Electricity shocker
Aldoris came down the lane in his music-blaring tuk-tuk and stopped at the gate where the trio had gathered. “Miss, unu-unu maalu paan thiyenawa mang langa (Miss I have hot-hot maalu paan),” he said, getting off the tuktuk.
“Ah, eka shok. Oya langa kimbula banis thiyenawada (Oh, that’s nice. Do you also have kimbula banis),” asked Serapina.
“Ow Miss (Yes Miss),” he replied.
As he picked some maalu paans and kimbula banis and put them into a siri-siri bag, handing it over to Kussi Amma Sera who gave him the money, he was asked by the latter, whether the prices have gone up.
“Ow, viduli gaasthu ihala gihin thiyena nisa apita ape mila ganan wedi karanna wenawa. Eth ada api vikunan-ne parana milata (Yes, with electricity rates going up we have to increase our prices though today we are selling at old prices),” he said.
“Minissu harima amaruwen jeevath wenne. Den eeta amatharawa viduli gaasthuth ihala negala-ne (People are struggling to survive and on top of that electricity prices have gone up),” noted Mabel Rasthiyadu.
“Mila ihala yana kota, padith wedi wenna oney. Eth eka kalathurakin-ne wenne (When prices go up, wages also have to go up but that rarely happens),” added Serapina.
After a short conversation, Aldoris continued on his sales journey down the lane just as the home phone rang on this Thursday morning. It was ‘Shifty’ Silva, the always-inquisitive IT expert, on the line. And the conversation for the second week in succession was on the recent electricity price hike.
“I am told that several industries are finding it difficult to survive with the over 60 per cent hike in electricity tariffs,” he said. “I am told that the move was conditional on the IMF providing us with the US$ 2.9 billion bailout package. One of the conditions was to stop doling out subsidies and pass on price increases to the consumer and end-user,” I said.
“You are right. The President also stated that with the electricity rates increasing, it has fulfilled a condition set by the IMF and with that, and the debt restructuring process in place, we are assured of the loan,” he said.
“We are caught between the devil and the deep blue sea. On one hand if we don’t end subsidies, we don’t get the IMF loan. On the other hand, the people’s miseries continue with high power rates increasing their cost of living,” I said.
After a long conversation on other ‘critical’ issues including continuous protests by trade unions and other institutions over increasing power rates, high taxes and elections, we hung up, promising to meet over coffee in the coming weeks.
This week, the Joint Apparel Association Forum (JAAF), the country’s biggest apparel sector grouping, raised concerns of rising electricity rates, warning that the rates would make Sri Lanka uncompetitive and compel buyers to seek other sources of cheaper supply from competing countries.
Stakeholders in the tea sector, another important segment of the economy, were equally concerned about rising electricity rates.
In a statement, JAAF said the Public Utilities Commission of Sri Lanka (PUCSL) granted approval to a 66 per cent electricity tariff hike effective from February 15 which has resulted in exponential increases in costs in the apparel industry, which in turn, threaten the continuity of operations, competitiveness and sustainability of a $5.5 billion industry, which remains the backbone of Sri Lanka’s economy. “The current increase is a further 31 per cent with an overall increase of 165 per cent since June 2022. This translates to an increase in manufacturing costs of close to 5 per cent just on electricity,” it said.
JAAF said it was perplexed and surprised that the written and oral submissions presented by the industry on tariff hikes to the PUCSL public consultation have simply been overlooked. “It discerns that the approved tariff hike was effected devoid of stakeholder consensus and done simply as a tick-box exercise to concede to legal processes,” the statement said.
It added that as highlighted by JAAF on numerous times, the fourth quarter of 2022 experienced a 15-20 per cent decline in orders (reduction in demand) due to the continuing global recession. JAAF estimated this downturn of economic activity to continue into the second half of 2023.
JAAF said it is vital that Sri Lanka’s apparels remain competitive with other apparel manufacturing nations and in the international market. With last year’s electricity tariff increases, Sri Lanka stood on par in US dollar terms with regional giants like India, Bangladesh, Vietnam, Indonesia and Thailand, offering electricity at $0.09 to 0.10 cents per kWh. Meanwhile, African countries including Benin and Togo which are aggressively pushing for foreign investments offer a much lower rate of $0.08 cents per kWh.
“With the increases that have gone through, this will leave Sri Lanka with a tariff of around $0.12 cents per kWh, which will undoubtedly make Sri Lanka uncompetitive and unattractive to investors,” the statement said.
While stating that the new power rates will affect the new Eravur textile zone where fabric mills must operate 24 hours a day to attract investors since a 400 per cent increase in offpeak tariffs is counter-productive to the objective of growing a textile base in Sri Lanka, JAAF urged the CEB to urgently scale up the commissioning of renewable energy including rooftop solar.
The tea sector also joined concerns about the increasing power rates saying the 66 per cent hike in electricity rates is making the world’s top tea producer uncompetitive in the global markets.
Tea industry sources said that tea is sold at pre-arranged prices, months before the delivery dates, and now becomes a loss to sellers with the new electricity rates in place.
Local production costs of tea have risen in recent times and with wages also going up, this sector – which is trying to convince workers to move to a more sustainable model – is struggling to survive. Apart from apparel and tea, other sectors too are confronted with rising costs owing to the changes in electricity rates.
Winding up my column today, I am greeted by Kussi Amma
Sera with, to my surprise, a cup of steaming hot coffee. “Kopi udaw karai weda kara ganna (Coffee will help you in your work),” she said.
True, coffee will keep me awake to the warnings of the various economic sectors in the country that Sri Lanka’s economy is in peril in the coming months!