Sri Lanka will settle nearly Rs.15 billion in outstanding payments owed to 386 renewable energy developers by the end of June, Energy Minister Aruna Karunathilaka told parliament on Thursday, EconomyNext reported.
The National System Operator (NSO) released Rs.2 billion on May 19 and is scheduled to disburse a further Rs.1 billion next week to green energy plants, the minister said. The plan would clear most of the arrears that have accumulated since the NSO halted payments in December 2025.
The disclosure follows a public warning earlier this month by the Federation of Renewable Energy Developers (FRED) that the domestic renewable industry was on the brink of collapse, with 389 plants — ground-mounted solar, wind, mini hydro and dendro, totalling around 1,073.9 MW — facing operational paralysis as unpaid dues snowballed past Rs.10 billion by April. The Rs.15 billion settlement figure released today indicates the arrears had grown by a further Rs.5 billion in the six weeks since.
Karunathilaka denied that the government had intentionally prioritised expensive fossil-fuel-based thermal power over renewables. “The government has not prioritised the thermal power supply, but our priority is always to maintain stability,” he said. “The National System Operator’s priority has been to ensure continuous electricity supply despite record high electricity demand, increased fuel prices, and low hydro conditions.”
The minister’s figures showed major hydro remains the cheapest source of power generation at an average Rs.2.05 per unit, followed by mini-hydro at Rs.14.67, wind at Rs.17.40, and rooftop or ground-mounted solar at Rs.25.13. Thermal generation, by contrast, is projected to cost Rs.31.99 per unit in the third quarter of 2026.
Karunathilaka said cash flows had to be managed strictly to secure a continuous fuel supply to thermal plants and prevent widespread blackouts during severe droughts and peak demand periods. The Hormuz-driven oil bill, which the CBSL Governor flagged at roughly USD 1 billion this month, has compounded the squeeze on NSO cash reserves.
The settlement is the most concrete fiscal commitment to the renewable sector since FRED’s collapse warning and aligns with the broader push toward seven new solar projects approved by Cabinet earlier this cycle.
