Electricity In Sri Lanka – Costs And Subsidies
S.Sivathasan
“Despite the revision in the tariff structure, domestic consumer subsidy was Rs. 8.98 per unit and for industrial consumer Rs. 7.83”. So states Ministry of Finance Annual Report 2012. The revision refers to the one in 2012, not to the 2013 May one. As per CEB statistics, gross sales in 2011 were, 10,023 GWh (million KWh). Three major consumers – domestic, general & industrial absorbed 84.1% yielding a revenue of 86.7%. The domestic segment of 33.7% yielded a revenue of 25%. In this segment the first slab of 1-30 was getting lunch ¾ free. Now it is 2/3 free. The second slab of 31-60 had 2/3 free lunch which is now more than half free. Perhaps this arithmetic made the masses less responsive to the strike. Invoking the IMF mindlessly as the villain and the government as the servile handmaiden of the IMF carried no conviction. It may also explain the stubborn refusal of the Treasury to budge and for the government to remain firm. The protest call was a far cry from Gandhi’s Dandi Salt March. The choice was impolitic.
After the successful Russian revolution, when Lenin was asked for his definition of socialism he said “universal free education and rural electrification”. He even said that the very sight of the high tension wires criss crossing the country would change the consciousness of the masses. He was however harsh on those who had a wrong understanding of, from each according to one’s ability to each according to one’s needs. He was swift in saying “he who does not work, neither shall he eat”. A good principle for SL. The country has extended electricity it says to 93% of households. It will be full coverage soon. Capital cost is by the state. Should the monthly bill be subsidized?
One explanation for high cost of electricity production in SL is the bypassing of coal fired production for 30 years or more. During this period global coal fired electricity more than tripled. According to International Energy Agency (IEA), coal – based energy is on average 17% cheaper than nuclear and 7% cheaper than gas. It says further that capital intensity in natural gas chain can be six times higher than for coal. Studies by the European Community, Congressional Budget Office and MIT show that coal power plants provide electricity at a lower cost compared to nuclear or gas. According to Electric Power Research Institute (EPRI) of USA too coal is cheaper. Hydro is reported as comparable to coal, but can be very high as several factors go into cost upto the consumers’ point. In SL most if not all of the economically better ones are exploited.
Coal is magnified as environmentally disastrous. What ruin has overtaken the following countries? South Africa with 93 % coal generated electricity, Poland 87%, China 79%, Israel 58%, US 45% and Germany 41%. SL had nil % till 2010 and will reach 36% when all five projects at the two locations are completed.
Total world electricity generation by fuel in 2009 was, coal 41%,gas 21%, hydro 16%, nuclear 13% and oil 5%. In Sri Lanka gross generation in 2011 was 11,528GWh of which Thermal was 59% and Hydro 40%. Was SL any the wiser in veering from coal and deviating widely from world average. Nothing mystical about world averages one would say, if deviation had led to lesser costs to the power consumer.
Every rupee in added cost cannot be explained away by corruption and mismanagement. Over staffing is the most condemnable feature in public sector employment. It has bred inefficiency as no other single factor has. This malady started as early as in in the fifties and has galloped to this day unabatedly. The incidence of this malaise has visited every citizen in its most debilitating form. Electricity is just one and it is felt keenly because it impacts in very precise monetary terms. Minor employees in semi – government institutions are 40.6%. Where in the world do we see such a ratio as 2:3? In the whole of Public Service – including semi govt. – the numbers are 288,000 composing 23% making a ratio of 1:4. Predilection for disproportionate minor is not for need but to shuffle in the least qualified. Every successive government has sought to demonstrate its capability by maximizing unproductive employment in the best of times and sustaining the redundancy in the worst of times. Since independence, was there ever a protest by the public service or the polity? Today there is a collective fine for universal lassitude.
In a few years when all coal plants at Noracholai and Sampur are commissioned, the additional installed capacity will be 1,900 MW. To these have to be added Upper Kotmale and Uma Oya hydro projects which are under construction. Then the final tally in composition will be: Coal Fired 1,900, Other Thermal 1690 and Hydro around 1600. It may be hoped that when all coal plants are on stream, heavy transmission losses are pared to be on par with most other countries and efficiencies are brought about, electricity bills will tally with costs. Break-even, no subsidy and a marginal profit thereafter can be a rational order.
