State-run energy utility Ceylon Electricity Board (CEB) made a profit of Rs61.2 billion for the year to end December 2023, turning around from a hefty loss of Rs298 billion the previous year, with all the profits attributed to inclement weather filling up hydropower plants and the price adjustments, according to interim accounts, our sister concern EconomyNext reported.
The CEB reported profits of Rs77.9 billion for the December quarter, compared to a loss of Rs182 billion a year earlier with about Rs94 billion due to forex losses, as a result of the central bank printing money to suppress rates that triggered a steep currency collapse in a failed float with a surrender rule, EconomyNext said.
CEB revenues rose 55% to Rs156 billion in the December quarter, and cost of sales fell 45% to Rs78 billion amid heavy rains, giving a gross profit of Rs78.2 billion for the quarter.
In the year to end December, CEB revenues were Rs606.6 billion, up 96% from Rs308 billion, while the cost of sales rose from Rs444 billion to Rs506 billion.
At the group level, which includes LTL Holdings, profits were Rs75 billion for the year, with income taxes of Rs6.3 billion provided to the state.
CEB consolidated profits were Rs68.4 billion, with other subsidiaries accounting for Rs7.2 billion. Shareholder equity was Rs498 billion at the company level by December 31, with Rs126 billion capital contribution and profits earned in the last quarter.
CEB earnings could have gone South if not for the tariff revisions.
The utility sustained a Rs18.2 billion loss in the first eight months of 2023 owing to the delayed and limited tariff hike inadequate to compensate for the significant increase in generation costs.
Generation costs had risen 55% to Rs324 billion rupees in the first eight months of 2023, up from Rs209.4 billion a year ago from higher fuel and coal prices and depreciated currency while rising interest rates also pushed costs up.
By August 2023, the cost per unit at the selling point had increased to Rs45.71/kWh from Rs29.17 a year ago, and the CEB charged up to Rs89 from domestic consumers while lowering tariffs to support specific businesses. The government absorbed some of the liabilities of the books of the CEB, adding to the national debt. The CEB had unpaid obligations to the Ceylon Petroleum Corporation and Independent Power Producers of Rs212.3 billion in August 2023.
Beyond then, the revival engineered in the year came from painful tariff revisions, as consumers also bear the burden of sustaining an unproductive workforce within the CEB with vocal unions. In March 2024, the CEB announced a possible tariff reduction: short-term relief that could be meaningless without the overdue restructuring and reforms.