The glaring missing element in the Electricity Tariff Hike.
Posted on May 10th, 2013

by Chandre Dharmawardana

While most commentators howled in opposition to the Electricity tariff hike , I have argued (e.g., 7th May, Island newspaper) that this would jolt the nation into a more salutary developmental trajectory. The first stages of development relate to basic agricultural capabilities needed to feed the people.  The vision of successive governments before and after independence had been fired by the ancient hydraulic civilization of Sri Lanka. This led to the Galoya, Walawe, Mahaweli and other schemes that created the nation’s foundation for agriculture as well as hydro-electricity.

As the agricultural needs become established, the key components needed are (a) roads, communication and industrial infra-structure that feeds on  (b) the availability of power and fuel. As a nation develops, people move from simple fuels (used for heating and cooking) to more sophisticated power capable of doing high-end,  `intelligent’ tasks needed in manufacturing and data processing. Politicians, mired in their power struggles, constitutional haggling,  and day-to-day wheeler-dealing are not known to take technology seriously except in war or in rare circumstances. However,  history is driven by technological circumstances.

The circumstances prevailing in Sri Lanka today in the power sector are clear. Chronic power shortages due to increasing demands, increasing incapacitation of hydro-power due to global worming, rising costs of imported fossil fuels,  difficulties in nuclear alternatives, are clearly evident. The current power hike may have been precipitated due to past mismanagement and corruption but it is inevitable in the best of circumstances.

electricitySLR 165 = 1 Euro

Sri Lankans consume about 40 units (kWh) per head per month, given the annual consumption of about 9 billion units by the whole country. This number, obtained by simple division is misleading. In reality, some 10-15% of the 9 billion are due to losses, and a good fraction of the power is used by non-household users. Hence the majority of house-hold users consume even less than the 40 units per head per month (obtained by simple division). The cost for the first 60 units per month per head remains at Rs 10 in Sri Lanka even after the power hike. This  tariff may be  compared to, say, Rs 15 per unit in the USA (national average of 11-12 US cents per unit), and Rs  35 per unit in rural Ireland.

electricity

The new tariff structure forces the large-volume users in Sri Lanka to pay more. The usual practice is to give lower tariffs to high-volume users to `encourage’ industries. This is in fact a hidden subsidy (or a hidden tax concession) to private corporate interests in the context of a country where the power utility is in the hands of the government. Hence, when the tariff structure was changed to increase the cost to high volume users, I hailed this as a correct step forward. It is a step that would encourage the industrialists as well as the government  to look for alternative energy sources. This is of course not rational planning to create a problem and then solve it. But this is the typical stochastic (cart-before-the-horse) approach used by politicians all over the world!

We need to tie a new horse to the cart to provide new traction.

I have suggested in many interventions that Sri Lanka should embrace solar energy in a big way to face the future, while also encouraging Dendro and other alternative energies. Let the government purchase, say, seven million square meters of solar panels from several sources (e.g., China, India, Japan, Germany, Korea) with each solar panel having an efficiency of 10%; and install them on the roofs of government buildings and public places like sports stadiums, schools, bus depots etc. Such installations would produce at least about one billion units of electricity if we use the (fixed-plate) average rating of 5 kWh of solar energy per day per square meter (data from US satellite studies, National Renewable Energy Laboratory, Colorado). Given high-volume orders for solar panels, manufacturers will drop their prices, and their governments (struggling with their domestic economic down turns) will  provide low-interest loans for the purchase of their products.

Even at the current market cost of about Rs 20-25 per kWh for solar panels in India, the total cost is in fact quite small compared to the cost of setting up a 1 billion-unit hydro-power station that involves the construction of reservoirs, dams, and power grids.

The consequent boom in the solar-energy sector in Sri Lanka would produce many new jobs (multiplier effect), and  encourage the industrial sector to install solar panels on the roofs of their buildings as well. Banks will give consumer loans to profit from the new business. So, the missing element in the electricity tariff increase is the need for concurrent action where a viable alternative energy source is boosted to a practical reality by pro-active government action.  This will in the end save the nation from its increasing enslavement to imported oil.

[My article entitled “he Electricity Tariff Hike – A great salutary step forward”, Island Newspaper 7th May, stated that the current usage pattern is 0.3-0.4 kWh per household’. This should be corrected to roughly 0.3-0.4 x1000 kWh per person per annum.]

31 Responses to “The glaring missing element in the Electricity Tariff Hike.”

  1. David Appuhami Says:

    Rajith Keerthi Tennakoon of CaFFE, another NGO money spinner, issued a statement saying that Sri Lanka was identified as one of the highest electricity bill paid country in the world and Now at a journey of reaching the “Miracle of Asia” there by increasing the electricity tariff by 65% we become not only in the south Asia but become among the top 5 paying the highest electricity tariff per unit at the leaflet distribution campaign held near the Fort Railway station.

    This is an absolute lie, See the truth by yourself;

    http://epp.eurostat.ec.europa.eu/statistics_explained/index.php?title=File:Half-yearly_electricity_and_gas_prices,_second_half_of_year,_2009-2011_%28EUR_per_kWh%29.png&filetimestamp=20130116115243

  2. Lorenzo Says:

    Walter,

    You should publish it as a NEW ARTICLE.

    People need to know. Otherwise NGO LOSERS FOOL them with LIES.

    CaFFE is another NGO in the NGO MAFIA EMPIRE of Pakiya which includes CPA, Groundviews. He is the BIGGEST NGO king in the country!!!

  3. Sirih Says:

    2nd chart must be pretty old since in Australia it says KWH is around 7 cents?

    About 3 yrs ago it was around 11 cents and now we have around 27 cents and in some areas 42 cents… We need to get these figures right.

  4. Fran Diaz Says:

    It would be good to EDUCATE the PUBLIC of Sri Lanka on the use of Solar Power as a relatively cheap and RENEWABLE energy source. Also NO pollution as in Coal plants.

    We are told that countries like Germany have solar panels installed even by the road side. California (USA) has the world’s largest Solar power plant in Nevada. California is the fourth largest economy in the world.

    Sri Lanka authorities should encourage the installation of Solar Panels wherever possible. Shouldn’t Solar panel prices be subsidised ?. Once people get used to the ease of the system plus the cost benefits, they will just go for it.

  5. aloy Says:

    Fran,
    What is the cost of solar power pannels?. Can anyone give a clue?. We have seen the size of solar power pannel farm at Hambantota; it is huge. It produces only 750kw and the cost is something like $70m (at our cost?).
    I think the best way is to reduce the the number of workers ( both blue and white collar) in public sector, who at the moment spend most of their time in travelling to work place and back, by sending those over 55, on retirement (with habdsome benefits to start their own businesses) and train those 100,000 new recruits to work more efficiently using new technologies. By this GOSL will be able to restructure its spending and reduce present heavy tax on oil (for power generation only) required to balance the budget.This way CEB will be able to reduce the cost of power generation. This is my thinking with common sense.

  6. Fran Diaz Says:

    Aloy,

    It is better to train the existing people working in the Public Sector to be somewhat more efficient than to replace them. To replace them would spell disaster to many thousands of families. People before Profit ought to be our motto. The purely profit motive kills ….

    No, it is better to find other ways to find energy. There are new technological breakthroughs happening right now (see internet) even for Solar energy. I do feel encouraged that such breakthroughs are happening. We can predict a future when Solar energy may be the cheapest ever permanent source of energy, along with wind, wave energy etc.

    To encourage people to go with Solar Energy, Germany guarantees a purchase price for anyone contributing Solar Energy to the national grid, for a period of 20 yrs. This makes people go into the BUSINESS of producing Solar Energy to the national grid.
    Since Sri Lanka is ready to go in for the new technologies in energy production etc., it would make sense if the GoSL gives an undertaking to pay a guaranteed price for Solar energy provided to the national grid, to attract private enterprise into the business of Solar energy production on a sure footing. In Germany it is a great success.

  7. aloy Says:

    Fran, I am not talking about recruiting new people for government service. I am going by the number they said they have recruited newly during the May day rallies. To me this appears to be the problem the government has to tackle and make the industrialists survive by reducing the electricity tarrif. IMF will want to make our industrialist bankrupt and import everything under the sun from India.

  8. Sunil Vijayapala Says:

    mismanagement, corruption were the causes for price hike and the biggest debtor cpc made it worse. since i am in the business of solar in anu i like to clarify few things raised by the forum members. when i imported my first set of panels, i was surprised that customs had a vat on these panels. one asst dir of customs suggested that i should write to director general to get rid of vat of 12% for photo-voltaic system, which did. although i copied this to mahinda, as usual there was no response. this is most pathetic situation in our country where admin officers never reply legitimate queries and suggestions. in a country run by a muddled up leader and and an administration, these things will continue to happen. i imported a solar battery too recently and here’s is the scenario. 12% vat, 5% pal, 2% nbt and 15% custom duty! i want to sell my system to the consumer at a very reasonable price.
    and on top of that the shipping company charges an enormous amount if the agent is foreign and also to compensate bribing the port handlers. altogether around 60% an importer needs to cop. here i am attempting do a what i call a ‘business service’ to the nation and our dumb fools are having all kinds of tariffs and levies on solar equipment. the inland revenue need to stream line their approval system for tin and vat certificates – hopefully they will go online in the near future. an assessor’s work is counter checked by another one in another section!!!
    absolute crazy! they never see things differently – the same old forms the same old process continue.
    now for the prices – hayleys have a big system fo 8 lakhs. i cater to poor esp. farmers to run pumps and middle class at 80k and with a battery under one lakh.(well now i may not be able to sell at this price). in between prices there are others in the market. i tried to arrange ‘easy payment loans’ with banks and finance companies but they too have been fooled by ngos, italians and germans who have made quick money and vanished from the island even before th warranty period and banks have had incurred bad debts. anyone who needs any info pl write to me [email protected]. this foolish leader, who now have sanctioned the npc elections need to immediately de- register all ngos in sri lanka and carefully put some criteria to eliminate most of them including this most corrupt organisation ‘world vision’ an australian venture, where over 90% of contributions go for salaries and assets.

  9. sen Says:

    Initial cost of household solar panel unit,generating 170kwh per month is SLR. 650,000/= and 200kwh is SLR. 725,000/=, comparatively high in cost. I think the authorities should look in to this and find a way to reduce the initial cost, to encourage the public to go for solar units, which will be a green solution for the current power generation crisis in the country.

  10. Fran Diaz Says:

    Aloy,

    Along with recruitment at May Day rallies (in all Democracies, even in the best of them, political parties are looking at ways to increase their vote base through various means), GoSL should do what Germany is doing, i.e. give a Guaranteed Price for a period of about 20 yrs to those contributing Electricity to the national grid.

    What about Sri Lanka’s own oil & gas off the Mannar coast etc. ? Wasn’t a date set for drilling ?

    We agree that importing everything from India (including Labor) is a BAD idea for Sri Lanka. While I admire the spiritual explorations of India (except for Caste system tied to the Hindu religion), most else is not admirable.

  11. Christie Says:

    Our electricity is the cheapest compared to our daily outlays on other purchasers. Compare what you pay for food, telephone, private tution etc.
    About seven years ago there were disel generators pumping electricity tou grid. These generators were mainly used by mining industry around the world.
    Time to have few more gas and coal fired power generation and of course nuclear power.

  12. Fran Diaz Says:

    I recall that when we were children, the Colombo retail shops were full of goods imported from Australia, selling such goods as cheese, meats, raisins, prunes, almonds, chocolate, etc.. The wholesale shops in Pettah ‘sillara badu’ (bulk groceries goods such rice, dhal, mung and other seeds) were sold in Pettah were even then full of goods from India, wasn’t it ?

    Our folks tend to import goods then and now from the most convenient spots, rather than grow them locally. May be it has something to do with the tropical heat and small size of the country. But the fact remains that in the far past, Lanka was known as the Granary of the East. Why the decline from that exalted status ? Was it Colonisation of some 500 yrs ?

  13. Christie Says:

    By the way solar does not last long and its efficiency goes down and needs batterires.

  14. Fran Diaz Says:

    I forgot to add that British goods were imported to then Ceylon and continues to this day, may be to a lesser degree. Foodstuffs like Marmite, Nestomalt, Ovaltine, various tea biscuits, also textiles (some made in India) & ready made clothing, shoes, cars, buses, trains and the whole equipment merchandise along with that, machinery & equipment, soap, books, school equipment, etc. Teh British Colonists were clever at identifying needs, raw materials of the colonized. Colonized cheap Labor was used in every colonised country, and ready made goods exported and new imported goods brought back to each country. A well organised system based on cheap local labor, while expertise and funds were provided by the Empire.

    And last but not least, Indian made sarees and jewellery, trinkets, ornaments, footwear etc. continues to be imported from India too, to this day.

    We are dependent on the imports, like it or not. What the answer ? More Industrial Zones ?

    Are we a nation of shop keepers, like the Brits themselves ?

  15. Fran Diaz Says:

    Christie,

    Long lasting batteries on the way :

    “A startup called Alveo Energy, with technology developed at Stanford University, is building an ultra low cost and long lasting battery that could help deliver breakthrough energy storage technology for the power grid”. Please Google for more info.

    I might add ‘if there is a Will, there is a Way’.

  16. Christie Says:

    If it is developed by the Yanks we will be paying a higer price until the patent runs out. I thought the Japs and Chinese are in the front when it comes to battrey technology. By the way the solar cell efficiency and use low grade silica (we have a lot of silica and export it too) is being developed. Even then the problrm with alternate energy producing methods (some calls it renewable or green) is higher cost, low efficiency, short life span and low reliability compared to more established methods like hydro, thermo and nuclear.

    Talking about the sillara kade whether it is ceylon, Burma, Uganda or Fiji the Sillara Kade was Indian.

  17. Christie Says:

    If it is developed by the Yanks we will be paying a higer price until the patent runs out. I thought the Japs and Chinese are in the front when it comes to battrey technology. By the way the solar cell efficiency and use low grade silica (we have a lot of silica and export it too) is being developed. Even then the problrm with alternate energy producing methods (some calls it renewable or green) is higher cost, low efficiency, short life span and low reliability compared to more established methods like hydro, thermo and nuclear.

    Talking about the sillara kade whether it is ceylon, Burma, Uganda or Fiji the Sillara Kade was Indian.

  18. Fran Diaz Says:

    I agree with what you say, Christie. But, we must best go in the direction of ‘Green’, the most important reason being Global Warming. They say now we have reached the tipping point in CO2 levels. Global Warming and weather related disasters therefrom will offset (exceed) any savings, with human hearts broken at loss of lives, homes, livelihoods. We can see it happening often in the developed world now ….

    We shall have to put human lives before cost cutting.

    ——–

    I forget the Pharma trade also being mostly with India now ? Not sure here.

  19. Fran Diaz Says:

    Also, “Talking about the sillara kade whether it is ceylon, Burma, Uganda or Fiji the Sillara Kade was Indian” – all British colonies, supplies from India, also a British colony.

  20. Cerberus Says:

    Another idea for consideration for GOSL for low energy cost, is to promote the use of low energy bulbs which give out the same amount of light as a regular bulb. These bulb costs can be subsidised which will result in a lower overall power consumption which means that the government does not have to build so many power plants.

    For example, a normal 60 watt bulb uses 60 watts of power, whereas the lower energy bulb will provide the same amount of light using about 15 watts of energy, thus a saving for the power grid. There is also a second generation of bulbs coming into the market which use LEDs. These are even better in terms of of the light to energy ratio. LED lights are somewhat expensive but they will last almost a life time. These too can be subsidised.

  21. kavdayako Says:

    Christie says that solar panels don’t last long and that you need batteries”.
    If you reed the article by Prof. Dharmawardana in the Island on 7th May it will be clear that he has a different picture. You don’t ned batteries. The ehectricity generated is not stored in batteries, but sent through an inverter itnto the mains grid if your house doen’t need it. Then your meter turns backwards and you get credit. Solar panels usually last about 8-10 years. Now sri lanka produces aboout 50% of power from hydro, and the rest from polluting, expensivve oil and cpal (very polluting). We need to GET OUT OF our dependence on foreign supplied fiels. Solar panels can be even fabricated in Sri lanka. If the government orders a million panels, and invites one of the companies (e.g., chinese, japanese, australian) to set up their factory hear, with guranteed purchases of panels for the next ten years (and we need them), we can also get the know how and get the panels cheap.

    The cost of panels will go down if there is bulk buying. The govt. has to put solar panels on all govt. roofs to start with. Then the public will follow. banbks will give loans.

  22. aloy Says:

    As Fran said ‘if there is a will there is a way’. The question is who should have it. I think the GOSL should have it and encourage people like Sunil who are trying very hard to make it work by removing barriers put up by various people like those in Customs etc. The goverment should study how they do things in countries like Korea, Thaiwan etc where they have a successful business comunity.

  23. Sunil Vijayapala Says:

    I am introducing ‘officially’ a solar battery called agm (absorbed glass mat), based on fibre glass and the acid within the fibre – a dry battery – deep cycle ideal for solar and can only be charged through a solar panel. they last 5-10 years and delivers current on a unifiorm basis – not like the lead acid starter battery which drains the current in one go and will be dead. some say gel batteries are better but my research says agm is the way to go and another opzv is the newest technology.
    fallacies in the discussion – solar panels last 25 years – my parent company gives a guarantee of 5 years. inverter and charger/controller 2 years. storage is the way to go – eventually replacing the grid altogether. systems without battery storage is good only for day use and if the day is cloudy or rainy no current and hence all equipment will stop working – in Australia we have this grid feed and get paid for that. 20 panels will generate enough current so that nothing is paid to the electricity supplier. our home has just 8 panels saving around 25%. a small less than 1000 watt air conditioner can be operated with a reasonable battery bank for considerable period with a pure sign wave inverter with an output of just 2000 watt.
    when you have an unwise leader who in turn is the finance minister, the country is at stake. in fact sri lanka is bankrupt and still being mortgage to imf and world bank. bbs is the only answer to this incompetent government.

  24. aloy Says:

    I tend to agree with Kowdayako’s idea that there is no need of a battery, thereby reducing the initial cost substantially. The storage can be the resevoir that release water to the trurbines or the oil storage tank that supplies the fuel to the engine. When solar pannels generate and feed the grid, less water or fuel is required to generate electricity for the grid.
    It is always good to move with the modern technology. But how can we do it with square pegs in round holes that we see in many places. Some even do not seem to know basic stuff as I highlighted in another thread on the same issue we are discussing. The next few decades will see a drastic change in the way we do things in everyday life. Electronically operated gadgets and systems will take over many things that we do. We should not train our people and let them leave the country to serve others. We should retain them and train all our uni students including arts students in unis.
    I do not know whether BBS is on the correct path. Various powerful people can make use of them for regime change etc. If they are not careful they too will end up like JVP with pencils driven through their ears.

  25. Lorenzo Says:

    Aloy,

    I think BBS is MOSTLY on the right track BUT as ALL political parties, they too have their share of blunders and thugs.

    The new BBS-Wimal W fight is a foolish thing UNLESS they contain it to HEALTHY COMPETITION. Until now WW was sleeping for 4 years. Now BBS has waken him up which is good. It was WW sho started this by linking BBS with Tamil diaspora.

    On JVP terrorists and pencils (true they were terrorists), at the same time, ALL in the Premathasa camp suffered a WORSE fate with ball bearings driven all over their bodies!! ONLY Run-nil survived. He wishes he should be better dead than alive to lose the way he loses!

    BBS will not drag the youth into what JVP/LTTE terrorists did. People are WISER than then.

    Prevention of terrorism act MUST remain to stop violently ANY SLIGHTEST move against SL.

  26. Sunil Vijayapala Says:

    bbs says they will never enter politics – this is the biggest blunder they make – they need not do party politics but they should be doing politics as a peoples movement. capturing power in this country by legitimate means is out as the people in power exercise violence and vote rigging. counting of votes can be easily carried out with right suoervision in the same voting station. the moment the boxes are carried away – all hell breaks lose. a peoples movement can topple a regime as happened in few countries in asia. bbs is a good framework to build this – may be some laymen influx is needed in their committee and armed forces need to be educated – along with young blokes getting a training in marshall arts to counter the thugs of this government. now where were we – solar power? we have come a long way.

  27. Fran Diaz Says:

    We think that a Science Advisory Committee for the entire Parliament is a must. Most of our MPs are not conversant with Sci&Tech, and this is a great drawback.

    We hope our Education system is re-vamped to provide students with the right type of knowledge to serve the Nation in the real day to day needs of the Nation.

  28. aloy Says:

    I understand that there is a proposal to set up Technical colleges around the country with foreign aid from a certain country. This will be a modern version of CWW Kannangara’s effort to establish central colleges throughout the contry. I know many patriots at that time donated land for building these colleges. I hope it will be done in a systematic way without much ‘political interfearace’ and carried forward with vigour.

  29. Lorenzo Says:

    Agree with Aloy.

    EDUCATION is the KEY to our development.

    That was how 15 million Jews BEAT 75 million Arabs.
    That was how the Japs BEAT the Chinese.
    That is how the Chinese will one day BEAT the stupid Americunts.
    That was how the Endians beat the Pakistanis.

    IF 75% of the people in a country are HAPPY, the country is happy. After all you can’t satisfy everyone!!
    And after all, politicians NEED votes in RETURN for everything they do.

    Parable of the sower. (from the Bible)

    “A farmer went out to sow his seed.

    As he was scattering the seed, some fell along the path, and the birds came and ate it up (useless like Colombians, don’t waste education on them).

    Some fell on rocky places, where it did not have much soil. It sprang up quickly, because the soil was shallow. But when the sun came up, the plants were scorched, and they withered because they had no root (useless like TNA voting ungrateful Tamilians in SL, don’t waste education on them).

    Other seed fell among thorns, which grew up and choked the plants (useless like ungrateful SLMC Arabs in SL, don’t waste education on them).

    Still other seed fell on good soil, where it produced a crop—a hundred, sixty or thirty times what was sown (like unitary-nationalist Sinhalese, Tamils and Muslims who ALWAYS give back to the country).

  30. aloy Says:

    What we have been discussing so far is relevant to this topic. The increase in electricity tariff has happened as the government has to find money to pay the large number of graduates that they have recruite recently. I think it amounts to more than Rs. billion a month. The government has not done any favour to them by employing them; it is their duty. While they were battling the terrorist these large number of arts graduates passed out without proper planning. They have to be given jobs as otherwise they will play havoc. This situation should not be allowed to continue. So, the best way to ameliorate the situation is to have the programme mentioned in my above posting to materialise. This will aslo give an opportunity to prepare our future generations to face the world confidently and become useful citizens unlike the unemployable arts graduates passing out today. It seems they account for 48% from all universities.

  31. Fran Diaz Says:

    All govt. employees should be trained in situ, in their present jobs.

    For new graduates, new avenues of employment ought to be made possible through new ventures, self employment preferably (huge possibilities in the agri sector here for organic veggies, herbs, edible plants), or co-ops for various ventures, ENERGY sector included, or in the private sector for new graduates. The resources of the sea ought to be studied and new ventures offered. Sri Lanka should explore the growing of edible sea weeds such kelp, growing lobster etc. in tunnels.

    It is a real shame that our women folk go abroad as housemaids to be abused and misused, even raped or killed, abroad.

    The education sector has to be re-vamped to suit the needs of the country. This applies especially to govt. schools all over the island.

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