Minister Confirms CEB’s Rs. 5 Bn Profit

By Faraz Shauketaly

Champika Ranawaka

Sri Lanka’s Minister of Power and Energy, Champika Ranawaka confirmed that the latest accounts for the Ceylon Electricity Board (CEB) indeed reveals an operational profit for the year 2010.
Squashing rumours and speculation that the figures bandied about were a product of creative accounting, Minister Ranawaka provided The Sunday Leader with details of exactly what constituted an operational profit of just over Rs. 5 billion in the year 2010. An electrical engineer by profession, Champika Ranawaka spoke of the need to have a diverse mix of power sources so as not to rely entirely on the one type – lest external pressures in one sector afflict the availability of continuous power in Sri Lanka.
The Minister confirmed that the government was committed to the Sampur Coal Power project and would then look at other sources of power, stating that with Puttalam and Sampur the government would not pursue further coal projects as they were looking for a “mix” of power sources including the possibility of atomic power, gas powered plants and wind power amongst others.
Atomic power may not be the most suitable for Sri Lanka due to its small size and the huge containment areas required. LNG power plants are more feasible but the cost structure may put the government off: the cost of a unit of LNG powered electricity is very appealing if taken without the storage costs. LNG will need exacting and superior storage and delivery facilities either centrally or on site, which is likely to double the cost of a fully fledged LNG power plant. Sources close to the power sector say that whilst the Minister is absolutely correct in seeking a mix of power sources, the fact of the matter remains that LNG (gas) powered plants can be prohibitively expensive due to the need to spend at least US$ 500 million in connection with the delivery and storage of gas – figures which proponents of gas powered plants are keen to downplay, highlighting instead, the lower cost per unit of gas powered electricity.
Excerpts of the Interview with Mandana Ismail Abeywickrema and Faraz Shauketaly:
Q: Can you explain how the CEB’s profits for 2010 of Rs. 5 billion came about?
A:
Yes, the value of sales in 2010 amounted to Rs. 121.862 billion, Expenses were Rs. 120.419 billion, giving an operating profit of approx Rs. 1.4 billion. The CEB also has various other income streams, all of which totalled Rs. 3.62 billion, giving us a pre-tax profit scenario of Rs. 5.063 billion.
Q: What happened to the losses in 2009 of Rs. 11 billion? Have you repaid that? What about the accumulated losses?
A: No, these have been treated separately. The losses over the 1999-2009 period have fluctuated. (Total losses 1999 – 2009 is approx Rs. 106 billion)
Q: So obviously the Treasury will be writing these off?
A:
Well, yes also the Treasury has taken over the amount due to the CPC.
Q: So the Minister of Petroleum will not be asking you to make payment to them?
A:
No, that is correct. We agreed in June last year that the CPC dues will be settled by the Treasury.
Q: What will you do with this profit that you have now – Rs. 5 billion?
A:
The thing is that our cash inflow and outflow is somewhat different. In our system there is something called ICG – Internal Cash Generation. When we are electrifying rural areas for example, we are actually spending our funds; in 2010 for example it was around Rs. 12 billion. That is not an investment – it is money being spent on extending our grid, distribution system to take electricity to villages. The street lighting component of our work amounted to Rs. 2.67 billion, we bear these costs too. Also there are many other cases where we meet the costs like Hospitals, Defence Establishment, Government, Temples and other social responsibilities – a sort of corporate social responsibility.
Q: What percentage of houses in Sri Lanka have access to electricity now?
A:
90%
Q: when will you reach 100%
A:
In 2012.
Q: You read from an interesting document explaining the Rs. 5 billion profit. Can we have a copy of that?
A:
Certainly. (The figures reproduced here are from that report made available by the Minister)
Q: Final question: you said earlier that you were looking at a “mix” as opposed to a “single source” for our power requirements in Sri Lanka. What kind of mix will it be?
A:
Our long term generation plan would be Coal 17%, LNG 27%, Hydro 27%. Rest will be fuel and Renewables. We use a system called WASP which automatically picks the generation mix.  We are also encouraging Wind energy. It however fluctuates and we have investors willing to do a further 300 MW.

15 Comments for “Minister Confirms CEB’s Rs. 5 Bn Profit”

  1. P.L.J.B.palipana

    Well done Champika. When we handle something very professionaly the out come is very sound.
    What happend to the Colombo- Mathara expressway? Please remind the Poddala Bridge failure. The out come was very un- sound because the project was managed by Quacks.

    • Dear P.L.J.B.Palipane, You said you are MICE and MIStructE qualified.
      What is your professional opinion?

    • KAPILA BANDARA

      This is electric!
      We now have operating profit, re-defined as, profit? London School of Economics take note. Oxford take note: verbal acrobatics (or is that verbal engineering?) at work, too.

      Politicians are now rewriting business school manuals! And, where is the comparable period data?

      Way to go!

  2. love2beTRAITOR

    just 27% on hydro? thats bad. i think we should use more hydro plants. even if it is small.

  3. Chandima

    The minister should be commended for this. This sort of news is very rare from the govt. sector as there has been Rs 215 billion loss from all govt. departments due to gross mismanagement. Most of the ministers and their henchman who do not have any interest in the subject generally plunder the country as in SL their is no accountability and what ever they do thay know that they get away. Sadly its the people who pay for misdeeds due to sky rocketting cost of living.

    So, why has Mr Ranawaka succeeded?
    - He is professional
    - Electrical engineer
    -Due to above probably doing politics not to earn money for himself but hopefully to serve

    It is this sort of people who knows the subject, who has committment and vision are the sort of ministers we need.
    So, well done Mr Ranawaka!

    • Accountant

      Chandima,

      There is nothing to commend anyone. The underlying and undeniable truth is that CEB made an operational profit but what are the other costs involved? The other costs are Interest on debts, depreciation and other finance costs which may go into massive amounts perhaps more than $10 Billion.

      This kind of reporting is called GARBAGE. Who are you trying to fool Mr. Minister? We are not dumb gone are the days to hoodwink people. People are smarter than you think.

      I trust the Leader would publish this letter without any alteration and forward a copy to the Hon. Minister for him to know that we masses are not fools.

    • Auditor

      You don’t need an Electrical Engineer to cook the books. Simply ask the Finance Department to creat suspense accounts. I believe we have to look at this in a pragmatic angle. Why are we beating our own drums sticking the head into sand claiming there has been a profit. Its all rubbish and not worth considering it.

      Let the Central Bank Governor who is a qualified Accountant himself who was also the Past President of our Institute vouch for the above news item. Does he agree operating profits= Net Profits ( Forgetting all finance costs, interest, depreciation and Management fee etc etc.)

      If Mr. Cabraal vouches for the above then we have to leave our profession and let the Electrical Engineers run the businesses.

  4. R.P Perera

    Why not publish the full accounts of the CEB along with the comparative figures for the previous year so that we can see how the profit was achieved. What is the Net Cash Flow after operating expenses for that is a better indicator than profits. What is the total investment in CEB and what is the rate of return on the investment. If the Minister wants the educated public to believe he must publish the full accounts and have them audited by the Auditor General or a private audit firm preferably since the Auditor general has also lost his independence and been reduced toa cypher after the 18th Amendment

  5. Sri Lanka maybe the only country which imports a commodity ( petroleum ) and sells same to a captive market at prices well above those in other countries, but yet manages to acheive losses ! !
    Overstaffing ( political appointees ), corruption ( unnecessary foreign trips, personal vehicles, misappropriation etc. over the years ) and waste of resources etc. contributed to this.
    The people pay for all this.

  6. Tissera

    Lets not forget to applaud the Sunday Leader paper for actually carrying a ‘positive government action’ story. This is balanced reporting. The profits seem to have appeared as this time the hydro power was achieving its full potential thanks to the rains. The facts are facts: Ranawaka has (like the President and the war) obtained the unobtainable. We should call the Rajapkasas just that: the overachievers!!

  7. Justitia omnibus

    This “profit” appears to have been generated, to a large extent, by ignoring the fact that the CEB owes the Ceylon Petroleum Corporation a HUGE amount for fuel supply!

    That is indeed a great way to display financial success: Don’t pay your bills and show your gross income as nett profit!

    One thing is for certain: This Minister is excellent at manipulating the media and having them publish “selected” information! Shame on the Leader for being “taken” in this manner!

  8. KAPILA BANDARA

    We are encouraging “wind energy” he says. Heh Heh. Flatulence comes to mind.
    Hot air in the accounting books should help Sri lanka!

  9. M.V.R.Perera

    will the minister confirm that depreciation and interest payments which may be in the region of over 20 Billion rupees per year is taken into account which is a statutory duty of the CEB in accordance to section 38 of CEB Act No 17 of 1969 and is also a requirement for profit and loss of any organization. Also any country goes for least cost electricity and even middle east countries have considerable amount of coal power stations as there are large deposits of coal in the world which on very conservative estimates can last for over 130 years it is this policy of the power ministry that is giving us one of the highest cost electricity in the world when we have the potential to have the least cost electricity in the world. Also there are many coal exporting countries in the world as such there is no fear of a short fall in coal supply further details will be given latter

  10. I Hussein

    Its profit making, you dont pay your debtors. From 115b loss to 5b profit in such a short time is really magical. This is an inflated boasted profit making to please the their gallery.
    I am sure people would like to see the P/L account & balance sheet in newspapers.

  11. Bull shit, whole sale bull shit. Do not beleive a word of any ministers including the mighty MR. Very soon all Govt. Depts. will come out with same tactics & show profit, the rate at which tis Govt. spends , even if you keep printing money 24/7 , still it will be loss. MR goes with over 100 of his stooges on foreign trips costing millions, thank God he can’t go to the US & England any more, he will go with an entourage to India & China. They get lons saying for development & spend on thamashas & show profit, whom are they fooling? the people are no more fools.

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