Annual Report 2010 - Ministry of Finance and Planning

4 | State Owned Enterprises (SOE)Infrastructure Development EnterprisesWell developed infrastructurefacilities are a prerequisite forSri Lanka to attract investmentnecessary for development.Recognizing that SOEs are the coreof infrastructure development in SriLanka the government during theperiod 2006-2010 invested in keyinfrastructure providing SOEsRs. 510,884 million which is anincrease of 226 percent from theinvestments made during the period2001-2005 amounting to Rs. 156,432million. 2 3The policy of aggressively investingin SOEs while improving theinfrastructure facilities of the countryhad the twin impact of improving thequality of life of the people throughgreater accessibility to electricity(increase in coverage to 87 percent),water (increase in coverage to 27percent) etc, as well as in facilitatingan increase in the productivityof SOEs. This was evident with aturnaround of CEB into a profitableone in 2010 while SLPA was able torecord the fastest growth amongmany peer ports in the region.Ceylon Electricity Board(CEB)The CEB earned a profit of Rs. 5,062million in 2010 recording a remarkableturnaround from the loss incurredin 2009 of Rs. 11,208 million, animprovement of 145 percent. Thisperformance is noteworthy as CEB hasbeen incurring continuous losses sincethe year 2000.During the year CEB’s asset baseincreased to Rs. 287 billion recording agrowth of 4.3 percent and is in line toachieving the government’s target ofRs. 1,000 billion by 2020. The year onyear demand for electricity increasedby 9.8 percent to 9,263 GWh in 2010,propelled by significant demandsposted in almost all sectors of theeconomy whilst generation capacityof the CEB recorded an increase of8.1 percent to 10,689 GWh at the endof 2010. CEB earned on average Rs.13.16 per unit sold whilst its cost ofproduction in 2010 declined to Rs.13.01/unit from Rs. 14.94/unit in 2009,an improvement of 12.9 percent. Thiscan be attributed to mainly the heavyrainfall experienced in 2010 and theprovision of subsidized fuel 5 . Whilethe former resulted in 5,451 GWhor 51 percent of total electricity tobe generated through the relativelycheaper 6 hydro power plants andonly the balance 49 percent or5,238GWh from the more expensive 7thermal power plants, the latterTable 4.15 > Investments 4 in key infrastructure providing SOEs (Rs. Mn)2001-2005 2006-2010Ceylon Electricity Board 47,566 86,813National Water Supply and Drainage Board 42,713 90,422Road Development Authority 59,976 272,587Sri Lanka Ports Authority 6,177 61,062156,432 510,884Source : Department of National Budget2Includes recurrent, capital transfers made. With regard to CEB and SLPA the on-lending of funds through the budget is alsoincluded3Ceylon Electricity Board, Sri Lanka Port Authority, Road Development Authority, National Water Supply and Drainage Board4Includes recurrent, capital and on-lending facilities granted5Heavy fuel was sold to CEB from January 2010-August 2010 at Rs.25/l and from September 2010 –December 2010 at Rs.40/l, whilst the average cost to CPC was between Rs. 50-65/l6Average cost of Hydro (CEB) – Rs 1.35/KWh and privately owned Mini Hydro-Rs 13.13/KWh7Average cost of Thermal (CEB) – Rs. 18.11/KWh and Thermal(IPP) Rs. 18.48/KWh216