Business

Sri Lanka's rocketing electricity prices bite hard

  • 30 April 2013
  • From the section Business
Sri Lanka leccy
Image caption Sri Lankan's have taken the the streets to protest about the electricity price rises, which will hit the poor hardest

There's big controversy in Sri Lanka over a sudden and very large jump in domestic electricity prices.

Ordinary people, already suffering from regular and difficult rises in the cost of living, are now seeing their bills rise by 50%, 90%, even up to the biggest hike 127%. And the poorest people are seeing some of the biggest rises.

Down a narrow alleyway, behind and almost hidden from an affluent street in central Colombo, the houses are crammed closely together. Their upper stories almost touch. Cheeky children suddenly appear on rooftops and shout "hello" to the visitor.

Here live families who earn little. Most of the men drive motorised rickshaws or are jobless. It is the kind of place where people use electricity for very modest needs - a TV here and there; ceiling fans and fridges which are needed in the hot and humid climate; the occasional small luxury like a fishtank.

These people have been very hard hit by the jump in electricity prices.

"It's very difficult," one woman, R Malika, tells the BBC. "I had a red bill from the electricity department saying it would be cut. So I went there to pay. They said it would be increased. So they tell us to reduce the usage. But how can we reduce? You can't stay without bulbs, you can't stay without fans so it's very difficult."

Staggered hikes

The new tariff - which took effect on 20 April - features sudden jumps in the charge so using one more unit within the month might send the bill up by 1,000 rupees (about eight dollars). According to official figures people using very small amounts such as 31 units per month will see bills rise by 65%.

People using 91 units will suffer a 127% hike, yet those using far more, 600 units, will only pay 9% more.

Malika's neighbour, Sheela Ruhunuge, lives with one of her sons and his children. The house gets almost no natural light so they use electricity even by day.

Her coming bill is likely to be double the last one.

"Whenever people get their electricity bills many go and pawn their belongings," she says, her voice cracking with emotion. "But what can people without belongings do? Lots of people have no jobs or just day jobs which give very little income. It's very difficult to afford our bills - it's hard for everyone."

Losing money

The country is only now getting to grips with its power problem. There are some long-established hydro-power schemes but there has been little investment in new ones in recent years. That means more reliance on expensive oil-based thermal systems, many of them privately run.

Image caption Public petitions have been organised against the government's attempt to balance its electricity books

The electricity woes have been worsened by constant breakdowns at the huge Norochcholai generating plant on the north-west coast, opened in 2011 - built and funded by China, and powered by coal.

So the state-run Ceylon Electricity Board (CEB) is making huge losses.

Its General Manager, Nihal Wickramasuriya, says they had no option but to implement this sweeping price hike.

He says this year's expenditure budget is forecast at 256bn rupees ($2.02bn) but the old tariff would only have brought in 183bn rupees ($1.4bn).

The Treasury has advised that a shortfall of 28bn rupees is acceptable but otherwise "we have to find ways, means of bridging this gap", he told the BBC.

Government row

There is public unhappiness. The small leftist party, the JVP (People's Liberation Front), has held torchlit rallies and laid out petitions at Colombo's main railway station under big red banners denouncing the price hike.

"Our message [to President Mahinda Rajapaksa's government] is very clear. Get out! You can't fulfil the people's requirements so get out!" shouted the JVP leader Somawansa Amarasinghe at a recent rally.

The public outrage is all the greater as the price rises are steepest for low-level and medium users.

Their usage is less flexible, more predictable, so the revenue for the government is more immediate.

As well as private consumers, businesses large and small are being affected. The price rise has created a row within the government, with the former energy minister saying it should never have been introduced; and in parliament, where government MPs threw bottles of water at opposition parliamentarians who lit candles as a form of protest.

Harsha de Silva, economic spokesman for the main opposition United National Party, calls the rise "unprecedented" for the way in which it hits low income users.

He accuses the government of "hammering" those who use under 48 units a month, people he describes as "electricity-poor". The rises will effect not only household economics but development, he says.

"There are studies which show that if kids have electricity in their homes, sufficient electricity, they can study longer and their economic benefits from that would be far greater down the road."

He also says there is "massive corruption" at the CEB and far too little auditing - a concern echoed by the Public Utilities Commission.

The CEB's Nihal Wickramasuriya says the corruption accusations cannot be substantiated and any complaint can be taken to a public commission on bribery.

Alternative sources

The actual provision of power in Sri Lanka is still rising and is good compared with some of its neighbours. Power cuts are rare.

Some greener sources are also being brought onstream - wind farms juxtaposed against the un-green Norochcholai plant, and solar street lamps around Parliament.

But the government has a massive shortfall to plug in balancing its electricity books - something that calls into question its frequent assertions that the economy of post-war Sri Lanka is rosy.

Indeed President Rajapaksa recently said the increase in electricity bills was introduced to save the country from "possible economic collapse".

And ordinary people are paying the price.