By Dr. Tilak Siyambalapitiya
Last year on 1st March, 2001, your electricity bills rose by 25%, taking the country average price of electricity to Rs 5.60 per unit. This year on 1st April 2002, your bills rose again by some 38%, making the average price almost to Rs 8 per unit. Years of indecision of various Governments, Ministers of Power and Boards of Directors of Ceylon Electricity Board (CEB), on lower-cost power plants, is now showing the full impact. For a moment, did you think why only your bills should go up repeatedly, when electricity prices in other countries remain relatively stable ? Please be assured that more increases are on the way, for which the reasons should be known to all electricity customers.

The scale of the Increase

From April 2002, larger households will see the highest percentage increase, while industries too will see their bills going up by over 30%. Tables below show the scale of increase in different customer classes. Note that GST will be extra.

A crisis in the electricity supply need not always be reflected as hours of blackouts. If you pay the highest price of electricity in this world, that too is a crisis. That is precisely where we are heading. With the increase on 1st April, Sri Lanka has the highest electricity price in the region. The power crisis is gradually transferring from a capacity shortage in the electricity generating system to a scenario of very high prices.

Bombay, Singapore and Kuala Lumpur

The table compares three customers of household, commercial and industrial groups, in Sri Lanka, Bombay (Maharashtra State Electricity Board), Singapore (Singapore Power) and in Malaysia (Tenaga Nasional Berhard). If you run a grocery, your electricity bill will be up to 44% lower in Malaysia, 37% lower in Singapore. Running a large manufacturing industry is 37% cheaper in Malaysia. Even in Singapore, a country that has very high overheads, and imports all its energy, your factory electricity bill will be up to 17% lower.

Only small and medium households pay higher rates in other countries. Electricity used for the manufacturing and service sectors is more expensive in Sri Lanka, compared with the prices in Bombay, Singapore and Malaysia. The picture is not very different when compared with other countries in the region such as the Philippines’ Thailand or Indonesia.

Sri Lanka certainly has the highest price of electricity in South and South-East Asia. Our prices are significantly higher than all countries competing to attract foreign investments to industry: Bangladesh, Thailand, Vietnam, Indonesia, China, to name a few.

Why are we paying high electricity prices?

In 1992, CEB requested Government clearance to conduct a feasibility study to build a coalfired power plant in Mawella in the Southern Province. With a natural bay, Mawella was definitely an attractive site to unload coal. Even before a full-scale feasibility study was conducted, a handful of misguided individuals lead by a Professor in the Ruhuna University succeeded in convincing the President that a power plant in Mawella will turn the South into a desert. In 1992, the President suspended the Mawella coal power project. The South lost a US$ 500 million investment, and the country is now losing US$ 100 million a year for extra fuel to run the oil power plants.

Customer Class Usage Monthly Electricity Bill without GST (Rs/KWh)

(KWh/month) (KVA/month) SriLanka Bombay Singapore Malaysia India

Household Small 30 — 150 101 239 165

Medium 90 — 372 433 716 495

Large 300 — 3,222 1,690 2,388 1,750

Commercial Small 1,000 — 10,930 9,557 7,961 7,260

Medium 10,000 50 132,800 112,062 83,926 74,243

Large 50,000 200 627,800 550,487 395.751 349,411

Industry Small 5,000 — 37,530 22,800 39,803 32,521

Medium 50,000 200 435,800 417,810 395,751 336,806

Large 200,000 600 1,628,800 1,625,260 1,351,076 1,021,509

Household Units Previous Bill Present Bill Increase

per month (Rs) (Rs)

Small 30 120 120 0%

Medium 90 338 372 10%

Large 300 2036 3222 58%

Demand Energy

Commercial Charge Chare

(Rs/kVA month) (Rs/k/Wh)

SMALL — 10.90 ¦ 28%

MEDIUM 480.00 ¦ 37% 10.80 ¦ 35%

LARGE 460.00 ¦ 39% 10.70 ¦ 36%

Demand Energy

Industrial Charge Charge

(Rs/kVA month) (Rs/kWh)

SMALL — 7.50 ¦ 26%

MEDIUM 400.00 ¦ 48% 7.10 ¦ 29%

LARGE 380.00 ¦ 46% 7.00 ¦ 29%

If you cannot afford your electricity bill today, if your supply was recently cut-off because you could not afford electricity, the suspension of Mawella in 1992 is the principal reason. CEB planned to generate 1894 million units of electricity from Mawella this year. Owing to Mawella not being available, CEB spends this year about Rs 9000 million EXTRA on other fuels, ranging from auto diesel to residual oil. A unit of electricity from Mawella was to have a fuel cost of Rs 1.60. Now the electricity lost from Mawella is generated using various oils, the production costs range from Rs 3.50 to 10.50 per unit of electricity.

The diagram shows how the electricity prices would have stabilised just under Rs 7 per unit by now, if Mawella was allowed to proceed to construction. Mawella was to produce electricity from year 1999.

Your electricity bills in the future

If the replacement for Mawella at Norochcholai, decided by the Government of 1992, is allowed to proceed at least now, your electricity bills would stabilise around Rs 7 per unit, from the first possible year of operation of the power plant, in 2008. Media reports indicate that the site is to be shifted again, for the third time, back to Trincomalee.

The country has so far lost US$ 400 million owing to the suspension of Mawella in 1992 (was scheduled to produce electricity from 1999) and US$ 500 million owing to the indecision on Norochcholai (decision pending since 1999, was to produce electricity from 2004). All this money is going out of the country as payment for expensive oil, and you electricity customers are paying for it.

Keep quiet now, pay later

The choice is yours. Your civic organisations, your Chambers of Commerce, your Chambers of Industries, your Exporters Associations, your Professional Institutions. You may opt to keep quiet: you were silent when Mawella Project was suspended in 1992, and you now pay the price for it. You even perhaps thought that electricity planners or engineers had some vested interest in Mawella, and that is why they were fighting to have that project done. You kept quiet when Norochcholai was facing difficulties in 1999 and be prepared to pay the price for it by way of further increases in electricity bills by 2004. Continue to keep quiet about Norochcholai, let the protectors have their way, (and say corrupt engineers want Norochcholai built) and see your electricity bills reach sky high by 2006. The estimated electricity price in 2010, with the absence of Norochcholai (Mawella has been cancelled already) is Rs 10 per unit (or approximately 10 US cts per unit), which probably is the highest average price in any country of the world.

The total damage done by politicians, academics, protectors, environmentalists, monks, priests, Bishops, and everybody else who protested and shifted the coal power plant round and round the country, is almost US$ 900 million to date, and increasing. If you need a comparison, US$ 900 was the total investment on the accelerated Mahaweli project between 1978-1990. And from 1992-2002, owing to indecision on coal power we have spent exactly the same amount of money extra for oil-based electricity, with no end in sight.

The game is the same. When a political decision was taken to shift the site out of Mawella in 1992, engineers protested. The Planning Ministry pacified them saying that various friendly Governments and Contractors have promised to build the power plant at high speed, at the new site in Puttalam (later known as Norochcholai). Do not worry, we will get the power plant at Norochcholai operating in four years, said the politicians in 1992. Ten years down the line in 2002, you are told the same story all over again. The game of shifting power pliant sites is the same, the players have changed several time over. The end-result cannot be different.

What do Mawella, Norochcholai, coal power, Trincomalee, and the raging debates in the electricity sector mean to you electricity customers? For the answer, simply look at your recent electricity bill.