Champika unplugs private sector

Monday, 21 March 2011 00:58 - - {{hitsCtrl.values.hits}}

By Uditha Jayasinghe

Electricity concessions to the private sector will be few and far between says the Power and Energy Minister insisting that only export oriented companies listed in the industrial category will even be considered for relief.

In an interview with the Daily FT Minister Champika Ranawaka took the hard stance that the electricity costs in Sri Lanka were low compared with other countries in the South Asian region and that there was little reason for companies to be given concessions.

“No matter who says what the electricity costs in Sri Lanka are still competitive. There is no way that we are going to give commercial entities industrial rates. That is simply not going to happen. There are some banks and hotels that are being listed as industrial. There are five star hotels that are paying Rs.8 for a unit while three star hotels have to pay Rs.23 per unit. These instances will not be tolerated by us. We cannot give concessions to commercial entities. Industrial companies will get concessions if they are export oriented. That is all,” he said adding that the private sector was well positioned to gain benefits from the high performing economy.

Ranawaka responding to questions of whether consideration will be given to at least select local industries such as ceramics noted that companies should change to non electricity dependent technologies. “We already addressed this issue by telling them to work during off-peak hours in the night,” he said adding “If this is impractical then there are alternatives such as Dendro Technology.

What happened when the government gave a kerosene concession was that many plants that ran on firewood and Dendro converted to electricity.”

When asked if the high power rates would be a deterrent to attracting Foreign Direct Investment (FDI) Ranawaka claimed that he does not accept this view. While admitting that Sri Lanka’s electricity costs were high when compared with the rest of the world he insisted that the numbers were in Sri Lanka’s favour when considering the South Asian region. “There isn’t a huge difference between us and India, in fact they are slightly higher and our power supply is uninterrupted and of very high quality. There is none that is better than ours.”

He pointed out that at the moment the only power prices that are lower than Sri Lanka’s in the region are South Korea and Malaysia. He stressed that this is because they are heavily subsidised by the government.

“The other consideration is; what is the electricity component in attracting FDI? In some businesses like cement the electricity component is high while in industries like garments the labour component is higher. Therefore the reason that Sri Lanka cannot compete in the global market is because of its comparatively high labour costs. If FDI is sorely dependent on electricity costs then how is it that a country like Singapore that has high labour and energy costs can attract so much of FDI?”