‘SL’s electricity unit cost remaining high compared to regional counterparts’

By Ifham Nizam

Sri Lanka’s electricity unit cost remains high compared to regional counterparts, currently standing at 13 US cents per unit, said Eng. Pubudu Niroshan, the Director General of the Power Sector Reform Task Force under the Ministry of Energy.

Speaking on the government’s plan, he stated the goal is to bring this figure down to 8 US cents within the next five years, ensuring Sri Lanka’s competitiveness in the region.

“Our aim is to reduce generation costs progressively, focusing on renewable energy sources and implementing reforms. Immediate price reductions are impractical without addressing the root causes. A stable reduction in electricity costs requires investments in low-cost power plants, Niroshan explained.

Highlighting the importance of renewable energy, Niroshan stressed that delays in commissioning solar and wind power projects and the absence of LNG-based generation have hindered progress.

“For decades, we discussed coal power plants but failed to implement them when required. Even with tenders for LNG facilities, significant delays were encountered. Competitive pricing and efficient tender processes for renewable projects are key moving forward, he added.

He also said that the government has already embarked on an ambitious plan to add 2,000 MW of solar power to rooftops at a rate of 400 MW annually. Additionally, wind power generation opportunities in the Mannar to Pooneryn belt are being fast-tracked to boost the national grid’s capacity.

While transitioning to solar and wind energy, Niroshan noted that managing day-to-day demand remains critical. “Thermal plants like Kelanitissa and Kerawalapitiya will rely on LNG for the next three years, and we aim to achieve 1,500 MW of production from LNG plants during this period, he revealed.

However, balancing generation costs poses challenges, he said, particularly during the dry season when hydropower output is limited. The estimated generation cost for the first six months of 2025 stands at Rs. 268 billion, while revenue is projected to reach only Rs. 229 billion, leaving a deficit of Rs. 39 billion.

“Despite public perception of profitability, the reported Rs. 140-150 billion ‘profit’ this year was used to settle outstanding debts amounting to Rs. 118 billion. Thus, only Rs. 41 billion remained, and this will be utilized to offset expenses for the first half of next year, Niroshan clarified.

Eng. Niroshan stressed the need for structural reforms in the electricity sector, including the unbundling of generation, transmission, and distribution into separate entities, all fully owned by the government. He explained that the reform plan involves establishing three to four generation companies, two transmission companies, and four distribution companies, overseen by an independent system-operating company.

“This is not privatization but a step towards efficiency, transparency, and sustainability. A restructured power sector will ensure affordable and reliable electricity for the next 30-40 years, he added.