edirisinghe - Director, Chief Executive Officer

National Development Bank PLC (NDB/ the Bank) recently announced that it successfully raised LKR 16.0 billion through the issuance of Basel III-compliant Tier II Rated Unsecured Subordinated Redeemable GSS+ Bonds (the GSS+ Bonds), to be listed on the Colombo Stock Exchange (CSE). This issuance marks a major milestone in thematic fundraising within Sri Lanka’s capital markets landscape, signaling the country’s growing progress in the increasingly important segment of sustainable finance.

The GSS+ Bonds issue opened on 10 March 2026 and was oversubscribed within the same day, demonstrating strong demand from both retail and institutional investors. This response reaffirms the confidence investors place in NDB and its overall financial strength and stability. The issuance of the GSS+ Bonds reflects the Bank’s strong environmental and social considerations embedded in its lending practices. For many years, NDB has maintained a robust Environmental and Social Management System (ESMS) ensuring that funds are directed toward environmentally and socially responsible projects and causes.

NDB’s GSS+ Bonds will be deployed to finance eligible Green (including Blue), Social, Sustainability, and Sustainability-Linked projects, supporting environmentally responsible, socially impactful, and sustainable economic development.

Business

HNB General Insurance fastest in reaching LKR 11 Bn. revenue (GWP) within 10 years of operations

Published

22 hours ago

2026/03/17

Sahan Weerasooriya

Stuart Chapman - Chairman / Sithumina Jayasundara –CEO

HNB General Insurance Limited (HNBGI) announced its financial results for the year ended 31 December 2025, marking a milestone year of accelerated growth, strengthened financial resilience, and sustained business momentum.

The Company recorded a Gross Written Premium (GWP) of LKR 11.0 billion for 2025, reflecting a robust 21% growth compared to LKR 9.1 billion in 2024. This performance significantly outpaced the industry’s growth of 15%, demonstrating the Company’s strong competitive positioning, disciplined execution, and continued customer confidence. With this achievement, HNBGI becomes the first general insurer in Sri Lanka to reach the LKR 11 billion GWP milestone within ten years of operations. The Company also improved its market position, moving up to 6th place from 7th in Sri Lanka’s general insurance sector.

The Fire segment emerged as a standout contributor with a 27% growth, reaching LKR 2.4 billion, while the Motor portfolio grew by 25% to LKR 6.0 billion. Marine recorded a steady 16% increase to LKR 378 million, and the Miscellaneous segment contributed LKR 2.2 billion. The broad-based growth across segments reflects HNB General Insurance’s balanced portfolio, effective distribution reach, and strong customer confidence.

The Company demonstrated its unwavering commitment to customers through timely and efficient claims management, committing LKR 2.5 billion towards Ditwa cyclone-related claims. In addition, a further LKR 4.7 billion was paid in claims across all other segments during the year, underscoring the Company’s financial strength and reliability in times of need.

The Company’s financial strength further consolidated during the year, with Total Assets growing by a significant 31% to LKR 13.38 billion, while Funds Under Management increased by 9% to LKR 6.74 billion. The Capital Adequacy Ratio remained well above regulatory requirements at 190%, reflecting a solid capital base to support future growth.