The main Opposition UNP yesterday came up with a new pricing plan that promises to make electricity affordable to the poor while blaming mounting CEB losses on bad governance.
Proposing an alternative electricity pricing formula that would not burden low end consumers, the UNP also claimed poor internal auditing systems at the Ceylon Electricity Board and flawed private power purchasing agreements entered into by the State-owned electricity provider were driving power generation costs up and increasing tariffs for the poor.
As the Opposition continued its agitation against a Government decision to hike electricity rates, UNP National List Parliamentarian and Economist Dr. Harsha De Silva said the UNP pricing plan would not increase electricity tariffs for consumers using 90 units and less but remain at pre 20 April level.
“According to the UNP’s structure, prices only really start to climb after a consumer reaches 180 units – and even then the increase is not suddenly exponential,” the UNP MP told a press briefing yesterday.
He explained that the exponential tariff increase proposed in the Government’s new plan for high-end users would also ultimately drive CEB revenue down because at such high rates, consumers would simply curb usage.
De Silva said the Government was abdicating its responsibility as set out in its Energy Policy gazetted in 2008, to provide power to the country’s ‘electricity poor’ – or those consumers using less than 48 electricity units per month according to a recent study carried out by the University of Colombo.
“The Government has a duty to ensure these low end consumers have access to a decent quality of life, by providing their minimum electricity need as per its gazetted Energy Policy,” he said.
According to De Silva consumers using less than 30 units a month use an average of 18 units. “These consumers face a 53% increase in their tariffs. If they are using only 18 units, it’s because they just can’t afford to pay for any more – that’s how poor they are,” he charged, adding that while the amount seemed negligible, it was a large percentage increase in relative terms for low end consumers to bear.
He said 1.3 million CEB customers use less than 60 units per month, with those consumers slated to face a 47% increase in electricity tariffs under the Government’s new pricing structure.
According to the UNP Legislator, the UNP pricing plan would reduce CEB revenue by a mere Rs. 3 billion to Rs. 82 billion from the currently projected Rs. 85 billion from domestic users but provide relief to the country’s poorest electricity consumers.
Acknowledging that the massive losses incurred by the CEB and the Ceylon Petroleum Corporation had to be covered because it affected the country’s macro-economic stability, De Silva said questions remained as to whether the CEB had sufficiently reduced costs and wastage before increasing tariffs and taxing the poor.
De Silva said that the Auditor General had informed the Committee on Public Enterprises (COPE), a parliamentary oversight committee, that the CEB employed 18,000 workers but only six internal auditors. “So there are some merits to the claim that the CEB has internal audit deficiencies, as the Auditor General has informed COPE,” De Silva said.
Charging that the Government was on a secret privatisation drive in the energy sector despite commitments to the contrary enshrined in the Mahinda Chinthana policy manifesto, De Silva said that since 2005 the CEB had lost a 40% stake in Heladhanavi, while it had conceded its entire 63% stake in LTL Projects, both companies owned by LTL Holdings Pvt. Ltd., which sells thermally generated power to the CEB and in which CEB still maintains a 63% stake.
De Silva said the Auditor General had queried the CEB’s long term Independent power purchase agreements, saying the state supplier had undertaken to pay the economic service charge; customs duty, VAT and debit tax on behalf of the IPPs whereas the private companies should have borne that cost.
He charged that a Central Bank annual report had found the CEB lost an estimated Rs. 6 billion because of flawed and irregular power purchase agreements.