The Hon. Kumara Jayakody - Minister of Energy

¶ 01 Hon. Presiding Member, on CPC: references were made to “debt” increases. There is confusion between debt and letters of credit/letters of indemnity. CPC has not borrowed to “run” operations in the way suggested; there are LC-related instruments. As to profitability, by October we recorded about Rs. 32 billion in profit.

¶ 02 On the India HVDC interconnection: we have signed an MoU and are working through technical aspects. We must be prudent about import/export prices and include transmission costs. Indian competitive prices (e.g., Adani bids around USD cents 3.50) are benchmarks; we are not yet at that average, so careful analysis is needed on buying and selling.

¶ 03 On the Trincomalee energy hub and oil tank farm: we are progressing on Sri Lanka’s side. India has indicated a joint working team but they have not yet arrived; once in place, we will proceed.

¶ 04 On grid development in the North and East: we are advancing projects. The Kilinochchi–Habarana 400 kV line (about USD 140 million) has financing support (from an international bank) and Cabinet paper submitted. The Sampur–Kappalthurai line tender is opened and under evaluation. Kappalthurai–Habarana tender will be called within about two months. Additional lines — Habarana–Kirindiwela, Hambantota–Monaragala, Norochcholai–Wariyapola — are being prepared for tendering and initiation next year.

¶ 05 The North faces capacity constraints for integrating renewables; we are addressing this. We have approved a 234 MW wind project at Pooneryn and another 204 MW project; tenders will be called and progressed next year. In Mannar, a 20 MW private wind project is underway; a 50 MW island project is also being advanced; a further 100 MW tender evaluation is nearing completion, with more to follow. Transmission must be ready in parallel; many projects were previously slated as far out as 2034–2037 — we are pulling them forward.

¶ 06 On the Adani proposal: much misinformation was presented. The quoted USD cents 8.26/kWh was only the energy price; it excluded transmission, which was to be paid via an annuity arrangement not finalized. Comparing cents 8.26 to India’s cents ~3.50 (via competitive tenders) shows why we could not accept it. Following the President’s guidance, we informed Adani we could consider around cents 5; the proponent withdrew. Locking in cents 8.26 for 20 years would prevent tariff reduction. We are instead proceeding to lower the generation cost.

¶ 07 Our current average generation costs (approximate averages) are: hydro 1.79 (Rs/kWh), CEB thermal 47.91, CEB coal 19.52, CEB wind 13.91, IPP thermal 91.80, renewables (excluding rooftops) 16.69, solar rooftops 29.73 — with legacy 37/27 schemes pulling up the average. We have already reduced the generation point average by about 19.2% and target moving towards about USD cents 5 overall (currently around cents 6.2 equivalent).

¶ 08 On household tariffs, the last revision before our government took office was July 2024. We have since reduced significantly: - 0–30 units: from Rs. 8 to Rs. 4.50 per unit. - 0–60 units: from Rs. 20 to Rs. 8 per unit. The 0–60 basket price fell by Rs. 12.75 per unit. - 61–90 units: from Rs. 30 to Rs. 18.50 per unit, even though our average generation cost is about Rs. 19.02 (before transmission). - 91–120 units: from Rs. 50 to Rs. 24 per unit. - 121–180 units: from Rs. 50 to Rs. 41 per unit. - Above 180 units: from Rs. 75 to Rs. 61 per unit.

¶ 09 Around 70% of customers fall within 90 units, meaning we supply at a loss to the majority — hence overall profit/loss depends on the cross-subsidy structure.

¶ 10 Regionally, in small household categories, Sri Lanka is now among the lowest — close to Pakistan and Bhutan. For medium domestic, we rank around eighth; for large domestic categories, similarly improved. For industry, we are about fourth in the medium segment (near Bhutan, Oman, Nepal) and second in large and very large segments near Bhutan. These align with our direction to improve affordability while maintaining fiscal prudence.

¶ 11 Under the Ministry of Energy, about Rs. 23 billion is allocated, of which around Rs. 21 billion are foreign-funded project loans eventually serviced by CEB/sector entities — minimal direct Treasury burden. Our priority is a quality service with a gradual move to cost-reflective tariffs by reducing costs and curbing corruption and waste.

¶ 12 I thank the Ministry Secretary, staff, Deputy Minister, and all agencies — CPC, CPSTL, the Sustainable Energy Authority, the Petroleum Development Authority, LECO, and Lanka Coal Company — for their support. We will continue to deliver.