Electricity Price Slash Promises 20% Savings on Goods and Services

Minister of Power and Energy, Kanchana Wijesekera highlighted that following the revision of electricity prices, there is potential for a reduction of approximately 20% in the prices of goods and services in the market.

The Minister further urged the business community to alleviate the burden on the public by lowering prices, starting from midnight on the day of the electricity price adjustment, coinciding with the reduction in electricity bills.

Addressing the press briefing titled “Collective Path to a Stable Country” held at the President’s Media Centre (PMC) today (16), Minister of Power and Energy, Kanchana Wijesekera emphasized that those consuming less than 90 units have benefited the most from the recent electricity amendment, receiving significant relief.

The Minister further elaborated,

The government has decided to revise the electricity tariff every January, April, July, and October each year. Following the price adjustment in March, the Public Utilities Commission (PUCSL) requested a July revision instead of April. Therefore, the new electricity tariff revision will take effect from July 16. The next revision is scheduled for October.

Amid the economic crisis of 2022, bank interest rates soared to 36%. Escalating prices of coal, fuel, and other commodities due to the Russian-Ukrainian war also contributed to the need for an electricity price revision, the first since 2014, which took place in August 2022.

However, this time, there are several key factors contributing to a 22.5% reduction in electricity prices. Notably, there has been significant improvement in the economic situation. Additionally, over the past two years, there has been an increase in rainfall, leading to higher hydropower generation. Renewable energy production has also seen a rise. In April, electricity from the Uma Oya hydropower plant was integrated into the national grid.

Over the last 18 months, the Ceylon Electricity Board (CEB) has diligently worked to reduce operational costs. No new employees have been hired, reducing the workforce from 26,000 to 22,000 employees.

This tariff revision has provided the most relief to consumers using less than 90 units of electricity, particularly benefiting the 79% of households in this category.

During the peak of electricity billing, the production cost per unit was approximately Rs.48.00, which has now decreased to Rs.35.00. A reduction of 25%-26% in electricity prices has been granted to hotels and industries, while religious institutions have seen a 30% decrease across their entire category.

Looking ahead, the key to further reducing electricity tariffs lies in lowering generation costs, which necessitates the rapid establishment of cost-effective power plants. These new facilities are projected to be operational within the next three years, promising additional reductions in electricity charges thereafter.

Currently, there are only 189,000 consumers using more than 180 units of electricity. For those consuming 30 units, the bill amounts to just Rs.290.00, while those using between 1 and 60 units pay around Rs.790.00.

There has been a significant 20% price reduction for factories and small businesses in this electricity tariff revision. Despite this reduction, it appears unlikely that the prices of goods and services, which typically rise on the same night as electricity price hikes, will decrease accordingly. Recently, fuel and kerosene prices have also dropped without leading to lower consumer prices. Therefore, with the substantial decrease in electricity costs this year, we urge the public to take advantage of these savings, with potential for at least a 20% reduction in overall expenses.

During previous electricity price increases, media reports often compared our tariffs with those of neighbouring countries in the region. I encourage the media to now initiate discussions on how this reduction compares with regional electricity prices and emphasize the continuity of electricity supply. Some media and journalists have speculated that this tariff revision was timed due to upcoming elections. However, these policies were formulated back in 2022 through a formal process, resulting from sound policy decisions rather than populist measures. Therefore, I kindly request equal recognition and acknowledgment for the President and the government when electricity prices are reduced.

In the future, we are focusing on implementing an electricity generation plan that emphasizes efficiency and low operating costs. Prior to 2022, the power sector consistently operated at a loss. However, we have achieved operating profits in both 2023 and 2024.

Due to our agreement with the International Monetary Fund (IMF), funding for the CEB from the Treasury has ceased since August of last year. Despite this, through stringent financial discipline, we have successfully steered the CEB into a profitable position. Significant efforts have also been made to repay a substantial portion of the CEB’s debts to other institutions.

Moreover, the government has actively promoted the installation of solar panels to bolster renewable energy adoption. A plan was devised for rooftop solar panels to contribute 150 megawatts annually to the national grid. Thus far, these installations have added 149 megawatts per year to our national grid.