CBSL renews call for CEB reforms, tariff discipline

THE Central Bank of Sri Lanka (CBSL) has said urgent reforms to the Ceylon Electricity Board (CEB) and the wider power sector are necessary to safeguard macroeconomic stability, reduce fiscal risks, and ensure long-term energy security, according to its December 2025 Annual Economic and Social Infrastructure Digest.

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• Latest infrastructure-related report says cost-reflective pricing beyond IMF program critical to CEB viability and debt reduction

• Repeated tariff cuts despite rising costs weakened CEB finances in early 2025

• Over-reliance on thermal power and weather-linked hydro exposes economy to volatility

• Unbundling CEB under amended Electricity Act aims at efficiency, transparency and investment

The CBSL said the continuation of cost-reflective electricity pricing beyond the International Monetary Fund (IMF) program is necessary to restore the CEB's financial position and reduce its dependence on the banking sector.

"Continuation of cost reflective pricing policy beyond the IMF program is essential to ensure the financial viability of the CEB, pay off its legacy debt, and reduce the over-reliance on the banking sector, the report said.

It said untargeted energy subsidies pose material fiscal risks, noting that such risks had previously materialised during the economic crisis.

"Energy subsidies provided by the Government outside the national Budget create substantial fiscal risks, which could eventually materialise as evidenced during the recent economic crisis," the CBSL said, adding that cost-reflective pricing is required "to prevent such fiscal risks that could jeopardise overall macroeconomic stability The report said a forward-looking tariff-setting framework is needed to reduce uncertainty for businesses and households.