Rethinking the increase in electricity tariffs

The Ceylon Electricity Board (CEB) has, for a considerable period of time, been considered as one of the largest loss making organisations owned by the Government. The reasons for the losses have been attributed by detractors of the CEB to wastage and corruption among other things.

At different times critics of the CEB including ministers have spoken of a mafia that prevents things being put right. But the tragedy is that, despite all this criticism over the years pretty little has been done to prove the allegations right or to take remedial action when necessary.

Consequently whenever the CEB requires to increase its revenue it resorts to an increase in tariffs as an easy way out.

According to media reports, the Cabinet has recently approved increases in electricity tariffs in two stages; in January and in June next year. The last increase in power tariffs was made in August this year.

According to CEB officials, despite the electricity tariffs being increased in the recent past, the CEB was still running at a loss.

To cover the current losses incurred by the CEB, electricity tariffs had to be increased by about 70%, CEB officials claimed. According to officials the CEB currently owed nearly Rs. 650 billion as outstanding debt to various parties.

However, Electricity Users Association (EUA) Secretary Sanjeewa Dhammika has been quoted claiming the CEB recorded a profit of Rs. six billion in October. If Mr. Dhammika’s assertion is correct it would seem the CEB is seeking to cover its past losses through increases in electricity tariffs in the future.

Any increases in electricity tariffs will undoubtedly burden the poor and marginalised and even the middle class who are already facing the brunt of the disastrous economic strategies of the past three years.

Moreover, Mr. Dhammika claimed the proposed increases in electricity tariffs would result in an increase of the monthly electricity bill of a low-income family to 1500 rupees while the bill of a middle class family would rise to at least 8,000 rupees a month.

Undoubtedly an increase in electricity tariffs will not only impact households but also other sectors of the economy, and should therefore be resorted to only after a proper study was conducted.

Patali Champika Ranawaka, who held the portfolio of Power and Energy at one time, also said if electricity tariffs were increased to cover CEB’s losses, businesses could collapse as a result.

Public Utility Commission of Sri Lanka (PUCSL) Chairman Janaka Ratnayake said even though the Cabinet has given approval to increase the electricity tariffs, PUCSL was not bound to implement that decision.

Despite the allegations of mismanagement, waste, corruption etc. against the

CEB over a period of time, there are no visible signs of any remedial measures that will be taken to cut down production costs of electricity.

The allegations are many but none seem to have been probed. For example there have been reports in the past of the unusual practices of the CEB making PAYE tax payments on behalf of its employees, when the usual practice elsewhere has been for employees themselves to pay such taxes.

Only after adequate steps are taken to internally cleanse the CEB of all the costs of mismanagement, can there be any moral justification for a further increase, if any, of electricity tariffs.