FINANCIAL CHRONICLE – Sri Lanka’s industry organizations have submitted their feedback on a draft national electricity policy, responding to a government call for written proposals. The chambers expressed concerns over the removal of cross-subsidies, which they described as a strategy that disproportionately ‘taxed’ service users, general-purpose users, and large households to subsidize cheaper electricity for certain industries with lobbying power and religious institutions.
There have been calls for more neutral, non-discriminatory pricing that can help the economy adapt to global changes, rather than having the government or regulator penalize emerging sectors and impose opaque subsidies.
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The industry bodies have also questioned the policy of limiting subsidies solely to the poorest households. “The proposed tariff revisions outlined in the draft energy policy raise concerns, particularly regarding the removal of cross-subsidies and the proposal to restrict subsidies exclusively to households consuming less than 30 kWh per month,” the chambers stated. “Without detailed analysis, these measures could weaken access to sustainable and affordable energy and potentially lead to fiscal risks.”
Sri Lanka faces generally higher electricity costs compared to East Asia due to resistance to coal power, reliance on high-cost feed-in tariffs instead of competitive bidding for renewables, and substantial debts incurred to cover losses from previously non-cost-based pricing, which has financially strained the utility.
The industry bodies also questioned the ‘uncompensated’ curtailment of renewable energy. Some renewable firms have advocated for ‘take-or-pay’ style contracts, similar to those used in Africa.
Industry Bodies Flag Gaps in Draft National Electricity Policy
The Ceylon Chamber of Commerce, along with the American Chamber of Commerce, Exporters Association of Sri Lanka, Federation of Renewable Energy Developers, Joint Apparel Association Forum, National Chamber of Commerce of Sri Lanka, and Sri Lanka Association for Software and Services Companies, submitted joint observations highlighting several key issues that have not been adequately addressed in the Draft National Electricity Policy.
While acknowledging the need for reform in the electricity sector, the submission points out several gaps in the draft policy that require closer examination. Key areas such as affordability, decarbonization commitments, incentives for renewable energy, competition, and the long-term financial health of the sector are either missing or insufficiently addressed.
The proposed tariff revisions outlined in the draft energy policy raise concerns, particularly regarding the removal of cross-subsidies and the proposal to restrict subsidies exclusively to households consuming less than 30 kWh per month. Without detailed analysis, these measures could weaken access to sustainable and affordable energy and potentially lead to fiscal risks.
The provisions allowing uncompensated curtailment, removal of feed-in tariffs, and imposition of mandatory time-of-use tariffs on rooftop solar users could render renewable energy projects un-bankable for international lenders, thereby increasing the cost of capital for Sri Lanka.
Calling for a more future-focused approach, the submission emphasizes the need for a policy that reflects modern electricity systems. This includes planning for the energy transition, energy storage, market competition, cross-border electricity trading, and emerging technologies.
The Chambers and Associations request a comprehensive revision of the Draft National Electricity Policy, alignment with the Electricity Act, and resubmission following substantive consultation. They reiterate their support for engaging constructively with policymakers to shape a policy that supports affordability, investment confidence, and Sri Lanka’s long-term energy security.
Link to submission – www.chamber.lk/wp-content/uploads/2026/01/joint-submission-on-national-electricity-policy.pdf
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