Business
‘The devil is in the details’ in electricity sector 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.
President Donald Trump has ordered a 25% import tax on all steel and aluminium entering the US in a major expansion of existing trade barriers.
The tariffs, which will increase the costs of importing the metals into the US, come despite warnings of retaliation from some political leaders in Canada – America’s biggest supplier of the metals – as well as other countries.
US businesses dependent on the imports have also raised concerns, but Trump has said his plans will boost domestic production.
He warned there would be no exceptions, saying he was “simplifying” the rules, which are set to come into effect on 4 March.
“This is a big deal, the beginning of making America rich again,” Trump said. “Our nation requires steel and aluminium to be made in America, not in foreign lands,” he added.
When asked if tariffs could increase prices for consumers, the US president responded: “Ultimately it will be cheaper.”
“It’s time for our great industries to come back to America…this is the first of many,” he added, suggesting other tariffs could focus on pharmaceuticals and computer chips.
The US is the world’s largest importer of steel, counting Canada, Brazil and Mexico as its top three suppliers.
Canada alone accounted for more than 50% of aluminium imported into the US last year. If the tariffs come into force, they are expected to have the most significant impact on Canada.
Late on Monday, Canada’s Minister of Innovation, Francois-Phillippe Champagne, said the tariffs were “totally unjustified”.
“Canadian steel and aluminium support key industries in the US from defence, shipbuilding, energy to automotive,” Champagne said. “This is making North America more competitive and secure.”
Ahead of the announcement, Ontario premier Doug Ford, whose province is home to much of Canada’s steel production, accused Trump of “shifting goalposts and constant chaos, putting our economy at risk”.
The lobby group for Canadian steel makers called on the Canadian government to retaliate against the US “immediately”, while Kody Blois, a leading MP from Canada’s governing Liberal Party, said his country was looking for ways to reduce its trade relationship with the US.
“This is completely upending what has been a very strong partnership,” he told BBC Newshour ahead of the official order.
Meanwhile, share prices of the major US steel-makers rose on Monday in anticipation of the order, with the price of Cleveland-Cliffs jumping nearly 20%. Prices for steel and aluminium also jumped.
The response in much of the rest of the market was muted, reflecting questions about how serious Trump is about his plans, given his track record of postponing tariffs, or negotiating exemptions to the rules.
In 2018, during his first term, Trump announced tariffs of 25% on steel and 15% on aluminium, but eventually negotiated carve-outs for many countries including Australia, Canada and Mexico.
[BBC]
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.
The Institute of Policy Studies of Sri Lanka (IPS) is inviting proposals for the Saman Kelegama Memorial Research Grant 2025. The grant is an annual, merit-based grant awarded to an outstanding undergraduate studying in a Sri Lankan university. It aims to promote policy entrepreneurs among undergraduates by encouraging policy-relevant, rigorous and innovative socio-economic research.
The grant was established in 2018 to honour Dr. Saman Kelegama’s legacy of independent research and public policy engagement in socio-economic development in Sri Lanka and the wider South Asian region. Dr. Kelegama was the Executive Director of the IPS from 1995 to 2017.
The grant is open to undergraduate students currently in their 4th year or about to enter their 4th year in 2025, studying economics or a related subject in a University Grants Commission-approved university or higher education institution in Sri Lanka. Proposals must be written according to the guidelines provided and emailed to tharakam@ips.lk on or before the submission deadline of 31 March 2025.
HOW WILL THE WINNER BE CHOSEN? The quality of the proposals will be judged for its policy relevance, feasibility, originality and creativity. Three finalists will be chosen and invited to present their proposals at the IPS, where the award recipient will be selected.
OUTCOMES OF THE GRANTS – The recipient will be expected to produce a Policy Discussion Brief within six months of receiving the grant. The research report can be written individually or jointly with an IPS senior researcher.
BENEFITS OF THE GRANT – The beneficiary will be awarded a one-time research grant of LKR 200,000 to carry out the proposed research and a three-month internship at the IPS. The recipient will be able to seek guidance from senior researchers and benefit from IPS resources to complete the proposed study during the internship. To enable students from all over Sri Lanka to benefit from this opportunity, the terms of the internship will be flexible. The internship can either be a fully in-house internship at IPS, or it can be an in-house plus online internship. In the case of the second option, the in-house component of the internship should be at least six weeks. To encourage research dissemination, an additional subsidy will be provided for presenting the research findings at local conferences and workshops.
Important Dates
31 March 2025 – Deadline for Submission of Proposals
31 May 2025 – Announcement of Finalists
23 June 2025 – Announcement of the Winner
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