Gamini Abeywardane
Sri Lanka’s new government plans to amend the 2024 Electricity Act, which was part of the previous administration’s IMF-backed energy reforms. These reforms aimed to stabilize the economy by aligning energy pricing with costs and privatizing parts of the state-run Ceylon Electricity Board (CEB). However, the new government seems to oppose these IMF-backed reforms.
To amend the Electricity Act, a specialist committee, approved by the Cabinet, was formed to gather input from 59 stakeholders, including development partners and those interested in restructuring the energy sector.
Based on these consultations, the committee has recommended changes to the Act. The Cabinet has approved moving forward with drafting a bill to amend the Act, which aimed to unbundle CEB services, enhance efficiency, and promote private sector participation in the energy sector, aligning with Sri Lanka’s IMF commitments.
Main issue in our energy regime for years was the heavy burden on the treasury because the successive governments had to absorb the losses resulting from the inefficiency and corruption while selling electricity and fuel at subsidized prices because of political reasons.
Until the country became bankrupt most governments had no political will to reform the sector for a number of reasons. While politicians also had been benefitted by that energy regime, the mafia style control of the sector by engineers stood as a stumbling block for any meaningful reforms.
In fact these vested interests have been responsible for undermining all past efforts to reform the sector and move into cheaper and eco-friendly sources of energy such as solar power and wind power.
If we are to change this set up the only way is to break the monopoly of the CEB by unbundling its services and part privatization. The required level of financial discipline can never be achieved in our country without the participation of the private sector. History has proved this fact to the extent that there should not be any argument on that unless someone has the intention of further politicize the set up. That is our experience with the public sector of our country particularly during the last six decades.
Making an institution financially disciplined while keeping it under full government control has not been possible in our country in the recent past. There are well managed profitable state entities in countries such as the UAE and Singapore, but they are completely different political and social set ups.
In our country when one set of politicians are in power they may try to run state institutions with financial discipline, but it is a matter of time till the next administration comes and politicize the whole thing. Therefor knowing our track record the best solution would be getting the private sector to participate in the management of the power sector.
It is vital to keep this in mind when introducing any reforms in the power sector particularly when drafting a bill to amend the Electricity Act.
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