18th June 2000

Up up, up they go…

Nilika de Silva and Faraza Farook report on the soaring saga of COL and the never ending battle the people have to face everyday for mere survival.

Battered by a series of price hikes over the past few weeks, the middle and working classes who comprise the bulk of the population, suffer in silence while the cost of living rises daily.

It is not that they have found a magic formula to make their limited salaries stretch sufficiently to pay all their bills, it's just that they are totally resigned to a demanding economy, which has no compassion for the common man.

Diesel prices went up by a further Rs. 3.30 on June 12, the final blow, after increases in gas and kerosene prices and a surcharge on electricity bills.

This also happens to be the third price hike for gas within the course of six months, the first hike being on December 30, the second on February 7 and the third on June 1. For diesel it was the second after a 23 percent hike along with a 48 percent hike in kerosene prices on February 7.

Simultaneously the people endured a15 percent fare hike on State-run buses on February 12.

Electricity charges went up by 10 percent alongside a 20 percent hike in telecom charges on June 1. Now the people are threatened with a 20 percent hike in water charges beginning in July.

Meanwhile, the rise in crude oil prices which has sent tremors across the world, is being attributed to limited output. The Organisation of Petroleum Exporting Countries (OPEC) is under pressure to increase production to reduce prices.

"The prices have gone to levels that are too high," cautioned White House spokesman, Joe Lockhart, with the US continuing its pressure on OPEC.

He warned this can lead to a reduction in demand which could hurt consuming countries as well as producing countries.

With salaries static, people are fighting to make ends meet, while the rate of petty crime in the country has gradually risen.

Kathiresan, working at the Pettah Market, is a daily wage earner. He earns approximately Rs. 250 a day. A father of three, Kathiresan depends on this income to fulfill the needs of his family. The burden of providing three square meals for his family is becoming heavier day by day.

The four loaves of bread alone costs him Rs. 40 per day, while the only rice meal they eat costs more than Rs. 100. Even though their household does not have electricity, Kathiresan finds the cost of kerosene very high and the requirements of his school going children add a further burden.

"I don't know what I'm going to do if costs keep rising like this. If a child falls sick we do not have the money to buy medicines," Kathiresan said.

At the Pettah wholesale market there was pandemonium last week. Just two days after the increase in diesel prices, everyone was demanding a hike, from the nattamies pulling the carts to the wholesale transporters bringing the goods down from the various parts of the country.

Ganeshan, a father of a four year old boy and a two year old girl is a nattamie on Sea Street. He and his fellow workers were canvassing for an increase in wages to fight the rising cost of living.

"We are paid five rupees per sack and we have asked for a one rupee increase," Ganeshan said adding, "however, some have already received an increase".

D.G. Piyadasa from Nikaweratiya, transporting goods for Thaj Stores said he comes to the wholesale market four times each week. The main commodities transported are potatoes, Bombay onions, chillies, garlic and other dry rations. "We used to charge Rs. 3000 per lorry load, but from now on we are going to increase our charges by a thousand rupees," he said.

Governed by the laws of economics, this hike in costs is not going to remain with the producers, transporters and wholesalers. Through the retailers this increase will be passed on to the consumers.

"Transport costs are up by 20 percent so we will definitely have to increase prices of commodities", said Sarath Aponso, an employee of Nathan brothers, a wholesale outlet in Pettah.

Even the fishing industry has been hit hard by the hike in diesel prices "We are facing grave losses," says A.L. Premadasa who transports fish from Trincomalee to Colombo. He added that when wear and tear is added to transport costs, one feels it is not worth the effort involved.

"Fish is not like other commodities which have a long shelf life. We are forced to sell them even at a loss," Saman, a wholesale fish seller at St. John's Fish Market said. "It is not possible for us to pass on transport costs to the end consumer," he said.

Transporters of import export cargo are also contemplating an increase in hire charges, unable to bear the brunt of the price hike on their own. This in turn will boomerang on the consumer.

"From January to date there is a 50 percent increase in transportation costs," the President of the Association of Clearing and Forwarding Agents (ACFA), M.H.M. Niyaz said.

"The increase in diesel prices has a direct bearing on the cost of transport and there is an all round increase when the dollar increases as prices of tyres, batteries etc. also go up," he said.

"As clearing agents we are the first people to be affected," Mr. Niyaz said.

Meanwhile, container transport agents will meet at the end of this month to discuss a 40 percent increase in their transport charges, to be put into effect from July 1.

"Bunker charges which are very high compared to Singapore and Dubai and are likely to go up further," said Managing Director of Delmege Shipping, Pushpa Amarasekera.

This might result in foreign ships skipping the port of Colombo due to increased bunker charges.

Another sector that is extensively affected by the increase in diesel prices is tea, an industry which is of paramount importance to the economy. The long term repercussions of this can only be estimated right now.

"The increase in diesel prices will have a direct impact on tea production," Mr. Brian Baptist, a senior member of the tea trade said, adding it will affect the cost of production.

Diesel is used in various stages in tea production. It is used for driers by those factories firing with diesel and is widely used in transporting.

Along with the demands for wage increases the price of tea should increase by Rs. 3 to 4 per kilo.

At present Sri Lanka is in a strong position as its leafy teas are much sought after by the Middle East countries and Russia who go in for such purchases in a big way.

"It would not be wrong to say that Sri Lanka controls the market for leafy teas," Mr. Baptist said.

It is indeed going to be a shame if we are going to watch our monopolies crumble due to the short term thinking of those who hold the reigns of our economy, in their palms, he said.

In the face of having to suffer an unbearable loss running into millions of rupees due to the price hike in diesel, the Ministry of Transport has been forced to jack up bus fares in both the state and private sectors, by 15 percent starting yesterday.

"With the 20 percent hike in diesel prices we would have to spend Rs. 70 million extra each month which will be more than Rs. 800 million per year," said Deputy Minister of Transport and Highways, Bennet Cooray.

Although the private sector made a request for a 20 percent hike to keep abreast of the rise in diesel prices, it had been turned down. Intercity buses, semi-luxury and luxury buses of the CTB will also see a fare hike from the 17th, while the hike for the private sector luxury, semi-luxury and super luxury categories will be taken up for discussion tomorrow.

Even school season ticket prices will be jacked by 15 percent from July in keeping with the rise in diesel prices. In an attempt to justify this Deputy Minister Cooray said there was a 50 percent reduction on prices of these season tickets recently and therefore this rise would not be felt.

Meanwhile, neither the Deputy Transport Minister nor SLCTB Chairman Ramal Siriwardena were in a position to give any assurance that in the event of another hike in diesel prices, any steps could be taken to safeguard the commuters.

In September last year private bus fares went up, while state sector bus fares were jacked as recently as February this year when the SLCTB raised its prices by 15 percent.

While the administrators had defences lined up for their actions the commuters too had reason to justify their anger and feelings of having been betrayed. Henceforth, even to travel the distance between two bus halts would cost them Rs. 3, an entire rupee more.

"We are going to file action against the government, if it does not heed our requests not to jack up bus fares," the General Secretary of the Sri Lanka Commuters Federation, S. M. Chandrasena told The Sunday Times on Thursday.

Meanwhile, three wheeler drivers have already decided to hike hire charges.

The situation regarding rail fares was yet unknown at the time this edition went to press. Mr. Bennet Cooray said the Ministry cannot decide on price hikes in the Railway. "It is the Finance Ministry that will decide," he said.

Responding to the question as to what train commuters can expect, Mr. Cooray pleaded total ignorance. "So far we haven't been told," was the only assurance, the only words of consolation Minister Cooray was in a position to utter.

Those who will greatly be affected by the hike in diesel prices are school children commuting daily to school. In the case of school vans the increase will be a staggering Rs. 100 to Rs. 150.

"We will be obliged to charge an extra hundred to hundred and fifty rupees per child" said Basil de Silva, adding, "Those parents who have been paying Rs. 850 will soon have to pay Rs. 1000." Another school van owner-cum-driver, Lakshman said these cost hikes are targeted at the common man, while those in power continue to enjoy their benefits.

"If it is because of the war that prices are rocketing, the Government too should cut down their expenses. They should cancel permits to import vehicles," he said.

Speculation was also rife regarding another hike in diesel prices. "We will run at a loss if we can't keep up with the ever increasing costs. We will have to stop the service and take to some other business," Lakshman said.

Analysts predict an overall impact on the economy, triggered by the chain of price hikes, but the people will be the ultimate guinea pigs.

"I am extremely sorry that this burden has to come on the people," MP Ravi Karunanayake said. "Two months ago when world prices came down the benefits didn't come to the people."

"If we don't have a strong economy very soon we will be snowballing into many other increases," Mr. Karunanayake said.

The Government should give the foremost place to the economy and increase earning avenues, he said.

"Even after six years this Government does not know the basic fundamentals of economics," Dr. Karunasena Kodituwakku said adding, "While economic theories are being set aside, politicians and multinational cronies are doing what they want."

The rise in diesel prices will not only pass on to commuters it will even affect the transport of goods. "Maybe even the price of lunch packets, will reflect the rise in diesel prices," Dr. Kodituwakku said adding, this is known as the "trickle down effect" with everybody in feeling it.

"At the end of the year the rate of inflation will be about 20 percent," Dr. Kodituwakku predicted.

The Special Report

Editorial/ Opinion Contents