The CEB can store 1,200 million units (GigaWatt_hours) worth of water at its reservoirs but it had started 2009 with only 600GWh worth hydro storage.
Lower than expected rainfall in the second half of 2008 as well as the first quarter of 2009 had lowered hydro storage to around 300 GWh, pushing the utility to rely more on thermal energy, worsening its cash problems.
The CEB had avoided official power cuts so far this year by increasing thermal generation, including expensive gas turbines.
"It is not possible to say definitely whether there will be power cuts or not in the future, but the government policy is not to have power cuts," power minister John Seneviratne said last week.
Delays in building a coal plant and the last large hydro plant in Upper Kotmale due to political interference had forced CEB to go for diesel and furnace oil plants - most from the private sector - at the last minute. "There are some financial constraints faced by CEB due to the cash inflow situation bec