The Hon. (Dr.) Anil Jayantha - Minister of Labour and Deputy Minister of Finance and Planning

¶ 01 Thank you, Hon. Presiding Member, for the opportunity. Under the Expenditure Head of the Ministry of Power taken up for debate today, I will respond briefly to several points raised by the Opposition. Many inaccuracies and misconceptions were presented.

¶ 02 First, on the principal issue: it was claimed that electricity supply is insufficient. While Sri Lanka has significant potential for power generation, the key challenge today is not supply per se but demand — ensuring that electricity is provided to meet demand and that demand is properly managed. Without creating the right framework for demand-side management, merely increasing supply will not solve the problem. The simplistic argument from basic economics that increasing supply automatically lowers prices ignores practical constraints. Perhaps that explains why those representing such views in the Opposition failed for decades to deliver the promised benefits from electrification. Our approach is different: electricity is a strategic sector to boost the economy, drive industrial growth, catalyse structural change, increase productivity, and reduce product costs.

¶ 03 There were also claims about losses at the Ceylon Electricity Board (CEB). These were presented without understanding the methodology. In utilities, prices are set by the independent regulator — the Public Utilities Commission of Sri Lanka (PUCSL) — within a framework that considers costs, projections of the future generation mix (hydro, renewables, coal, fuel), and transmission and distribution costs, as well as a return on assets. Prices are not set by simply taking the historical generation cost plus a fixed mark-up.

¶ 04 These parameters can change within months; hence surpluses or deficits may arise as forecasts move. In 2024, CEB recorded profits — roughly Rs. 144 billion for the full year and Rs. 119 billion over six months — not because someone made a mistake and then reversed it, but because tariff revisions followed updated information. PUCSL reduced tariffs by 22% in March 2024, reduced again by 22% in July 2024, reduced by 20% in January 2025, after a prior 66% increase; then increased by 15% in June 2025; and did not increase in October 2025. Surpluses generated were thus reallocated through the regulatory cycle. About Rs. 51 billion that could have accrued in 2025 to profits was eroded due to such movements based on updated inputs — not by presenting false numbers.

¶ 05 Our vision of power is not as a simple commodity to produce, store, and sell for profit or loss. It is a people-centric energy transition anchored in public interest. We have reformed the Electricity Act to clearly define roles across generation, transmission, distribution, and system operation, enabling state entities and new corporatized structures to function efficiently in a conducive environment. This is not about excluding the private sector; rather, it is about a coherent system in which private participation aligns with grid integration and national needs, avoiding past ad hoc power purchase agreements signed at high prices without regard to grid absorption.

¶ 06 As presented in the Budget, to achieve medium-term growth above 7%, we must ensure affordable power and expand demand — with energy a decisive enabler. The President highlighted greater transparency in procurement, especially for renewables. For instance, a 500 MW project proposal priced at around USD cents 8.26/kWh was cancelled because it was unaffordable; we observed the same company selling in India around cents 3–4/kWh. Subsequently, on 28 October 2025, two projects at Mullikulam were secured at significantly lower tariffs.

¶ 07 Under the Ministry of Power, Rs. 23,100 million has been allocated, including for transmission, distribution, renewables, and nuclear studies. Of this, about Rs. 18,291 million is capital expenditure for transmission and distribution. We also have to absorb off-Budget commitments created previously, now being regularized per the Auditor General’s reports — for example, Rs. 7.6 billion related to foreign debt servicing accounts of the CEB.

¶ 08 On renewables, there is a Rs. 1.1 billion waste-to-energy project; while useful, its power purchase price (around Rs. 36 per kWh over 20 years) places a burden on the Treasury under that agreement. We will bring the Energy Transition Act next year to broaden “energy” beyond electricity — including fuels, offshore resources, and minerals. Offshore exploration is advancing with consultancy support; preliminary indications suggest hydrocarbon potential in two of four sites off Mannar. We will pursue commercialization based on results.

¶ 09 Our aim is to make the energy sector a prime engine for accelerated economic growth and to present and enact the Energy Transition Bill next year. Thank you.