The Hon. Ravi Karunanayake

¶ 01 Thank you, Hon. Chairman, for allowing me to speak at this very important Discussion. I am also happy that you are presiding.

¶ 02 Hon. Chairman, as we discuss the Energy Ministry, let me first note how power supply began in our country: the ship SS Helios arrived in Colombo in 1882; the Bristol Hotel at Colombo Fort used a diesel generator in 1890. From there to today, I draw your attention to our current state.

¶ 03 In 2025, generation is about 16,500 MW-hours equivalent on annualized basis; forecasts show 24,000 by 2030, 34,000 by 2040, and 45,000 by 2050. In open discussions with the subject Minister, we know we are heading into a grave situation if not addressed, and I wish to propose answers.

¶ 04 Demand growth is about 5 per cent annually. The rupee-dollar is volatile: Budget Day Rs. 300 per dollar, but LCs now clear at Rs. 312. Our debt stock rose by Rs. 300 billion in just days—this affects investment.

¶ 05 Out of 16,500 MW equivalent, roughly 4,000 MW hydro, 7,000 MW coal, 4,000 MW furnace oil, and 1,500 MW renewables. Unit selling prices in competitor countries are Rs. 16–20 (India, Pakistan, Bangladesh) and around Rs. 22 (Thailand, Malaysia), while Sri Lanka is about Rs. 24–25. Our average selling price now is around Rs. 26 with production cost around Rs. 23, per “Operating Performance Highlights 2025 Q1”: hydro generation cost Rs. 2.50 plus Rs. 1.50 distribution, Rs. 4.50 generation cost and Rs. 0.03 corporate charge—yet total costs reach Rs. 31 while income is Rs. 26.09, implying losses. To be competitive, we must lower power costs.

¶ 06 Installed capacity is about 6,000 MW (CEB and private). Peak night demand is roughly 2,900–3,000 MW; mornings about 2,700 MW, leveraging renewables. There is a mismatch and a generation deficit hindering growth. Historically, growth of 7–11 per cent correlates with power demand growth; now renewable integration faces system absorption issues. We must move from strict least-cost if it blocks renewable entry and enable renewables.

¶ 07 Over 76 years, CEB’s total asset value is about Rs. 1 trillion—significant investment. A SWOT analysis will reveal the critical state. Generation projects take 3–4 years; transmission and distribution take 4–5 years.

¶ 08 The CEB Act No. 17 of 1969 was reformed in 2002 by Minister Karu Jayasuriya, and then in 2024 by Minister Kanchana Wijesekera to reduce state micromanagement and commercialize operations. A later change of government altered policy: instead of multiple competing companies, generation (thermal, hydro, coal) is now to be combined into one generation company; distribution split into divisions under a holding company; transmission/system operation under a separate company; a maintenance company; and a corporate entity for pension and provident funds. LECO, a successful PPP, should not be dragged back into a purely state model—let its success continue. Yesterday, Minister Wajira Samarasinghe noted savings; fine—but ensure governance. I also raised concerns about high-end cars and BYD purchases at LECO; I ask for updates on actions taken.

¶ 09 Transmission and system operation is crucial: system control, power purchasing, planning, implementation all sit there. Staffing has reduced from 27,000 to 22,000, with a further 2,600 to retire. The CEB can be run with 10,000–12,000 if commercially managed. We need clarity on the restructuring pathway—free from ad hoc, politicized decisions. IMF says any consumer relief must come via the Budget, not via loss-making utilities. With fewer political interferences, we can do better.

¶ 10 Over the next 7–8 years, we need US$ 8 billion (about Rs. 2.4 trillion) in energy investments. The world is moving to renewables; Sri Lanka must adapt. Spending on fossil fuels is a waste if we can produce domestically; renewables keep 100 per cent of value onshore, while 75 per cent of fossil value leaks abroad.

¶ 11 Data show we can do 4,000 MW solar in Jaffna, Kappalthurai, Hambantota, Monaragala, Trincomalee, Batticaloa; 2,000 MW wind in Mannar, Kilinochchi, Trincomalee, Batticaloa, Hambantota, Monaragala; 700 MW pumped storage via Victoria and downstream. With BESS of about 1,400 MW across Colombo, Hambantota and Habarana hubs, we can displace expensive fuel generation.

¶ 12 From “Operating Performance Highlights 2025 Q1”: CEB fossil fuel generation costs Rs. 49.75 per unit; IPP thermal Rs. 73.97; coal Rs. 22; renewables Rs. 21. So, BESS plus renewables can be cheaper. Proposals suggested BESS at Rs. 45.50 due to 10-year contracts, but the lifecycle is 20 years—short contracts inflate annual cost. Recently, WindForce reportedly won 17 of 20 tenders, with BESS at Rs. 17 and firm renewable energy at Rs. 32 per unit—much cheaper than Rs. 75–90 fuel units. We must not sabotage such outcomes.

¶ 13 On duty-free treatment for components: I raised this under Standing Order 27(2). The Finance Minister gazetted bonded storage relief—a step in the right direction.

¶ 14 Globally, Round-The-Clock Solar is emerging; we should focus on practical system integration and transmission, not just generation. We need 400 kV lines: Kilinochchi–Habarana, Habarana–Trincomalee, Habarana–Mannar, Hambantota–Monaragala, Victoria–Kirindiwela, Habarana–Victoria, with Habarana as the collection hub.

¶ 15 Absorption capacity matters: Rs. 2.4 trillion over seven-eight years must be absorbed without overheating. The independent Central Bank may warn of overheating; coordination of monetary and fiscal policy is essential. Our debt-to-GDP is about 104 per cent; rupee depreciation inflates GDP in rupees while debt stock rises. In 1977, J.R. Jayewardene accelerated growth to 8–12 per cent by compressing Mahaweli into five years instead of 30; today we benefit with Rs. 2.50 hydro units and paddy support.

¶ 16 We must be politically sensitive in energy choices: the World Bank, JBIC, ADB and AIIB emphasized LNG; yet we picked a company without LNG production while our production, ports and trade rely on China and India. Our foreign policy must align with development needs; India, China, the USA and EU are all critical partners—do not sacrifice one for the other.

¶ 17 On plant retirements: Kelanitissa (165 MW) should retire by 2030; Kiribathgoda (190 MW) by 2030; the 100 MW Port power barge by 2032; Norochcholai (900 MW) must derate from 2032 and be fully retired by 2040. If today’s Rs. 21 coal unit costs begin rising, what then? We must plan now.

¶ 18 The hydros—Victoria, Kotmale, Randenigala, Rantembe—built decades ago by the UNP provide Rs. 2.50 units. Their 50-year-old machines need upgrades, part of the Rs. 2.4 trillion requirement. The State cannot fully fund this; the private sector, which drives 60–70 per cent of GDP, must be engaged sensibly. Fix issues in LTL subsidiaries through regulation and taxation, not by destroying value.

¶ 19 I also urge power-energy grid interconnection with India and to invite Indian and Chinese firms to help reduce production costs—do not fear India or be scared of China; leverage both.

¶ 20 On the 350 MW Sobhadanavi/Sahasdanavi saga: if you signed and opened the plant, ensure transparency. IPO attempts that were then withdrawn—regulate, tax fairly and proceed. The Government already gets 30 per cent corporate tax, 18 per cent VAT, etc. Engage LTL Holdings constructively—tax dues must be paid, but do not crush enterprises that can invest and deliver.

¶ 21 If we can bring the unit price down from Rs. 26–30 to around Rs. 18, we can compete at 6 per cent growth. Macktiles installed 10 MW rooftop solar to compete with imports once prices fell.

¶ 22 For the CPC, encourage investment while negotiating with the IMF for space to support needed capital and targeted relief.

¶ 23 Thank you.