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The much talked about electricity tariff increase will come next week. Basically, all the horror stories we have been hearing from politicians in recent weeks about this proposed hike are true. For the poorest category of electricity consumers, i. e. those consuming less than 60 units, the price increase could be up to 35-32%. In March last year, when there was a 36% hike in the price of diesel, the government was able to take cover behind the resolution that the USA had brought against Sri Lanka in the UNHRC. This time, the UNHRC circus has come and gone, and the government did not avail itself of the opportunity to make the price increase while public attention was directed towards Geneva. Last year the government would not have dared effect that increase in the price of diesel without the cover of the UNHRC resolution. But this year, it appears to have thought that it is on a better wicket to be able to effect a 35 to 32% increase in the electricity bill for the poorest segments of society without too much of a backlash.
Last Thursday, when the Public Utilities Commission received oral submissions from the public on the proposed electricity tariff hike, UNP parliamentarian Dr Harsha de Silva was the only representative of the Opposition present to champion the cause of the poorest consumers. He did make some valid points in his submissions. The gist of what he said was that the brunt of the proposed tariff would affect the poorest section of electricity consumers and that it would put a dampener on improvements to their lifestyle and even affect the futures of their children.
Harsha’s suggestion was that the poorest category of consumer be identified as those who consumed 50 units or less a month and this category should be provided with subsidised electricity while all subsidies should be removed from those consuming more than 50 units. There is no doubt that this argument has merit. However, when one looks at the absolute amounts by which electricity tariffs will increase, a different picture emerges. At present, those who consume 30 units or less pay only Rs 3.00 per unit of electricity and with the fixed charge and the fuel surcharge, they will have to pay a maximum total of Rs. 142/50 a month. After the proposed increase, they will pay a total of 7.25 per unit. So those consuming 30 units of electricity will have to pay a maximum of Rs. 217/50 a month.
How poor are the poor?
It’s the same for those consuming up to 60 units a month. At present the unit cost of electricity for those consuming between 30 to 60 units is Rs. 4.70. When the fixed charge and the fuel surcharge are added to this, the unit cost goes up to Rs.6.20. So as of this moment, consumers in this category pay Rs.372 a month. According to the new tariff structure, the new unit cost is Rs 9.10. Hence the tariff will go up to Rs. 546 a month. So even though in percentage terms the increase sounds like a lot, in absolute terms, it does not amount to much for those consuming 30 to 60 units a month. A household that consumes up to 60 units a month will have lights, a TV, and a few appliances including a fridge. So the question is: Will Rs. 546 a month be too much for a household that uses electrical appliances to pay? And would Rs. 217.50 a month for those consuming up to 30 units a month be excessive? If electricity consumers at the lowest level cannot afford Rs. 217/50 a month, they should be at such a level of absolute poverty that they should not be having food to eat. But, in this country we do not have such levels of absolute poverty.
If we take those who consume between 61 to 90 units a month, the unit cost will go up from Rs.8.09 to 12.90. Even for this category, the monthly electricity bill will go up from Rs. 728/10 to RS. 1,161. A family that uses 90 units of electricity a month and uses a fridge, a washing machine, iron and the like will not really find an amount like Rs. 1,161 a month excessive. For those consuming between 91 to 120 units, the unit price will increase from 15.30 to 23.63. As such the monthly bill of this category will go up from Rs.1836 to Rs.2,835. These four categories of people, who consume up to 30, 60, 90, and 120 units of electricity, make up about 4.3 million of the 5 million or so domestic consumers of electricity. The reason why the government did not seek to bring the electricity tariff under cover of the US resolution in Geneva is probably because they felt more confident that the charges on domestic users would not be excessive in absolute terms even though it looks big in percentage terms.
Over the coming week, we will hear the Opposition always talking in terms of percentages and the government always talking in terms of absolute amounts. Even for the poorest segment of electricity consumers, a monthly increase of Rs. 75 (less than 60 US cents) cannot possibly mean the difference between life and death. Politicians do have a tendency to say at public meetings that people nowadays do not have enough to eat because of the high cost of living. But the question is: Are people in this country actually so badly off that they don’t have enough to eat? Such a picture does not tally with the serious labour shortage that is now becoming one of the main topics in the country. If people in this country are actually starving and unable to fork out Rs. 217 a month, then there should be people out there willing to work for a square meal, but that is hardly the case. So we should really get our bearings on the actual situation on the ground.
Those who deserve a subsidy
However, one suggestion made by UNP parliamentarian Harsha de Silva should be taken careful note of, which is to create a category of underprivileged consumers who use up to 50 units a month and to give them a substantial subsidy while eliminating the subsidy for those consuming more than 50 units. As of now, the government subsidises consumers using up to 90 units. There is a point that JVP parliamentarian Vijitha Herath raised, which connects with Harsha’s point. Herath pointed out that because of the new policy of multiplying the number of units by the new rate that applies to the new slab as consumption increases, there are unjustifiable jumps in the price of electricity at the thresholds. For example, according to the new scheme, so long as your consumption remains at 60 units or less, you pay only Rs. 546 a month. But the moment your consumption increases by just one unit to 61 units, your bill suddenly increases to 786.90 – a jump of Rs. 240.90 for that single unit.
This jump becomes even more pronounced and unconscionable at the 120 unit threshold. So long as you consume between 91 to 120 units, your unit price is Rs.23.63. But the unit cost for the 121 to 180 unit category is Rs. 35.35. So when you consume 120 units, your monthly electricity bill will be Rs. 2835.60 but the moment the units consumed goes up to 121, the monthly bill suddenly increases to Rs.4,277.35 – a jump of Rs. 1,441.75 for a single unit of electricity. Perhaps at the 120 unit level, the government may be able to justify such a jump on the grounds that they are trying to encourage electricity saving. But it will always be a wiser policy to smoothen the transition from a lower to a higher threshold even at the risk of complicating the calculation. For domestic consumers to pay maximum rates of Rs. 217.50, Rs. 546, Rs. 1,161 and Rs. 2835.60 at consumption levels from 30 to 120 units is not excessive at all, and people will soon adjust to it. But, the transition from one level to the next should be smoothened out. Sudden spikes and reductions in the electricity bill throughout the year will keep reminding the people of the rhetoric of ‘exploitation’ that the opposition will be spewing forth from next week. If one listened to what the Opposition has been saying, it is almost as if this increase in electricity tariffs would make people while away their nights in darkness due to the inability to afford electricity. But that would be hardly the case, upon a more reasoned consideration of the facts. This price increase is not by any stretch of the imagination, going to put electricity beyond the reach of domestic consumers. After a while, people will simply forget that the price of electricity was raised. But the government should take care not to leave any rough edges that would constantly remind electricity consumers about the tariff hike. Having sudden spikes and reductions in your electricity bill on just a slight difference in consumption from one month to the next will appear iniquitous to the consumer and this possible source of irritation is best smoothened out. A graduated increase in rates after a certain threshold in each consumption segment would perhaps be in order.
Transparency in power generation schedule
The request made by Dr. de Silva for greater transparency in the CEB’s decision making processes with regard to power generation choices should also be taken into consideration by the government. Forecasts for electricity demand are made for every half hour segments on a daily basis depending on what day of the week it is and on the weather. The need for electricity will be less at certain hours of the day than others. As the requirement for electricity goes up or down depending on the hour of the day and whether it happens to be working day or a holiday, and on the weather, the CEB would call into production each of their sources of electricity starting with the cheapest, source – hydro electricity. Depending on the source of generation, the costs of the CEB would also go up and down on a daily basis and this constitutes the real cost of electricity production.
Dr. de Silva’s accusation was that the method being used by the CEB in deciding on this daily power generation schedule was not transparent and no outsiderknew which source was being used at any given time of the day. Dr Tilak Siyambalapitiya, a former CEB engineer himself, does not believe there is anything underhand taking place in the preparation of the daily schedules for sourcing power generation, but he, too, admits that the system is not transparent. As Siyambalapitiya points out, in neighbouring India, the forecasts for electricity generation for the next day are available on a daily basis online along with the merit order of the sources to be used to meet that demand. He states that the ADB had provided funding for the CEB to institute such a system, but it had never got off the ground.
One of the oddities in our tariff structure that one notices is the subsidised electricity being provided to 34,000 registered religious establishments. Of these, 8,400 institutions use less than 30 units a month. At present these establishments are charged only Rs. 1.90 per unit, which works out to a maximum of Rs. 57 a month. That has been now increased to Rs. 2.90 a unit and it will work out to a maximum of Rs. 87 a month. In this middle income country, shouldn’t any religious institution however small, be able to pay at least as much as a domestic consumer for electricity? Then if one takes the 7,400 largest religious establishments consuming more than 181 units a month, the unit price for this category has gone up only from Rs. 7.54 to Rs. 8.20 which means that electricity even for the largest religious establishments is also heavily subsidised by the government.
The fact however is that these larger religious establishments have ample revenues and can afford to pay at least the actual cost per unit. In fact, some of these higher end religious establishments can farm out the payment of their electricity bills to donors who will do it for merit as well as the prestige that goes with it. But, subsidised electricity for religious establishments in Sri Lanka is one of those holy cows that nobody will dare touch. Dr Siyambalapitiya says that this subsidy for religious establishments was in place even when he joined the CEB over three decades ago. As such there is no likelihood of its removal any time soon.
There will be no change in the tariff rate of Rs. 19.50 for the 450,000 small commercial establishments consuming less than 210 units per month and for those consuming more than 210 units, there has been a marginal increase from Rs. 19.50 per unit to 21.50. For the larger commercial establishments, a system of a high tariff of Rs. 25.00 for peak hours and 14.50 for non peak hours and a flat rate of 20.50 for the day time has been devised instead of the flat rate of Rs 19.40 that was charged up to now. A similar system appertains for industries as well, with 53,450 small and medium industries being provided electricity at a flat rate of 12.50, which has increased by Rs 2 from the previous 10.50. The larger industrial establishments have had their peak hour rate increased from Rs. 13.60 to Rs. 21 and the off peak rate reduced from 7.35 to Rs 7.00. The day time rate for the larger industrial establishments has gone up marginally from Rs.10.45 to Rs. 11.30.Dr Harsha de Silva says that this regime for industries makes sense.
Small Tourist hotels hit
What however strikes a discordant note is the increase of the flat rate electricity tariff for the 315 small tourist hotels from Rs.19.50 to Rs. 25.57. The large hotels have like the industrial sector, a separate rate for peak hours which has been increased from Rs.16.90 to Rs.24.00 but the off peak rate has been raised only marginally from Rs.9.10 to Rs. 10.00. The day time rate for the large tourist hotels has been increased from Rs 13 to Rs. 15.00. As Dr Siyambalapitiya pointed out, the hotel sector is a steady consumer of electricity throughout the day and night, on all days of the year and does not shut down for holidays and weekends. Since such is the case, the small tourist hotel sector has taken the biggest hit being charged a flat rate of Rs 25.57 which is even higher than the peak hour rate for the largest hotels. This does not seem right.
With regard to all categories of consumers, the CEB has gone out of its way to mention the quantum of the subsidy given to each segment. The CEB seems to apologetically accept that electricity costs are too high and a subsidy is in order. This brings us to the mess this country’s energy sector is in. About 70 to 75 percent of this country’s electricity generation is through oil fuelled thermal plants. Only about 20 to 25 percent is generated through hydro electricity. A coal power plant has been commissioned but is operating only barely, with frequent breakdowns. In the meantime, we have built an export industry and a service sector that is dependent on this oil generated electricity supply. We are basically sitting on a ticking economic time bomb. Successive governments since the 1980s ignored the call of CEB engineers for cheaper sources of electricity generation and we are now facing the consequences of this lack of long term planning. As Dr Siyambalapitiya points out, every succeeding government since the 1990s thought the easy way out to meet increasing electricity demand was to encourage private investment in oil thermal power plants. However, due to the accumulated losses that the CEB had to incur in subsidising the power generated by thermal power plants, the CEB is now in debt to the tune of 80 billion Rupees partly necessitating the price increase under discussion.
There is a belief in this country that electricity generation is one of the most racketeer ridden spheres of activity in this country. Mini hydro-electricity projects are one area where some investment by private parties is still possible. But in this sphere, there apparently is a racket going on with certain individuals filing letters of intent to develop mini-hydro projects on a given land thus effectively blocking anyone else from coming in. When a genuine investor comes along, the holders of the letters of intent and sometimes permits even higher up the scale, ask for exorbitant amounts to yield their place to the investor. The government should seriously consider cancelling all LOIs permits which are not under construction in order to facilitate the construction of mini-hydro power plants by private investors.
The politics of the graveyard
Both the JVP and their breakaway group led by Australian revolutionary Premakumar Gunaratnam have been making a great deal of noise about the mass grave found in Matale. Two individuals. The Matale Judicial Medical Officer and a Kelaniya University Forensic archaeologist have apparently reported to courts that the mass grave found cannot be older than the late 1980s. The JVP has been trying to implicate both the government and the UNP in the Matale mass grave thus killing two political birds with one stone. There is no doubt that skeletons were found. But what strikes a discordant note is that this hospital has been a functioning hospital from British colonial times.
It is said is that there was an army detachment in the adjoining school and that the mass grave could be their doing. The location of an army detachment in close proximity to the hospital makes sense because the main hospital in the district would be one installation that had to be secured against terrorists. But to suggest that terrorist suspects would have been executed and buried in the hospital premises does not make sense. If the army detachment was located in a school, why would they want to lug the dead bodies into the adjoining property for burial? And why bury dead bodies in a public place like the hospital premises? Could such a burial have taken place without everybody including the staff and patients of the hospital getting to know about it? The fact that it remained unknown all these years until construction workers stumbled upon it seems to indicate that if these dead bodies did indeed belong to the late 1980s, they could be dead bodies collected from the roads from all over the district and brought to the hospital morgue which were later disposed of by the hospital if no one came forward to claim them.
It would be interesting to find out what kind of technique was used to date the skeletons so accurately. It’s certainly news to us that such technology existed in this country in a situation where even in a country like Britain, such tests are carried out only by a few selected labs in a few selected universities. Conventional radio carbon dating is used to date organic material that are 500 to 50,000 years old. The margin of error in conventional radio carbon dating is around 400 to 500 years and that cannot possibly be used to date skeletons that are less than 500 years old. Of late, forensic experts have been trying to use radio carbon dating to find out the age of unidentified human remains as well, but how accurate these techniques are remains highly suspect. This technique is based on the fact that after the second world war, the radio carbon levels in the environment have gone up because of nuclear weapons testing and they have been dropping back to normal levels so since the second world war, the level of radio carbon in human remains depends on when they were born.
The absorption of C 14 by the body ceases when an organism dies and C-14 dating is based on estimating the number of years that it would take the radioactive carbon to decay to the level it is found at the time it is tested. However, factors like chemical changes in the soil, the weather, climate and other factors can skew the accuracy of such dating techniques. Because of the unreliability of the older system, British scientists devised a scheme to measure the radioactive compound called led-210 which is deposited in the bones through the food consumed and this stops upon death. This was the technique used to examine the mass graves in Yugoslavia. One thing that is clear is that these bones that we found in Matale were never subjected to such sophisticated tests.
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