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electrical shocks for shocked consumers
With the new electricity reforms requiring that the price to the consumer reflects the direct costs involved as a result of the steep increase in world market fuel prices and 70% of the country’s electricity requirements being purchased from private power generators, the consumers would invariably have to foot higher bills. The power sector reforms committee delegate Thilak Siyambalapitiya told The Sunday Times that although the CEB has requested that electricity tariffs should be doubled, the increase should be staggered. “This is necessary to safeguard local industries and the domestic consumers. The increase should be applied through a realistic and fair mechanism”, he said. Dr. Siyambalapitiya said the Government would implement the tariff increase in two phases. He said the first phase would be the immediate price increase of electricity and the second phase to take effect after the Rs. 93 billion short and long term debt of the CEB was off loaded. Dr. Siyambalapitiya said that after the immediate price increase and the CEB’s debt off loading was completed and based on fresh calculations it would be decided whether to either decrease the tariff or allow the increase to continue. He said the CEB owed Rs. 38 billion to the Ceylon Petroleum Corporation obtained as a short term loan. This was necessitated by the high demand for fuel required to operate the private diesel generators and another debt of Rs. 55 billion obtained from the Treasury for long term power projects. It is stated in the electricity reforms draft that the cost of operating oil-fired thermal power plants had increased by a large margin when compared to other countries in the region. In most other countries the consumption of electricity generated using diesel was only 7% while in Sri Lanka it amounted to nearly 70%. It maintains that hence it was essential to generate electricity at a low production cost in keeping with the reform processes, within a five-year period. The Draft outlined that since the government, CEB or subsidiary companies will not initiate projects to build new oil or other fuel operating power plants with the primary objective of reducing costs in producing electricity, the implementation of the Norochcholai and the Upper Kotmale power plants becomes even more urgent and essential. The
ERD emphasised that the existing government policy, of building
thermal power plants only by the private sector in the future, should
be suspended. Dr. Siyambalapitiya said one of the main aims of the electricity reforms was the debt off loading by the Asian Development Bank and the Japan Bank for International Cooperation (JBIC) since they had not granted substantial assurances that they would provide funding for the CEB. “If the CEB debt is not off loaded the Electricity Reforms will not take effect as the new operating companies will be burdened with more than 20 years of sins committed by Government Officials”, he said. Dr. Siyambalapitiya said the CEB could independently interact with the ADB and the JBIC regarding the off loading of Rs. 38 billion in short term loans from CEYPETCO, and the Treasury would be involved with the ADB and the JBIC in off loading the long term debts amounting to Rs. 55 billion. He
said these matters had not yet been discussed at a substantive level.
Dr. Siyambalapitiya said it would take nearly 18 months for approval to be granted for the new reforms act and during that period the Ceylon Electricity Board would have to function as Strategic Business Units. Meanwhile the CEB Trade Union Alliance strongly opposed the Reforms Act earlier, since it believed that it would lead to the privatisation of the CEB by offering ownership of CEB shares to the new Board of Directors who have been granted authority, through the Reforms Act, to float a company to handle CEB operations. CEB Union Alliance convenor Ananda Nimalaratne said that since the new Reforms draft clearly stated that the subsidiary companies that are to be established under the CEB would not be privatised, the Unions decided to go ahead with the reforms based on ten conditions. The Reforms draft mentions that measures would be taken to prevent the privatization of the subsidiary companies by referring any such proposal with regard to privatisation to a committee, which would be constituted for the sole purpose of studying such a proposal or resolution and this committee shall include representatives from the CEB Trade Unions to articulate the views of the power sector employees. It also stated that after considering the recommendations of this committee, it would be necessary for the alienation, or otherwise, for the disposal of the shares to have a two thirds consent of the CEB Board of Directors or relevant subsidiary company for the resolution to take effect and such a resolution would then be placed before Parliament. |
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