• ‘Even if an electricity tariff hike was necessary, the approved tariff rates are absolutely unacceptable’
• ‘Asking the people to cover electricity generation cost is easier than taking effective measures to produce electricity at a lower cost’
• ‘Prices of everything change once every two, three years; why are we surprised when electricity tariffs are increased after many years?”
• ‘Electricity tariffs increase will compel businesses to increase prices of many goods, especially certain food items’

By Sumudu Chamara At a time when almost every product and service has become unbearably expensive, further price hikes are the last thing the crisis-hit Sri Lankans want to see. However, the prevailing situation is such that a number of reforms to Sri Lanka’s economy and the private and public sectors are necessary, and in this context, more price hikes seem inevitable. Last week, the Government announced a decision about one such price hike that is highly likely to cause more or less the same adverse impact the fuel price hike had on the people – the long overdue electricity tariff hike. On 9 August, the Public Utilities Commission of Sri Lanka (PUCSL) approved an average 75% price hike for electricity tariffs for all groups of electricity consumers. This, according to the PUCSL, is the first electricity tariff hike in nine years, and is based on proposals submitted by the Ceylon Electricity Board (CEB). As per new tariff rates, electricity consumers who use 30 or less units will face a 264% increase, which will bring their average monthly bill to Rs. 198, while electricity consumers who use 30-60 units will face a 211% increase, which will bring their average monthly bill to Rs. 599. Electricity consumers who use 61-90 units will face a 125% hike, resulting in an average monthly bill of Rs. 1,461. These tariff hikes were not welcomed by electricity consumers, and several feel that the authorities should have not opted for such a massive tariff hike. For some insight into their thoughts on this decision, The Morning spoke to several electricity consumers in Colombo.   People’s response   Most people The Morning spoke to opined that the authorities should not have implemented such a massive electricity tariff hike, and that it will make the lives of economic crisis-affected people a lot more difficult. They further said that this is not the time to make loss-making public institutions profitable by putting the cost burden on the people. “The people are going through an extremely difficult time due to a plethora of economic issues, and the Government, after waiting for many years, chose now to increase electricity tariffs. In addition, even if an electricity tariff hike was necessary, the approved tariff rates are absolutely unacceptable,” said P. Janaki Udunuwara, a 27-year-old private sector worker, expressing her disapproval of the electricity tariff hike. She added: “The Government may have a thousand reasons to get more money from people’s pockets. However, it is always ordinary people who have to endure the impacts of financial crises, instead of the authorities and politicians who create such situations. What is more, they chose the worst time to increase electricity tariffs. The authorities are insensitive to the people’s hardships. Even in the case of increasing fuel prices, we saw that the Government was making a profit, and is extremely lethargic when it comes to revising fuel prices in the country in accordance with decreased fuel prices in the world market. This is absolutely not the time to make profits. This is a time where subsidies should be given and price hikes should not go beyond covering costs. How much more pressure are they going to put on the people’s shoulders?” Meanwhile, some questioned whether an electricity tariff hike is the best solution to the CEB’s losses. “The authorities say that this electricity traffic hike comes after around nine years, and due to that reason, I think the decision to increase electricity tariffs is reasonable. However, I do not think that these rates (percentages) are reasonable at all, especially given the present situation of the country,” said Susil Perera (name changed on request), a 57-year-old store-owner, expressing concerns about the new electricity charges. He was of the opinion that the Government should take alternative measures to curtail the cost of electricity generation, instead of asking the people to cover that cost, which he said is easier than taking effective measures to produce electricity at a lower cost. “Even though having to use fuel to generate electricity is cited as a main reason for the necessity of a fare hike, the CEB’s losses are not new. It has been one of the biggest loss-making institutions for years, if not for decades, and it has been demanding a fare hike for a long time. According to what has been revealed over the years, CEB officials are entitled to a large number of various perks, and it is one of the reasons why it is making such losses. “Regardless of what has happened to the country’s economy, they are not ready to lose those perks, and instead pave the way for fare hikes, to keep enjoying those perks. At the same time, there are plenty of allegations that high-ranking CEB officials do not support effective and low-cost power generation methods, and instead, support traditional and high-cost methods, in order to keep enjoying certain commissions and other benefits they are said to receive from various parties, including private power-generating companies that sell CEB electricity.” He expressed concerns that it is a crime against the country to get electricity consumers to pay more in order to operate the CEB according to the wishes of corrupt, opportunistic, and incompetent officials. However, some see the electricity tariff hike as an absolutely necessary measure, and they encourage electricity consumers to realise this. In this regard, Hasitha Gunawardena, a 35-year-old private sector worker, said that regardless of how difficult it would be for ordinary citizens and businesses to bear the increased electricity tariffs, in a context where the electricity fare has not been increased for a long time, it is fair to increase electricity tariffs. “We should not see this as an increase, although it technically is. Essentially, this is an update of electricity charges. I believe the electricity charges have not been increased, or updated, for a few years. In a context where the prices of everything change at least once every two, three years, why are we surprised when electricity tariffs are increased after many years? We should be happy that despite CEB’s massive losses, the authorities did not increase electricity charges for many years. “I am not saying that the CEB has been operating in an exemplary manner. In fact, it has shown great weaknesses in evolving over the years. However, not increasing charges on time is one of the reasons, although most definitely not the main reason, that the CEB has been suffering losses. I understand it is difficult for everyone, especially when inflation is through the roof. But we will have to adjust.” Instead of fighting the authorities’ decision, Gunawardena said, it is necessary that the people adjust to the new rates, adding: “We will have to limit electricity consumption. It is not difficult; we are just used to having electricity 24 hours a day. Did we not manage to do our day-to-day work when there were 13-hour power cuts a few months ago? Why cannot we plan better and in advance, and limit electricity consumption for a few hours a day? I am not saying people should be in the dark at night or that the Government should be allowed to ask the people to curtail basic needs. But switching off unnecessary electrical equipment, especially lights, is not a big deal, and it is something we should have been doing regardless of the economic crisis or increased electricity tariffs.”   Impacts of the electricity tariff hike    Meanwhile, the business community expressed displeasure about the electricity tariff hike, adding that they will be certainly compelled to increase the prices of many goods, particularly of food items. They opined that businesses are not in a position to bear this tariff hike, given the present situation of the economy. In this regard, Perera said: “Due to skyrocketing inflation, the people can barely make ends meet, and this tariff hike is going to exacerbate that situation. Now, when electricity tariffs are increased, we businessmen have to spend more for electricity, which in turn increases the cost of goods. We have to cover that cost, and passing that cost on to consumers is the only way. There is absolutely no way we can ignore this cost and sell goods at previous prices.” He explained that while a need will arise to increase the prices of all goods and services, increasing the prices of food items that have no maximum retail price and require refrigerated storage, such as meat and fish, will receive priority. In addition, vegetables or fruits that need refrigerated storage will also go up in price. When asked about the prices of other goods that have a maximum retail price and require refrigerated storage, he said: “This is a problem that is yet to be discussed. Prices of goods such as ice cream, chocolate rolls, and various types of cakes and soft drinks have to be stored in refrigerators. However, their prices are decided by the companies that manufacture them, and we have no power in increasing their prices. “However, soon, those companies will have to increase the prices of these goods, because they too have to spend more for electricity now. I hope they revise the prices of these goods without delay. Otherwise, store owners will either stop selling these products (at previous prices), or they will arbitrarily increase prices. Both of these possibilities will have a direct impact on consumers.” However, 47-year-old A.R. Withanage, another businessman, was of the opinion that most small-scale businesses, especially grocery stores, are on the brink of collapse, and that even if the prices of goods are increased, that alone will not save the industry. “Even though the cost of electricity affects every good and service, that is merely one challenge we have had to deal with. There are more issues such as high cost of and limited supply of fuel, scarcity of imported food items and various ingredients, and high cost of labour, which are becoming worse. The bottom line is we cannot increase the prices of goods and services at the same rate that costs are increasing. Therefore, even after a price hike, there will be a huge difference between the cost of products and the price, and it will leave consumers unable to purchase goods and the business community unable to sell goods.” He added that instead of merely increasing electricity tariffs, the Government should have studied how such an increase may affect the general public. “Increasing prices is something anyone can do. Doing so in a manner that causes minimum impacts on consumers is what makes these types of decisions good decisions. It is a very simple but a sad reality that ordinary citizens will have to pay twice the amount of the electricity tariff hike – first they will have to pay more for household electricity consumption, and secondly, they will have to pay more when buying goods and services, because goods and services providers have to increase prices to cover their costs.” While it is understandable that both the authorities and electricity consumers have valid reasons to support or oppose this tariff hike, these rates are unlikely to decrease in the foreseeable future. In this context, the people will have to adjust to new electricity charges. As some who spoke with The Morning noted, it is crucial that the people learn to manage their day-to-day activities with the minimum amount of electricity.