Anyone passing the environs of Galle Face Green in Colombo these days will be given to wonder if they are actually in Sri Lanka – a country that is officially bankrupt with half of its people in need of humanitarian assistance. That being the reality, the show that is being put up, presumably to impress visitors to the country, epitomises the Sinhalese saying which in a nutshell illustrates the mentality of the majority of our people; ‘nava gilunath, band choon’ – the party goes on even when the ship is sinking.
The latter half of 2022 was to be the period of accelerated tourism revival and was in fact designated as such by the incumbent leadership. However, with the year drawing to a close and actual incoming numbers a far cry from what had been anticipated, it is clear that the authorities will have to go back to the drawing board come 2023 if they are to make any impact on what is now a vibrant international travel market.
With travel returning to pre-pandemic levels, Sri Lanka is no longer the only girl on the beach and everyone everywhere is fighting for a piece of the tourism pie. At first glance, the most obvious reason for travellers to bypass Sri Lanka in favour of comparable regional destinations like Thailand, Malaysia, Vietnam, and Cambodia appears to be the price factor, with soaring inflation pricing Sri Lanka out of its bread and butter segment – the cost-conscious tourists.
It is no secret that the festive season of 2022 has become the most expensive to celebrate in the history of this nation. As far as the citizens of this country are concerned, if they are to compare the prices of essential items and even utilities like electricity, water, gas, and fuel from last season to this one, prices have doubled or trebled all round while incomes have shrunk. However, there are a few who continue to benefit from the multiple crises at the cost of the nation and it certainly is ‘Christmas’ for them, not necessarily at this time of the year alone.
The unwillingness of the regime to tackle corruption and hold to account those responsible for the economic downfall of this nation has provided the green light for these individuals and entities to continue to make hay while the sun shines. It is in this light that the creditor community, which the regime is doing all it can but not what is necessary to woo, is continuing to display a noticeable lack of interest in expediting Sri Lanka’s debt treatment process.
While the millions of fairy lights are succeeding in diverting attention away from the real issues, the bitter reality is that the Ceylon Electricity Board (CEB) engineers are already predicting dark days ahead, starting as early as next month. It will be recalled that the CEB Engineers’ Union first warned of a ‘dark period’ a few months back, identifying that period to be around June next year. Subsequently however, pointing to the delays in the procurement of coal to feed the critical Norochcholai Power Plant that supplies one-third of the nation’s power requirement, that June deadline was revised a few weeks back to March next year and just last week, we were told to brace for extended power cuts as early as next January.
While the Minister of Power routinely disputes these warnings of the unions and has even threatened legal action against them on multiple occasions, no such action has been initiated to date. Interestingly enough, one unit of the Norochcholai plant was shut down on Thursday (22) to ‘better manage existing coal stocks,’ the public was informed. It now appears it will only take a few days to find out who is telling the truth.
Notwithstanding the electricity supply crisis that is very much in the making, consumers will be forced to endure yet another tariff shock come January, with the Minister in charge of the subject adamant to further jack up tariffs while the regulator, the Public Utilities Commission, is not so enthusiastic about it, having called for extensive details that supposedly warrant the third rate hike in a matter of just three months.
Electricity tariffs were hiked by over 200% in some segments as of last September/October while a Social Security Levy was added to all bills effective from December. Now with another substantial rate hike in the offing, helpless consumers have been left to scratch their heads and ponder how on earth they can afford to pay the higher rates on top of the 15% Value-Added Tax that will kick in on 1 January as well as an unforgiving income tax regime varying from 6-36% that will squeeze the life out of the middle class.
An electricity tariff hike at this juncture will necessarily precipitate another wave of price increases as the higher tariffs will be directly passed on to consumers by manufacturers as well as retailers and service providers. This will be on top of widespread price increases for goods and services as a result of VAT coming into effect. All this in a shrinking economic space with GDP growth in the third quarter of this year registering an all-time record minus 11% certainly does not augur well for the economic rebound that the administration is anticipating.
What needs to be noted here is the lack of will on the part of the regime to tackle the messy business of reforming the State sector and especially critically-important institutions like the State electricity supply monopoly – the CEB – in order to cut costs and reduce the burden on the consumer. Instead, taking the easy way out and passing the entire burden – corruption, malpractice, wastage, et al – to the hapless consumer seems to be the preferred method. Therefore, not surprisingly, the go-to method for ‘reform’ these days appears to be to parcel it into multiple sectors and then sell them off. The danger of embarking on such a journey is that it permanently compromises the nation’s energy security, some aspects of which have already been dealt with by the Opposition parties in Parliament.
It is common knowledge that the CEB, thanks to years of unmitigated politicisation, reeks of corruption and wastage, with the all-powerful Engineers’ Union a law unto itself. How this union has singularly ensured a dependence on expensive thermal power generation sources when renewable sources are aplenty is a case in point. Besides the thermal mafia, the astronomical salaries being paid to some of these engineers and the absurd allowances and other forms of remuneration being enjoyed by other grades of employees such as a special allowance for reading a meter correctly are all contributory factors that that have made this State utility not only a bad joke and a burden on consumers, but more worryingly a liability for the entire nation.
Having been battered blue by the pandemic followed by an economic meltdown and now a strangulating tax regime, there is only so much that the people can withstand. Needless to say, come 2023, all indications are that it will be a case of jumping from the frying pan into the fire. Given what’s in store, they might as well enjoy the show while it lasts, but for the great majority it will be yet another blue Christmas.