Independent trade unions cry foul

The government has launched a far-reaching overhaul of the electricity industry, breaking up the Ceylon Electricity Board (CEB) into six fully state-owned companies, claiming to rein in chronic losses and mounting debt.

Under the Preliminary Transfer Plan, the newly incorporated entities, namely, Electricity Generation Lanka (Pvt) Ltd (EGL), National Transmission Network Service Provider (Pvt) Ltd (NTNSP), National System Operator (Pvt) Ltd (NSO), Electricity Distribution Lanka (Pvt) Ltd (EDL), CEB Employees Funds (Pvt) Ltd (CEBEF) and Energy Ventures Lanka (Pvt) Ltd (EVL), will take over the assets, liabilities and operations of the CEB from the appointed date.

Independent trade unions have opposed the restructuring programme.

At the core of the new model is the creation of an independent National System Operator, which will handle power system planning and competitively procure electricity from Electricity Generation Lanka, Independent Power Producers and non-conventional renewable energy developers. Power will be wheeled through the national grid operated by the NTNSP and sold to distribution companies.

Explaining the economic rationale, Eng. Pubudu Niroshan Hedigallage said the separation of functions was critical to restoring cost discipline in the sector.

“Electricity planning and procurement will now be carried out independently, based on least-cost principles. That is essential if we are to control generation costs and ease the upward pressure on tariffs,” he said.

Electricity Generation Lanka, though a successor to the CEB, will compete with private and renewable energy producers for projects, a move expected to curb inefficiencies and end guaranteed returns enjoyed under earlier arrangements.

“There will be no automatic allocation of projects. EGL must compete in the market like any other generator,” Eng. Hedigallage said.

According to officials, the Preliminary Transfer Plan provides for one generation and one distribution company initially, with further unbundling planned under the Final Transfer Plan to introduce sharper financial accountability at operational level.

Economists note that the restructuring is closely watched by multilateral lenders and investors, who have repeatedly flagged the power sector as a major fiscal risk.

The government has insisted that the reforms do not amount to privatisation, stressing that all six entities remain 100 percent state-owned. However, independent trade unions are of the view that what the government has undertaken is divestiture in all but name.

By Ifham Nizam