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Homes, small business in for another 20% electric jolt
View(s):By Nathara Abeywickrema
Concerns were raised by many about the proposed electricity tariff hike that, along with a 22% increase, would take a toll on the country.
The Electricity Consumers’ Association’s General Secretary, Sanjeewa Dhammika, said: “Energy bills going through the roof cause social hardship to ‘Samurdhi’ and ‘Aswesuma’ beneficiaries in particular. As of today, almost 20% of industries have taken a hit in one way or another due to skyrocketing electricity costs. Rising energy costs would affect the economy at large, including small businesses, in many ways.”
Suren Rodrigo
He said the proposed tariff table with an increase of 22% from October is unlawful since it would exceed what is spelled out in Section 5 of the Sri Lanka Electricity Act.
Mr. Sanjeewa said complications within the power sector arise due to the absence of a strategic government policy to implement renewable power generation schemes. Even so, a dispatch audit has not been done for this year following the procurement process, which further points to the failure of the Ministry’s act in response to the impending crisis.
Thus, it is no surprise that different types of mafia and conspiracies relating to the energy sector rule the roost, which equally signifies the reason for their less enthusiasm for setting up renewable energy power plants in the country despite funds from the Asian Development Bank.
He said the ECA is awaiting the disapproval of the Public Utilities Commission of Sri Lanka for the new tariff revision.
The price increases are expected to result in sharp upward pressure on household energy bills and present broader risks to economic activity, especially for sectors that are directly exposed.
W.M.H. Fernando, a director of a plastic recycling factory, lamented that 90% of factories have closed down, mostly due to sky-high energy costs.
“In terms of energy inputs for the production of plastic recycling, the machinery that operates 24 hours a day requires the use of a great deal of electricity and heat. Presently, the people in the industry are in a situation where they cannot afford to replace a high-horsepower motor. The tariff revision of 22% certainly would set the stage for the remaining 10% to go out of business.’’
Mr. Fernando, a pioneer of the plastic recycling industry, said: “Plastic recycling is a well-entrenched industry that globally processes and resells millions of tonnes of used plastic material each year. Sri Lanka would almost encounter the dead end of the industry in the face of increased energy prices.
“This element of speed can allow a small business to act fast, and take up options such as installing a solar system or replacing power-guzzling machinery and equipment. This has the possibility to improve a business’ core and serves as a valuable hedge in the face of future electricity price hikes.’’
Suren Rodrigo, head of operations at the car service company, Auto Miraj, said: “A branch used to serve 30–40 cars a day. At present, this amount has dropped. Customers face budget pressures too, and when they do, they spend less to get their vehicles serviced, reducing demand. Price increases can push demand even lower. The outcome is lower sales volume and a decrease in profit. Yet, we cannot bump up the costs despite the conditions. If the electricity tariff escalated, unfortunately, none of the services could be offered under the existing price range.
Small-scale Enterprise Owners’ Association President Niruksha Kumara said, “Small businesses benefit the local economy. Higher energy costs increase the cost of everything one needs to run a business. Higher energy costs show up everywhere else as your suppliers pass cost increases on to you. More so, the situation is seen to linger on for a while longer, so small businesses are unlikely to enjoy a reprieve from rising electricity costs any time soon.”
Mr. Kumara said the PUCSL, the CEB, and the Sri Lanka Sustainable Energy Authority should be held accountable for the approaching crises as these institutes do not have policy plans to implement sustainable solutions that could prevent and counter corruption.
About 100 quarries around the Kaduwela area and 80% of small-scale apparel industries around the Maharagama area face closure, Mr. Niruksha also claimed.
The proposed 22% increase could potentially strike Sri Lanka’s hotel industry.
The Sri Lanka Hotel Owners’ Association President Y.A. Nayana Udayapriya said: “Hotel room rates are expected to remain unaltered at this moment in time, notwithstanding the rising expenses connected to electricity usage. Even at present, we have to go down with room charges from US$100 to US$ 50 in particular, at a loss since the demand is considerably low. Yet, we do not expect the cost to slip back to the guests unless hotels increase their rates, which is quite implausible. Therefore, in such circumstances, booking charges will not have an effect.’’
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