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.

By Hiran H.Senewiratne

The stock market yesterday witnessed huge selling pressure as local and foreign investors became cautious over the IMF’s next review of the economy and the forthcoming budget that will take place this month, market analysts said.

Amid those developments both indices moved downwards. The All- Share Price Index went down by 168.4 points while S and P SL20 declined by 24.93 points. Turnover stood at Rs 2 billion with the following crossings. Those crossings were reported in Amana Bank, which crossed 8.2 million shares to the tune of Rs 205.9 million; its shares traded at Rs 25, Ambeon Capital 700,000 shares crossed for Rs 21.3 million, its shares traded at Rs 30.50, Hemas Holdings 185,000 shares crossed for Rs 21.3 million; its shares sold at Rs 115.

In the retail market top six companies that mainly contributed to the turnover were; HNB Rs 180 million (538,000 shares traded), Browns Investments Rs 132 million (15.6 million shares traded), Access Engineering Rs 100.6 million (2.4 million shares traded), Melstacope Rs 93.9 million (721,000 shares traded), JAT Holdings Rs 74.9 million (2.6 million shares traded) and LOLC Holdings Rs 72.1 million (105,000 shares traded). During the day 78.5 million share volumes changed hands in 17890 transactions.

It is said that the banking and financial sector counter was the main contributor to the turnover, while the manufacturing sector was the second largest contributor to the turnover. Other sectors also performed but not at a satisfactory level.

Yesterday the rupee was quoted at Rs 297.30/60 to the US dollar in the spot market, weaker from Rs 297.00/50 to the US dollar Friday, dealers said, while bond yields were broadly steady.

A bond maturing on 15.12.2026 was quoted flat at 9.05/10 percent. Bonds maturing on 15.09.2027 and 15.10.2027 were quoted flat at 9.75/85 percent. A bond maturing on 01.05.2027 was quoted at 9.50/60 percent. A bond maturing on 15.02.2028 was quoted at 10.13/16 percent, up from 10.13/15 percent. A bond maturing on 01.05.2028 was quoted flat at 10.25/30 percent. A bond maturing on 15.10.2028 was quoted at 10.40/42 percent, up from 10.38/43 percent. A bond maturing on 15.09.2029 was quoted at 10.80/90 percent, up from 10.80/85 percent. A bond maturing on 15.10.2030 was quoted at 11.26/32 percent, up from 11.25/30 percent.