Data in the Central Bank’s annual report said power generation rose 7.5 percent to 11,521 GigaWatt hours (millions of units), and sales rose 8.2 percent to 10,024 with system losses coming down from 13.5 percent to 13.0 percent.
But the utility lost 25.5 billion rupees as more thermal generation replaced hydro with a failure of rain.
Its short term debt with state-run Ceylon Petroleum Corporation and independent power producers was 121 billion rupees.
Credit taken by the Ceylon Electricity Board to manipulate energy prices, and manipulated interest rates which were not allowed to rise for credit and deposits in the banking system to reach equilibrium were key reasons for Sri Lanka’s dollar peg to come under pressure.
The rupee fell from 109 to near 131 to the US dollar before recovering after interest rates were raised and energy prices increased.
The central bank said consumption by households rose 7.6 percent due to higher utilization of domestic appliances in rural areas with electricity and rising incomes.
Sales to general purposes and hotel categories increased by 9.7 percent and sales to industry increased 9.1 percent.
Rising energy sales indicates that the underlying economy was in good shape in 2011 and the economy ran into difficulties simply due to state intervention that undermined market forces that would have corrected the imbalance automatically.
Sri Lanka’s power prices were to be revised under the island’s regulatory system in mid year and the end of the year, but rulers have arbitrary power to over-ride the regulatory law, undermining rule of law in the island.
Sri Lanka’s rulers also use the power sector as an off-budget income re-distribution tool, giving subsidized energy to places of religious worship and industry.
In another bizarre move the utility was also asked to subsidize power to state schools and hospitals, cost that should have been borne by the education and health budgets.
The Central Bank report said the share of hydro power fell to 40 percent in 2011 from 53 percent a year earlier and thermal generation increased 36 percent to 6,785GWh, leading to a loss of 25.5 billion rupees in 2011 from a 4.8 billion rupee profit a year earlier.
The average cost of production was 16.21 rupees while the selling price was 13.22 percent.
The CEB itself – which has cheap large hydros – could generate power at 6.77 rupees a unit but the average purchase price from independent producers was 17.24 rupees.