Time for Sri Lanka to move from the Hydrocarbon age to the age of Electricity
March 23rd, 2022Harvey Perera
Currently, we are using hydrocarbons for all our energy needs. We use it for our transportation, for cooking, and production of some of the electricity. Due to global warming, it has become imperative that we start using renewable energy instead of hydrocarbons for our energy consumption. If we switch to electricity we can start switching our tuk-tuks, cars, trains, buses and cooking to electricity.
Most of the switching can be done by giving the correct tax incentives to consumers to switch to electricity. If it becomes cheaper for a household to use electricity for cooking they will do so gladly. We will be also rid of the problem of exploding gas cylinders and having to lug those heavy tanks home. It is the same with cars and tuk-tuks. It is a matter of providing the right incentives for people to switch. In Sri Lanka most of the distances are small. It will be easy for current electric vehicles which are manufactured to be used for transport since most of them have a capacity to travel about 200-300 miles on a charge. Some of the newer vehicles give even more. This means setting up charging stations in every town in the country. Again this can be done by the private sector if the right incentives are provided.
There is an added advantage in switching to electricity for transport since there will be less noise and air pollution when we switch to electric vehicles. I understand we cannot do it overnight and will have to be done gradually as our cars are wearing down. The maintenance on cars will be much less since there are very few moving parts in an electric car compared to a gas-powered car. There are supposed to be around 30,000 moving parts in a gas-powered car whereas the number of moving parts in an electric car will be about 10 at most. With the development of battery technology, each home can be independent of the grid and be self-sufficient in electricity needs for the home and for charging the car. This means no power cuts and it will be less work for the Govt too. There will be a certain part of the population who will need to connect to the grid such as high rises, and buildings that cannot have solar panels on the roof.
The question is where are we going to get cheap electricity? One of the most abundant things we have in Sri Lanka is sunlight and wind. We can get the full benefit from it and get all our energy needs from the sun and wind if we adopt what Germany did a few years ago. In Germany a few years ago, they introduced a guaranteed price for renewable energy for a period of 20 years. The net result is now Germany is leading in renewable energy. They shut down 84 coal plants and most of their Nuclear plants. The investment was mostly done by the Private Sector. Why don’t our leaders follow the same model that has worked for the Germans so well? If we do that, we could cut down on the import of coal, crude oil, and diesel, save Forex and solar energy electricity for all our needs such as cooking, vehicles, all powering, etc. In the USA too they give tax incentives for homeowners to install solar panels on the roofs. We need to think out of the box in terms of clean energy instead of using coal plants and diesel generators.
We have a lot of waterfalls and rivers which can be harnessed to generate power. See the article by Mr. Sugath Kulatunge ” Run of the River Hydroelectricity” Posted on February 23rd, 2022. – https://www.lankaweb.com/news/items/2022/02/23/run-of-the-river-hydroelectricity/.He has given many examples of rivers that utilize this method which does not involve building dams. There was also another good article in the Island by Mr. Parakrama Jayasinghe “Time to escape from the grip of fossil fuels -“https://island.lk/time-to-escape-from-grip-of-fossil-fuels/“. In this article he is showing how to use renewable biomaterials to do our cooking very cheaply. There is also a good article in the Island “SOLAR POWER an ALTERNATE ENERGY source” by Mr. Tissa Jayaweera. – https://www.dailymirror.lk/opinion/SOLAR-POWER-an-ALTERNATE-ENERGY-source/172-233414.
The Govt needs to appoint a panel of experts to study all these issues and make a long-term policy plan with ideas for tax incentives to bring about the required changes in our consumption of energy and also the generation of energy.
Last week President Gotabaya Rajapaksa addressed a nation in crisis. Instead of calming the masses, a good part of whose life is now spent in everyday queues, he managed to further enrage them. What could probably be the operating para of his speech was ‘this crisis was not created by me’. Our country is not the only country in the world affected by the prevailing crisis situation. The entire world is engulfed with various hardships,” he said. Fair enough, President Rajapaksa inherited an economy that was loaded with an unsustainable amount of foreign debt, much of which was obtained during the two-term presidency of his elder brother. While some of them were invested in useful infrastructure projects, Mahinda Rajapaksa misallocated a good deal of foreign loans on a dynastic enterprise-in development projects which had no immediate, perhaps, not even medium-term, economic viability. Mahinda Rajapaksa misallocated a good deal of foreign loans on a dynastic enterprise-in development projects which had no immediate, perhaps, not even medium-term, economic viability
But, only Gotabaya Rajapaksa is responsible for mismanaging the latent economic crisis, which could have been handled with economic common sense. Instead, he turned it into a national disaster. Without a series of flawed policies adopted by his administration, Sri Lanka would not have been in the throes of a crisis as acute as it is at present. But, the president did not admit any of his blunders; they broke the back of this nation. Perhaps, his ego blinded him. Or he is simply ignorant and his advisors sycophantic. Here are four cardinal mistakes he committed, and they turned an otherwise manageable foreign exchange crisis into an unprecedented national catastrophe. 1.His extensive tax concessions made the government bankrupt Mr Rajapaksa started on the wrong foot. The government revenue in Sri Lanka as a percentage of the GDP is one of the lowest in the world – not just in comparison to peer lower Middle/Middle-Income nations but even compared to the least developed nations. To address the lower government tax revenue, Rajapaksa’s predecessors, the Yahapalanaya, partly guided by the IMF, adopted a revenue-based fiscal consolidation programme. Tax revenue as a percentage gradually increased, from 2015 to 2019, when Rajapaksa was elected to power. The new president thought he knew better and cut VAT from 15% to 8% and abolished NBT, PAYE tax, etc. As a result, the government revenue in 2020 declined by 526 billion rupees. And the number of registered taxpayers in the country declined by 33.5 per cent, according to Verite Research, a think tank. In order to fill the shortfall, the government printed money, fuelling inflation. Public finances were weakened while the country was due to pay over US$ 24 billion of foreign loans by 2024, which itself reveals the economic acumen of the president and his advisors. 2.The self-made disaster in the agricultural sector The president’s overnight ban on chemical fertiliser would be remembered as the dumbest, yet one of the most callous policy decisions in recent memory. It is more ludicrous if the real reason as he claims was to save public health (instead it seriously damaged Sri Lanka’s food security, Sri Lanka now ranks behind a number of South Asian peers in terms of food security). If the unsaid motive was to save limited foreign reserves, it reveals the misplaced priorities of his government. Fertiliser subsidy cost about US$ 250-300 million annually. In the meanwhile, his government continued to service international sovereign bonds, the last one of US$ 500 million that was paid in January effectively emptied the foreign reserve. The ban on chemical fertiliser decimated the local agricultural sector, paddy harvest declined by two-thirds. The cost of the folly was, according to conservative estimates, is US$ 2 billion. It impoverished 1.8 million farmers, which account for every one in four of the Sri Lankan workforce. The new president thought he knew better and cut VAT from 15% to 8% and abolished NBT, PAYE tax, etc. As a result, the government revenue in 2020 declined by 526 billion rupees. And the number of registered taxpayers in the country declined by 33.5 per cent 3.Unsustainable Rupee peg and continuation of bond payments If there is a government that continued to pay its foreign lenders against a net negative foreign reserve, it is this one. The real motives may be much less sincere than lofty claims of non-existent creditworthiness, which is ranked below the junk by rating agencies. The government effectively drained US$ 7.6 billion of foreign reserves of 2019 to pay for foreign lenders and to maintain an unsustainable peg of the Rupee. The peg resulted in a further squeeze of foreign remittance by the Sri Lankan workers abroad. Exporters parked their earnings in foreign banks. The President in his speech admitted that the workers’ remittance, which would have been US$ 2 billion under the peg would now increase to US$ 5 billion after the rupee was floated. However, the rupee was floated when the country ran out of hard currency, with the government having no effective instrument to manage the free fall of its value. While the rupee is traded at 275 for a dollar in banks, it is still traded for 300- 305 per dollar in the parallel markets. That might suggest further depreciation is on the way. If the peg aggravated the shortage, now the free-falling rupee would make most essential items, ranging from milk powder to cooking gas beyond the reach of average folks. The promised Saubagyaya (prosperity) has been proved to be an unmitigated self-made disaster. 4.Self-isolation from the West Now when the government begs for short changes from Bangladesh, and pleads for oil on credit from Russia, at its hour of global infamy, one should know, that its friends are few and far between. This was not the case when it launched into power. The Japanese were funding a Colombo metro rail project, the Americans offered a US$ 480 million grant under the Millennium Challenge Cooperation. Gotabaya Rajapaksa’s administration suspended the Japanese project and shunned the Americans. It effectively self-distanced itself from the West and its allies. A common-sense foreign policy followed in the national interest would have made it possible for the country to seek help from a greater number of states at its hour of need. But, the Rajapaksa’s personal political calculations had always ranked above the national interest. Those are only the most salient of blunders, which are directly instrumental in our flight. There is a separate long list, from the 20th Amendment to racist dog-whistling and to the compulsory cremation of Muslim Covid dead, that further discredited the nation. Connect the dots, and you will see why and how Sri Lanka ended up here, our daily ritualistic humiliation at queues and our daily struggle to make ends meet. 
off their daughters due to various reasons such as poverty, tradition and gender inequality. The debate on child marriages in Sri Lanka has been focused too much on Muslims. But, in reality, the evidence shows that the child marriage problem is not a Muslim or Sinhalese problem, but a national problem. 
