Financial Times

Petition in SC against rising electricity costs

The Supreme Court this week granted leave to proceed with a Fundamental Rights petition filed against the Ceylon Electricity Board (CEB) and 69 other respondents on the basis that the CEB has drastically increased tariffs solely in order to defray the constant losses it has incurred and unduly burdened consumers.

The petitioners, Jeevan Thiyagarajah, Chairman of the Board of Management of the Institute of Human Rights (IHR) and the IHR state that the CEB has had to increase tariffs due to the mismanagement of its affairs and the imprudent and short-sighted energy and power generation policies adopted by successive authorities over time. The matter has been listed for hearing on November 21.

The petition states that this situation has reached crisis proportions at the present juncture as a result of its continuing nature and as a result of the continuing failure by the authorities to adequately address these burning issues in an effective and meaningful manner, in the best and long term interests of the country and her people. They further state that the acute problem has been severely exacerbated by the lack of a properly formulated and/or conceptualized energy policy prepared with the participation of all the necessary stakeholders.

The petitioners stated that apparently the CEB presently incurs a loss of 'an utterly staggering sum of approximately Rs.40 million per day.' According to official statements by the Minister of Power and Energy, even after the introduction of the new tariff scheme, the 'projected total expenses of the CEB for 2008 amount to Rs.137.7 billion, whilst the CEB's projected revenue target is only Rs.94 billion, which creates a deficit/projected loss of Rs.43.7 billion for 2008. Of the said total expense of the CEB, Rs.109 billion is allegedly spent on generating thermal energy.'

They stated that the net loss to the CEB (state/government) due to financing the thermal power sector was Rs.35 billion in 2006 and Rs.51.7 billion in 2007. The cumulative loss to the CEB from thermal power generation for the next 10 years from 2007 is estimated at a sum of Rs.619 billion. The petitioners further stated that nearly half of the losses suffered by the CEB are attributable to those arising from generating thermal power and for the next 10 years from 2007, the said loss is estimated at being approximately US$2,750 million.

The petitioners say they instituted this application with a view to seeking relief in respect of, inter alia, important issues directly or indirectly impacting the public, nation, its future and the national economy such as sustainable power generation and cost effective and more environmentally friendly power generation which includes reducing the massive dependence on diesel and fuel oil as a source of power generation. The petitioners are seeking long term or short term plans or policies to reduce electricity tariffs and also to offer concessions to lower income groups.

They also call for the expeditious implementation of the National Energy Policy already formulated with wide stakeholder participation. Further, the petitioners are seeking the appointment and vesting of powers in an independent regulator for the electricity and energy sector and optimizing the operating efficiency of the CEB by implementing proper systems and procedures to minimize mismanagement and corruption and to transform it into a profit making state agency in order to reduce the financial burden on the State.

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