Industries will be affected by electricity tariff hike - FCCISL

Industrialists and the business community are shocked on the decision of the Government to increase the electricity tariff effective March 1.

The business community in general and the industrialists in particular are continuing against tremendous odds such as the insecure situation of the country due to the escalation of hostilities, inflation, escalating material costs for inputs, high rates for skilled labour.

With all these tremendous odds it is the private sector - the industrialists that sustain the economy and maintaining a remarkable growth rate of 12 percent and if the increase in the electricity tariff is affected it would certainly throttle the industry to a finish.

In this backdrop the Federation of Chambers of Commerce and Industry of Sri Lanka (FCCISL) along with all its ancillary Regional Chambers as well other affiliated professional associations urge the Government to withdraw the proposed electricity tariff increase to save the industrial sector from collapse.

President, FCCISL Nawaz Rajabdeen, commenting on the issue expressed concern and said that if the electricity tariff goes up it would have an unbearable impact on SMEs - the small and medium scale industries. He said that there is the danger of their getting wiped out.

He said that it is unlike earlier, with globalisation enveloping the entire industrial world and merchandising, for Sri Lanka there is no turning back from continuous maintenance of the competitive edge with such countries like China, Bangladesh, Vietnam and several other countries.

Secretary General FCCISL Samantha Abeywickrama, quipped that the present electricity tariff in Sri Lanka is the highest in the Asian region and if the present proposed price hike is enforced it would become the highest in the world.

They indicated that the government failed to ensure adequate electricity supply for the last five years. On the contrary the gap between demand and supply increases each year.

In 2006 the installed capacity for electricity went up by a marginal one per cent whereas the demand increased by eight to 10 per cent.

They indicated that price increases too have been a standard feature of the supply of electricity.

Though it largely depended on the cost of petroleum, the management of affairs in the electricity sector has been a matter of concern in the price increases.

But these increases have affected the industrial users and not enabled them to be competitive, especially in respect of export oriented production of a range of goods.

Sri Lanka’s competitors do not seem to face the same degree of problems especially in relation to inputs costs.

In the national interest as well as in the interest of industrialists, exports and the business community and in order to avoid a collapse of operations of certain industries which currently function under difficult conditions that at least as an interim measure FCCISL proposes: a) suspend the proposed KVA charges (charges on three phase electricity from the present Rs 400 to Rs 1090 under the new tariff).

The entire industrial sector including SMIs use three phase electricity, so do some households; b) re-examine in greater detail the impact of fuel price adjustment charges and as an alternative impose a marginal increase of peak time tariff and postpone fuel adjustment charges considering the likelihood of a decline in price of crude oil in the international market.

Major industrialists, business community as will as small and medium scale industrialists too have voiced their concern over the proposed electricity tariff increase.

President, Ceylon National Chamber of Industries A K Ratnarajah, said that the increases would jeopardise the competitive edge in the international market.

Even those industrialists who cater for the local market would not be able to pass on the high cost to the consumers and thus some of them would have to put up shutters.

President, Apparel Exporters’ Association Ramya Weerakoon, said that in their factories all the machines are powered by electricity and any increase in the electricity tariff would have a great impact on the industry as it directly adds up to the cost.