Dry weather and high oil prices pushing power generation costs to higher levels

The proportion of electricity generated from hydropower declined significantly since the beginning of this year, dropping from 69.2% in January to 26.5% in March. In the same period, the price of Brent crude oil has escalated from $78.06 per barrel to $84.22 per barrel.

Between January 1st and March 14th of this year, electricity generation rose from 37.47 GWh to 49.69 GWh. The Central Bank of Sri Lanka (CBSL) stated that this surge has been primarily at the cost of thermal oil and coal, in contrast to the dominance of hydro in January..

The favorable weather coupled with the improved exchange rate coupled with multiple upward price revisions helped the CEB to earn record profits last year. Last month, the government finally approved a double-digit price revision in electricity tariffs. However, the rising costs in power generation might pave the way for another power tariff increase.