Minister of Power and Energy Kanchana Wijesekera recently stated that he would take all possible measures to ensure uninterrupted power supply by January next year, adding that they had taken steps to drastically reduce power cuts in the last few months.
However, he pointed out that it was impossible to do so without revising the electricity tariffs and added that it would be best to revise the electricity bill every year in the months of January and June.
Two days after this, the Cabinet of Ministers granted approval for an electricity tariff hike as the increase made in the recent past had been insufficient to cover the losses of the Ceylon Electricity Board (CEB).
The Cabinet has approved for the increase of electricity tariffs to be implemented under two stages in January and June 2023. Accordingly, relevant measures are to be taken to obtain the approval of the Public Utilities Commission of Sri Lanka (PUCSL), said CEB Additional General Manager (Distribution Division 4) Eng. Rohan Seneviratne. In order to cover the present losses, the electricity tariffs should increase by about 70%, CEB representatives said.
A few days ago, Minister Wijesekera stated during a press conference that the CEB had estimated that one unit of electricity would cost Rs. 56.90 to ensure an uninterrupted power supply for 2023. The Minister pointed out that the current average tariff was Rs. 29.14 and the deficit was estimated to be Rs. 423.5 billion.
The number of consumers who come under 0-30 units is 1,460,828 and they pay Rs. 8 per unit, while units 30-60 have 1,683,172 consumers who pay Rs. 10 per unit, he pointed out. Units 60-90 have 1,702,515 consumers and they pay Rs. 16 per unit, while units 90-180 have 1,559,131 consumers who pay Rs. 50 per unit. Units over 180 have 303,928 consumers paying Rs. 75 per unit, he added.
This statement comes a few months after Sri Lanka increased its electricity tariffs amidst prolonged power cuts. The business community has not been in favour of this decision.
Tourism looking at alternative sources
Speaking to The Sunday Morning, Sri Lanka Tourism Development Authority (SLTDA) Chairman Priantha Fernando stated that the tourism industry was looking at shifting to alternative energy resources such as solar power.
“We are looking at getting credit lines to support the hotels in this process. If not, it is a concern for us to maintain competitive prices compared to other regional destinations. However, this will not be an instant solution. It is going to take at least one to one-and-a-half years until the Government is able to connect the hotels to solar grids,” Fernando added.
Even now, tourism was on a higher tariff, he stated, adding that along with the occupancy rate of the hotels, the electricity cost also increased, which was a major concern for the industry and its recovery.
However, expressing his views on the recent proposal to increase electricity tariffs while addressing Parliament on Thursday (8), Tourism Minister Harin Fernando stated that although he understood the difficulties such an increase would bring to those at the bottom of the economic chain, it was time that both politicians and the people understood that such difficult decisions and sacrifices were required to help Sri Lanka out of its current crisis.
When contacted, Board of Investment (BOI) Director General Renuka Weerakoon said that it was difficult to respond to The Sunday Morning query, as a response would be too premature given that the percentage increase in electricity tariffs had not yet been confirmed.
Disastrous to industries
Speaking to The Sunday Morning, Ceylon National Chamber of Industries (CNCI) Chairman Canisius Fernando stated that any increase, be it water, electricity, or fuel, would be disastrous for the industry.
“We are already impacted by the hikes, import ban, and shortages. Increasing electricity prices will worsen our issues. Businesses are already shutting down and the purchasing power of customers has gone down,” he explained.
Fernando noted that while most Small and Medium Enterprises (SMEs) were closing down, large-scale and multinational companies were downsizing amidst increased borrowing costs and import bans. Even a 15% increase in electricity tariffs at this point would be catastrophic, he said.
Fernando asserted that if the Government decided to go ahead with the proposed electricity price hike, barely any businesses would be surviving by mid next year. He further noted that if businesses were to undergo multiple issues, the recovery of the economy that was presently in crisis would be questionable.
According to him, the CNCI is planning to meet the President and discuss their grievances. However, he stated that they had met the authorities several times previously, but all these meetings had failed to bring desired results, and therefore he believed that the only option left now was to step out into the streets and protest.
Businesses need concessions
Speaking to The Sunday Morning, Colombo Chamber of Commerce President Saranga Wijeyarathne stated that the move to hike electricity prices would have a negative impact.
“The cost of manufacturing has already increased. Another price hike will create an unbearable situation next year. We are aware that the electricity generation cost is increasing, but in countries like India, even though they charge higher rates than for normal consumers, they give concessions for businesses. Export-oriented, manufacturing businesses should be given concessions in that case,” he explained.
He urged Sri Lanka to look for cost-effective, alternative power generation methods. There are much cheaper options like renewable energy, Wijeyarathne stated, adding that these methods would also take time to materialise.
“The cost of living has gone up. This will definitely have a big negative impact. Giving incentives or credit lines to switch to solar power are options we can think of to resolve this issue. At the same time, the cost of panels has gone up, as well as restrictions in importing due to dollar availability. These issues too will have to be looked into by the Government,” he added.