Sunday, May 5, 2013

Politics of ‘power’ and power of ‘politics’

By Dhanesh Wisumperuma

The Nation, 05-05-2013, p.

Crowd response to electricity tariff relief announced on May Day

The government authorities approved an electricity tariff increase based on the proposal of the Ceylon Electricity Board in mid April. The rise was of a record percentage and was to affect all strata of consumers. This was a curtain raiser for a series of discussions, protests, campaigns, press-conferences and more importantly for a wider discussion of the subject. Finally the President, head of the same government, announced relief for some of the consumers at a May Day rally. Is it the end of the issue – will the so called losses of the CEB covered? Are consumers – the needy group - given a relief?

The cause behind the requirement of an electricity tariff hike was thoroughly discussed this time, if we consider the sound discussions and responsible statements, and not the baseless hear-say type stories propagated with vested interests. In simple terms, the main cause for the loss experienced by the CEB emerged due to the increased cost of electricity production.

For instance, electricity is provided to the consumers at a lower rate than the cost of production. It is obvious that the Ceylon Electricity Board will experience a loss in such a scenario. This has been a result of the lower contribution of hydropower for the energy mix of the country and the increased production of thermal power generation – and specially when purchased from the private sector power plants. This loss has increased with the rise in fuel prices and the devaluation of the Rupee. Increased demand for electricity which rose continuously and the increased percentage of households with electricity (about 94%) contributed to this.
In simple terms the crisis in the electricity sector is a complex issue, a fact that all will agree. Some of the policies of the government institutions also increased the price of electricity production. For instance, furnace oil provided for the CEB has been increased in the recent past.

There is a need to reduce the loss of the CEB and the Petroleum Corporation to avoid those from collapsing. There may be parties who need to see these vital institutions collapse and opt for privatization or some other option it is not the policy of the present government. It is not what the people need. Hence finding ways and methods is a matter which needs to be discussed in future. One might be the reduction of expenses of the CEB itself and also the unnecessary expenses of the state sector.

Did all speak for the consumers?

The electricity tariff hike took up the political stage at a level not seen ever before. Many politicians, political parties and politically allied trade unions started to voice against the proposed tariff hike. How many of those were really worried about the consumers is a question to consider.

It was clear that some of the opponents were interested only in gaining political advantage from the issue. They may or may not have hidden agendas such as to make this an opportunity to topple the government, which some said openly. Such opportunistic moves are normal for political parties, especially in Sri Lanka. It is a topic on social media, and especially among the anti government camp.
However, we noticed that some of the organizations which speak of the electricity tariff hike never had an interest on such consumer issues. It is great that they are concerned of the public’s rights, although the genuine nature of their interest is unsure – which we could see in near future. Meanwhile a so called trade union leader, who was in the front of the campaign, didn’t have any idea of how power is generated in the country in response to demand fluctuation.

Politics of power

It is of interest that there are incidents where politicians who voiced to justify various tariff hikes while they were in power, speaks against such tariff hikes when they are in the Opposition. The most important here are the statements made by the politicians, recorded well in media.

One classic example for such a situation is provided by a UNP minister, when one of the highest electricity price hikes was announced, by the then UNP government, in early 2002. This tariff hike is often mentioned as the record highest price hike, and may remain among the highest, even compared to the 2013 tariff hike. Addressing a press conference, the then Minister of Power and Energy, Karu Jayasuriya said that “We don’t call it an increase,” and said “We prefer to call it an adjustment”. It was not just a joke, but a somewhat a technical term – “price adjustments” are being used again and again to soften the impact of such issues.
Another example was provided by a UPFA minister in 2008. When electricity price revision was announce, the then Minister of Power and Energy, John Seneviratne said that If people use less electricity they can save money and keep the bills at old levels, ... so this is also a conservation measure. That is how a minister described tariff hike as a conservation measure!
These two examples show the reality of political crisis of the country.

May Day promise

The other question is whether the tariff hike was settled by the May Day speech of President Mahinda Rakapaksa. He promised an immediate relief for electricity consumers. According to what he said, consumers using less than 60 units of electricity will not suffer a price hike. Further, a relief was to be provided for the consumers who use 61-180 units per month – it seems about 25% reduction of the fuel subsidy. He also said that the limit of the block of 60, 90, 120 could to be shifted from 5 units, i.e. to 66, 96, 126 respectively. At the time of writing full details of the new tariff system has not been published in full.

The President’s announcement was a show of the ‘power of politics’. There is some sort of a victory for the consumers, and especially for the low income consumers, who make about 50% of the electricity consumers. The cheer of the gathering was a sign of relief. It is obvious that the campaigns and the public concern had an impact of the government to alter the decision.

However, for us the struggle is not over yet. There is something important to be considered here. There is a need to go back to the block system again, which will provide a significant relief for the middle income people also. For instance, according to the proposed tariff rate, a consumer who uses 90 units exactly will have to pay Rs. 1161.00, while a 91 unit consumer will have to pay Rs. 2226.00. Some isolated this and tried to take the advantage on the political stage, but the principle behind this is the proposed abolition of the block system. People must voice to keep the block system.

There is no problem in increasing the tariff for the consumers who continue to use more and more electricity. Hence it is not necessary to speak of the consumers who use more than 180 units. Addressing a meeting last week, the Minister of Technology, Research and Atomic Energy, Champika Ranawaka explained one touching experience he had while he was the Minister of Power and Energy – according to him, only the people who use less than 90 units supported in the much publicized drive of the ministry to reduce the power consumption. It is the reality in many cases.

To end the article, I like to write down a different experience. A grocery owner was speaking about the high electricity tariff with a few of us at his shop. A daily paid laborer returning home after work, and a member of the low income community, paid a 500 rupee note and requested for a packet of cigarettes, worth Rs. 490! We were made silent for a long moment. There arises a good method to raise the government income and revenue and even subsidize the CEB. Increase the price of cigarettes and alcohol.

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