The quest for power

SRI LANKA is still electrified by the unprecedented fuel hike and the fallout continues to grow. On Wednesday a fishermen was shot dead as protestors clashed with the police in Chilaw prompting the Government to issue an immediate subsidy.

JVP protesters were tear-gassed and the Political rhetoric continued for a fourth day as the Government grappled to deal with a plummeting stock market, a rapidly devaluing rupee and tension caused by the fuel hike. Discussions over a possible subsidy for buses continued to be discussed even though the fare increase had already been implemented. This increases the economic fallout for the Government will have to spend extra to fund the different subsidies promised.     

Despite a fuel adjustment charge coming into effect from midnight the Ceylon Electricity Board (CEB) will remain in the dark with a whopping Rs. 97 billion subsidy from the Government.

The Norochcholai Coal power plant begins operations today after almost a one month shut down. It is clear that the Government has to conduct an impartial and transparent investigation to the reasons of the string of break downs that has been plaguing the facility since it opened last January. This could prevent other China funded projects facing the same fate.

The Public Utilities Commission (PUC) while announcing its new fuel adjustment charges told media that the CEB expense is projected at Rs. 218 billion for 2012. Out of this the people are expected pay Rs. 161 billion but Rs. 57 billion will still be left with the Government.

The CEB made a loss of Rs. 53 billion in 2011 and of this the Treasury has already agreed to take on Rs. 40 billion taking the total subsidy to Rs. 97 billion. However with the latest unexpected fuel increase an additional Rs. 29 billion will have to be spent by the CEB and of this the Government has agreed to foot Rs. 4 billion taking the total amount to an electrifying Rs. 101 billion.

The latest fuel adjustment charge is formulated to earn from consumers the Rs. 25 billion extra that will be spent by the CEB to produce thermal power in 2012. The PUC statistics show that the CEB will spend Rs. 64 billion on fuel for thermal power generation this year and Rs. 83 billion to buy power from private mini-hydro operators.

Under the new PUC guidelines, the first 30 units will be charged Rs. 22.50 under the fuel adjustment formula. Households consuming 60 units will pay Rs. 80.85 while those using 90 units will pay Rs. 182.40. The largest increase will be for those using 120 units that will have to pay Rs. 434.40 and 180 units that will see Rs. 1010.40 added onto their bill.

Hotels and industries will have to absorb a 15% fuel adjustment charge while those falling under the general purpose segment will have 25% imposed on them. Religious institutions, public schools, hospitals and street lamps will have no increases made to their current payments.  

This has made a stronger case than ever to stamp out corruption in the CEB and CPC and bring more pragmatic policies such as a monthly adjustment formula into effect. The spiralling cost of living and possible demands for salary increases will be increase core inflation and unleash more challenges for Sri Lanka.

Focusing on renewable energy is another long term goal that can be looked at since it would make reliance on thermal power lesser. But that is a costly and technologically challenging measure. Encouraging solar powered buildings and homes might be a better step to take to free up electricity for industrial purposes.

It is heartening that Sri Lanka is getting close to 100% electrification. Yet it is a privilege that comes at a high cost.