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Energy poverty and inequality in Sri Lanka

10 Aug 2021

By Dr. Maneka Jayasinghe, Prof. Eliyathamby Antony Selvanathan, and Prof. Saroja Selvanathan  There are significant heterogeneities in energy poverty and inequality in Sri Lanka, according to the findings of a research conducted by the authors, which was published recently in the Energy Economics Journal.  Energy poverty is defined as the absence of sufficient choice in accessing adequate, affordable, reliable, high quality, safe and environmentally benign energy services to support economic and human development. The idea of the ‘absence of choice’ in this definition relates to Economics Nobel Laureate Amartya Sen’s notion that development is not simply a question of achieving a certain level of income but is not being excluded from those options that enable people to choose and obtain welfare in its broadest sense. In particular, not having access to energy may not only indicate deprivation of direct services, such as cooking, but also other elements which are fundamental for individual and collective development, such as access to education, health, information and social capital. The ‘affordability’ component in this definition captures the fact that access to energy services is contingent on the affordability of modern energy sources as well as the affordability to invest in household appliances, and education, entertainment, and telecommunication appliances. Ultimately, energy use supports economic and human development, contributing to an improvement of the well-being of the people.  The accurate measurement and tracking of energy poverty lie at the core of efforts made towards improving access to modern energy services for every person around the globe. In particular, the availability of detailed and accurate information on the extent and depth of energy poverty has the potential to positively influence the design of policy, regulatory and financial strategies to address the issue.  Despite its strong trajectory of recovery from a 26-year civil war, Sri Lanka still faces major development challenges, including providing affordable, accessible, and reliable energy services, and reducing poverty and regional disparities. However, measurements of the extent and depth of energy poverty in Sri Lanka are generally absent and the research and discussion of energy poverty are largely missing in the policy and public domain in the country.  This research study, using the 2016 Sri Lankan Household Income and Expenditure Survey data collected by the Census and Statistics Department, constructed the Multidimensional Energy Poverty Index (MEPI) to examine the incidence, intensity, inequality, and determinants of energy poverty in Sri Lanka. The MEPI is computed using a set of seven key indicators representing six dimensions of energy, namely, cooking, lighting, refrigeration, entertainment/education, communication, and space cooling. These indicators encompass common energy services demanded in households and hence enable capturing the deprivation of the services or conveniences of households, in terms of both access and affordability.  The results revealed that the incidence of energy poverty in Sri Lanka is 71.6% and that the average intensity of simultaneous deprivations among the energy poor is 60.2%. The MEPI was estimated at 0.431, reflecting the presence of a moderate level of multidimensional energy poverty among households, on average. The lack of access to modern cooking fuel represents the highest proportional contribution (57%) to the overall MEPI, followed by the lack of ownership of computers (13%), and household service appliance (refrigerator) ownership (12%). Not having access to electricity and telephones contributes the least to the MEPI in the country.  The findings also revealed that multidimensional energy poverty is slightly higher among households headed by females. Furthermore, the results suggested that low income households have the highest level of energy poverty. Some significant differences were observed in the proportional contribution of indicators by the income group. For example, access to modern cooking fuel contributes to energy poverty of upper middle and high income households more than for low income and lower middle income households. On the other hand, for low income and lower middle income households, the lack of asset ownership contributes to energy poverty more than for upper middle and high income households.  At the sectoral level, the estate sector showed the highest level of energy poverty, three times higher than the urban sector (which has the lowest). Nevertheless, urban households appeared to experience a higher level of energy poverty inequality. At the Provincial level, the highest level of energy poverty was seen in the Uva Province. The lowest energy poverty level was reported for the Western Province. However, the highest level of inequality in energy poverty was observed among the households in the Western Province.  Figure 1 presents the distribution of energy poverty at the District level, a further disaggregated visualisation of sub-national location-based energy poverty in the country.  Income indicates the affordability of energy and related services. As such, this study also investigated the link between energy poverty and income poverty in the country. Income poverty was defined in terms of whether the per capita monthly total expenditure of a household is below the official poverty line of Rs. 4,166. The findings revealed that energy poor households are not necessarily always income poor. For example, about 67.8% of households are energy poor but not income poor. Only about 5.5% of households were identified as both income and energy poor. While about 0.2% of households were found to be income poor but not energy poor, about 26.5% of households in the country are neither energy poor nor income poor.  The findings of the study revealed that in addition to income, various socio demographic factors affect the level of energy poverty. For example, compared to the urban sector, both rural and estate sector households show a higher level of energy poverty. Female headed households appeared to experience a higher prevalence of energy poverty compared to their male counterparts. Compared to the household heads age category of 18-34 years, the prevalence of energy poverty is lower among the other age groups - 35-49 years, 50-64 years, and 65 years and above. Households with married and widowed heads show a lower prevalence of energy poverty than households with never married, divorced, or separated household heads. The results also suggested that as the level of education of the household head increases, the level of energy poverty declines. When considering the impact of ethnicity on energy poverty, the results indicated that, compared to Sinhalese households, Tamil households experience a higher level of energy poverty. The results also showed that as the number of employed members in the household increases, the lower the energy poverty is.  An important aspect of energy poverty arising from this analysis is the implications of Covid-19 related learning losses and thereby long term education hindrance on children and tertiary level students caused by the lack of access to computers, mobile phones and televisions and radios. Transitioning to online education was inevitable in the country, similar to other countries, during the Covid-19 pandemic. The lack of access to educational and communication equipment for many, potentially for the low to middle income households, impedes the successful learning of children in those households, creating lasting effects on their education outcomes.  Furthermore, the lack of motivation, coupled with a lack of financial resources create a situation where the interest to adopt ‘clean cooking fuel options’ is somewhat low in the country. Therefore, enhanced support to overcome financial and social barriers to facilitate the transition towards clean energy is required. Of equal importance is the need for raising awareness and educating the general public regarding the health and economic implications of the adoption of cleaner energy.  The authors believe that the current study paves the way for further research and enhanced discussion about energy poverty and its implications on the well-being of people in the country and the formulation of required policy and programmes to address this critical issue.  (Dr. Jayasinghe is a Senior Lecturer in Economics at the Asia Pacific College of Business and Law of the Charles Darwin University of Australia; Prof. E.A. Selvanathan is the Discipline Head of Economics and Business Statistics at the Griffith Business School of the Griffith University of Australia; and Prof. S. Selvanathan is attached to the same School and University. This article is based on findings of a research study conducted by this trio of authors which was published in the Energy Economics Journal recently)


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