Power problems

Monday, 25 March 2013 00:16 -     - {{hitsCtrl.values.hits}}

The increase of electricity prices will predictably hit consumers hard, but unfortunately it has not provoked a stronger discussion on price allocation and better governance of State-Owned Enterprises (SoE).

More than three million electricity consumers whose usage exceeds 90 units will be the hardest hit by the newly-proposed electricity tariff as their monthly bill is set to increase drastically, CEB statistics reveal. Among the worst hit will be the consumers of 30 units of electricity since their monthly income may not be sufficient to accommodate the soon-to-be increased electricity charges.

According to CEB figures, 75% of the five million domestic consumers use between one and 90 units of electricity per month. The new electricity tariff proposes increased percentages for this group divided into four blocks.

The increase for the first block (0-30 units) is 53 per cent, for the second block (31-60 units) it is 47%, for the third block (61-90 units) it is 59% and for the fourth block (91-120 units) the increase is 54%.

However, the hike will not achieve the desired objective of the Ceylon Electricity Board (CEB) meeting debts of more than Rs. 30 billion to the Ceylon Petroleum Corporation (CPC), a report said over the weekend. Instead the additional Rs. 48 billion will only be used to meet the extra expense incurred by increased furnace oil prices from 1 April. This means that the CEB would fall afoul of the Petroleum Ministry, which has now decided that it will stop credit to State institutions.

Among the State enterprises are SriLankan Airlines, which owes Rs. 27.4 billion to the CPC. Others which have run up heavy bills include the Sri Lanka Navy Rs. 6.7 billion, Sri Lanka Railways Rs. 5.3 billion, Army Rs. 4.1 billion, and the Air Force Rs. 1.8 billion. 

It is therefore worth considering why such massive amounts were allowed to be racked up by institutions and whether they can be rationalised to provide maximum benefit to the consumer. In this vein, it can be pointed out that the Rs. 12.7 billion in arrears accumulated by the military would be one place to start. Given the whopping Budget allocation for the defence sector, which is larger than any other, it would seem that it is in the best position to repay its debts to the CPC so that it in turn can concentrate on areas more central to the economic development of the country at large.

Moreover, the price allocations for State institutions and religious organisations remain low, while more pain is being heaped on consumers, which is blatantly unfair. Equitable distribution of CEB’s debt burden is one aspect that is usually paid little attention, but underscores the unfair process employed time and again by the Government and other stakeholders. Even though price increases are enthusiastically implemented, there is much less enthusiasm on restructuring the CPC and CEB, reducing massive corruption and wastage, holding officials accountable, depoliticising and improving overall governance.

Price increases without these steps being taken, at least in part, will remain unfair and a genuine bone of discontent among the public.