Sri Lanka’s proposed electricity wheeling reforms could become an important test of whether the Government can convert energy policy promises into tangible economic advantages for its export industries, particularly the apparel sector, which faces intense international competition and pressure to control production costs.
The Joint Apparel Association Forum (JAAF) yesterday welcomed the Public Utilities Commission of Sri Lanka’s (PUCSL) push for a simple, transparent and cost-based wheeling tariff, arguing that competitive energy arrangements could strengthen industrial investment and export performance.
Hitherto the real significance of the proposal lies not merely in introducing another electricity tariff. It is whether Sri Lanka can create an energy market in which manufacturers have meaningful choices, investors can secure reliable supplies before committing capital, and smaller businesses can participate without facing prohibitive costs.
Under electricity wheeling, a generator can supply electricity to a separate customer through the national grid in return for a regulated network charge. This could allow apparel manufacturers to negotiate directly with electricity producers and potentially obtain more suitable supply arrangements.
PUCSL Director General and CEO Damitha Kumarasinghe, speaking at the Sri Lanka Economic and Investment Summit 2026, said investors should be able to secure electricity before making capital commitments instead of waiting for generation capacity to follow investment decisions.
That principle is particularly important for export manufacturing. A company considering a factory expansion must assess electricity availability, operating costs and supply reliability alongside labour, logistics, finance and access to markets. Uncertainty over energy arrangements can weaken investment decisions before a project even begins.
Kumarasinghe estimated that 15% to 20% of electricity could eventually be traded through a market mechanism. However, this remains a prospective estimate, not evidence that such a market is already operational or that manufacturers will immediately obtain cheaper power.
The reform’s success will depend on the tariff’s design. JAAF wants a transparent, cost-based structure that does not discourage investment while allowing transmission and distribution companies to recover their costs and earn a reasonable return.
This creates a delicate policy challenge. If wheeling charges are excessive, manufacturers may find direct power purchasing commercially unattractive. If network costs are inadequately recovered, the financial pressure could ultimately affect electricity consumers or the wider power sector.
The distribution of benefits also requires scrutiny. Large exporters may be better equipped to negotiate contracts, finance energy-storage systems and manage complex electricity arrangements. Smaller apparel manufacturers could be excluded if regulatory procedures, minimum purchase requirements or infrastructure costs make participation uneconomical.
JAAF has therefore called for industry consultation and fair access for businesses of all sizes. Those safeguards should be reflected in the final regulations rather than left as broad policy assurances.
Battery storage is another critical component. JAAF supports stronger incentives for storage alongside accelerated open-access and wheeling regulations. Storage could help businesses manage variations in renewable generation and improve the usefulness of electricity purchased from different sources, although its financial viability will depend on capital costs, tariffs and operating conditions.
The legal framework is another unresolved issue. Kumarasinghe said discussions remain at an early stage and depend on gazetting the relevant legal provisions. Until those provisions are published, manufacturers cannot fully assess the applicable charges, eligibility conditions, and implementation timetable or dispute-resolution arrangements.
For Sri Lanka, the wider economic implications extend beyond individual factories. More competitive energy could support export expansion, investment, employment and foreign-exchange earnings. Conversely, delayed implementation or poorly designed regulations could leave businesses confronting the same constraints despite repeated policy announcements.The Government must now demonstrate that reform means more than opening the door to private electricity transactions. Transparent pricing, predictable rules, effective regulation and equal access will determine whether wheeling becomes a genuine competitive advantage for apparel exporters or another unrealised industrial policy promise
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