CEB settles Rs. 15 b in CPC debt

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The Ceylon Electricity Board (CEB) has paid approximately Rs. 15 billion to the Ceylon Petroleum Corporation (CPC) so far this year for the fuel it purchased from the national oil supplier.

Speaking to us, CEB Finance Manager T.K. Liyanage stated that this includes a recent settlement that was made during the month of August, amounting to a total of Rs. 3 billion, and the Rs. 6 billion settlement which was raised via a debenture issue at the Colombo Stock Exchange (CSE).

CEB losses soar to Rs. 85 bn in 2019 | Daily News

“Our payments depend on our collections, but according to our allocated budget, the CEB plans to settle at least around Rs. 2 billion to Rs. 3 billion each month to the CPC,” Liyanage said.

We also spoke to a senior official from the CPC, who emphasised that the payments being settled on a monthly basis by the CEB was insufficient, given the current financial difficulties due to dollar rate fluctuations and other external obstacles faced by the corporation.

“The average purchases of the CEB is a minimum of Rs. 3 billion for each month, and the accumulated debt for them to pay the CPC is around Rs. 76 billion, which was to be settled from mid-2019. Therefore, these payments are not sufficient,” the senior official added.

The CEB struggled with its short-term borrowings from banks and other short-term liabilities to the CPC and independent power producers (IPPs) increasing to Rs. 223.2 billion by the end of 2019 from Rs. 142.2 billion at the end of 2018. The CEB’s long-term outstanding liabilities increased to Rs. 421.7 billion by the end of 2019, from Rs. 392.2 billion recorded the year before.

According to its unaudited provisional financial statements, the CEB recorded a loss before tax of Rs. 85.4 billion in 2019, compared to a loss before tax of Rs. 30.5 billion in 2018.

former CEB Chairman Eng. Vijitha Herath mentioned that the CEB was planning to minimise the dependency on diesel usage by introducing a new power plant that would generate 30% of the national requirement.

“The CEB has made a loss of Rs. 100 billion due to diesel; therefore, in the long run, the main target is to get rid of diesel, since it costs Rs. 30 and an additional Rs. 5 for distribution and transmission (per unit of electricity). The average selling price should be Rs. 35, but the CEB was selling at Rs. 16, thereby incurring a loss of Rs. 5 billion per annum,” Eng. Herath stated.

Furthermore, he said that due to the government concession on fuel prices and increased demand for electricity driven by the pandemic, the CEB’s losses were reduced to Rs. 45 billion, whereas the estimated loss was Rs. 90 billion.

“This happened last year. We got a fuel subsidy of Rs. 14 billion from the Treasury. Without a subsidy, we may not be able to repay,” he added.

The CPC provides fuel for the CEB under a credit limit of Rs. 80 billion per month. There were occasions where the CPC discontinued fuel supply to the CEB when they exceeded the credit limit, which resulted in the CEB opting for power cuts around the island.

Poor decisions made on cancelling electricity power plant projects, along with emergency power purchases at expensive prices, were alleged to be the reasons behind CEB’s losses over the years, according to reports.

Meanwhile, addressing a press conference on 17 September, Minister of Power Gamini Lokuge stated that the CEB expects to receive a monthly sum of Rs. 47 billion for electricity bill payments, as payments from consumers had not yet been settled, owing to the current pandemic situation.

“We have halted disconnecting the electricity supply this month as well. If we are to extend the relief period by another month, we will face a severe economic backlash, costing us an additional Rs. 22 billion,” he stated.

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