ECONOMYNEXT – The discriminatory electrical energy costs in Sri Lanka, with punitive costs being charged to a number of shoppers, are purely the work of the regulator and officers and never of a political nature, Vitality Minister Kanchana Wijesekera mentioned.
Sri Lanka’s Public Utilities Fee has authorized tariffs with a bewildering array of discrimination penalizing clients based mostly on their sort, measurement and sort of enterprise on the identical time.
“It’s not the ministers or anybody who makes the tariff system,” Minister Wijesekera advised reporters.
“There are civil servants who’re employed solely to work on this. They serve on each the Electrical energy Board and the Public Utilities Fee.
“Primarily based on the methodology, these officers use a digital system. If, as you say, there are shortcomings, I can inform the CEB and PUCSL.
“If there’s an incorrect calculation, a grievance might be filed with the supervisor to appropriate it. One of the best strategy is to file a grievance instantly. As a result of neither I, nor senior officers of the ministry, nor ministers intervene to calculate the charges.
“Now we have solely established the methodology at coverage stage. If the federal government may give subsidies to industries, it can occur.”
There are considerations that the precise costs authorized by the regulator battle with the ideas set out in a tariff methodology.
There are rising considerations that mispricing of power sends the mistaken financial indicators in a rustic that, not less than on paper, is meant to be a market financial system.
READ MORE The cross-subsidization of power tariffs in Sri Lanka is being questioned
Industries and inns pay decreased costs. In the meantime, throughout industries, bulk clients are charged greater costs regardless that they need to obtain a reduction based mostly on market dynamics.
A small trade and a small business institution are charged totally different costs, successfully penalizing SMEs that aren’t within the manufacturing or resort sectors, sending distorting financial indicators with none price foundation.
Households are charged greater charges as consumption will increase, reaching ranges the place costs are properly above prices as excessive as Rs 89 per unit.
“A differential tariff implies that some classes are sponsored, which raises the query of who pays these subsidies,” says Advocata Institute, a Colombo-based free market assume tank.
“As for inns, home shoppers subsidize international vacationers.”
The discriminatory costs result in different absurd outcomes, Advocata identified.
“…[T]The distinction in charges between common bulk supply and industrial/resort customers is meaningless,” Advocata emphasizes.
“For instance, a venue internet hosting weddings and celebrations could be handled as a common bulk buyer and charged double the speed {that a} resort could be charged, regardless that each host comparable occasions.
“A restaurant in a shopping mall could be charged as a common buyer, however the identical restaurant in a resort could be charged a fee half of what a resort pays.
“Whereas this distinction existed below the earlier fee, it can develop into even better below the brand new construction; inns confronted a ten% fee enhance, whereas common customers confronted a 20% fee enhance.”
Though households make up the majority of the in a single day peak, the place era prices are highest, critics say charging Rs 89 far exceeds the fee. And there’s additionally no level in subsidizing smaller industries and inns with penalty charges for households.
In international locations like Vietnam, the best household fee is round 40 rupees.
In Singapore, the place era prices are excessive as a result of presence of liquefied pure fuel, the best home value is 31 cents (about 74 rupees) together with tax. Industries additionally must pay round Rs 66 on account of LNG, however off-peak costs are half of that.
In the meantime, new considerations are rising that the hole between peak and off-peak costs has nearly disappeared, eradicating the important thing device to spice up off-peak energy consumption and enhance uniform capability utilization.
Whereas peak trade charges of round Rs 38 are similar to some East Asian international locations similar to Vietnam, which has a big coal and hydropower base, the off-peak fee of Rs 32 is far greater. (Colombo/02 November 2023)