The Government last month stressed that the Budget for 2024 will include a stronger social safety net for an estimated 6.9 million poverty-stricken Sri Lankans amidst heavy increase in public expenditure. The Government has also argued that the absence of long queues for energy, food and medicine, and power outages which lasted days, is a clear sign of improvement from the crisis situation faced last year. While many Sri Lankans may be a bit better off than they were last year, a significant segment of our population remains struggling to get by, and many of them do so while being “in the dark”.

Since January this year, over 500,000 households who were unable to pay the revised electricity tariff have been disconnected from the power grid. This has essentially affected some of the most vulnerable people of the island, making it much more difficult for them to get by in day-to-day life. Sri Lanka did an about turn on subsidised utility pricing, which has long been decided on political grounds and not based on breaking even or profit making. The Ceylon Electricity Board (CEB), the utility regulator and the political leadership of Sri Lanka did not increase the electricity tariff to be cost reflective from 2014 to 2022. Yes, the cost reflective pricing system was a necessary change to ensure the CEB and linked state banks didn’t collapse. However, when the State over a span of several months increased the electricity tariffs by 66% (February 2023), only a few months after a 75% increase in tariffs in August 2022, it created a substantial financial shock that affected all low-income households. However, how fair is it to leave the poor in the dark? What is the social safety net available for them?  

It seems that in the drive to make loss-making State-owned enterprises (SOEs), which were mismanaged and politicised for years, the poorest households of a country of 22 million were left to shoulder such a sudden burden. This, amidst the worst economic crisis in Sri Lankan history, rising unemployment, a Small and Medium Enterprise (SME) sector decimated, and skyrocketing cost-of-living. Those who were in poverty and those who were pushed into it, did not stand a chance. Poverty itself was on the rise, and by the middle of this year, according to policy research think tank LIRNEAsia, the number of poor Sri Lankans had increased to 7 million from 3 million in 2019, before the pandemic hit. The latest figure is equivalent to about 31% of the population. Many, who have had their power connection stripped due to non-payment are from the working-class poor in Colombo and the suburbs. Many more have been forced to limit use of electricity to the most basic of daily functions, as multiple red notices and publicly posted notices on their usage meters warn of disconnection due to non-payment of bills.  

While reforming the state sector is a must, and restructuring SOE’s is vital for economic stabilisation and recovery, the economics of utilities is not without issues. There are strong concerns about waste, misuse and abuse of power in the energy sector. This applies to both the CEB and Ceylon Petroleum Corporation (CPC).  Critics, and energy experts have questioned the pricing models used by both utility suppliers, and the fact that the regulatory process which was in place was ineffective, and now, seemingly is not functioning properly. For there to be social justice, Sri Lanka needs to review, empower and restore a true independent regulatory oversight mechanism for electricity, fuel and cooking gas. Once that is established, pricing issues can be figured out.

Further, why is the Government not considering a tariff reduction or subsidy for the poorest of the poor? They can start with a survey of those in the Aswesuma and other social safety schemes for relief.  Living in the dark in this day and age is not something the poor should endure. The safety net can only work if it is effective and gives those who need to hope to rise above that need. Why not start there?