Call to rise against corrupt trade unions:

Competition vital for a vibrant CEB- Power and Energy Minister

By Manjula FERNANDO

Power and Energy Minister Patali Champika Ranawaka said people must rise up against power hijackers, the trade unions who hold consumers to ransom to achieve their political agendas.

In an interview with the Sunday Observer, Minister Ranawaka said, “Lack of competition has resulted in this mess within the Ceylon Electricity Board. We saw how the banking sector reformed with the introduction of private banks. Earlier, the State banking sector was riddled with strikes. Now they do not resort to such action because if they do so customers will withdraw their money and go to a private bank.”

The excerpts of the interview:

Q: Once a local leader boasted that Sri Lanka is in a position to even light up parts of India. What are your comments?

A: When late President J.R. Jayewardena made this claim, our total capacity was about 250 MW. The Mahaweli Accelerated Power Project increased this capacity to about 800 MW.

This meant that there could have been a surplus of power supply but soon our demand multiplied due to rapid electrification programs launched subsequently as well as industrialization. In 1990 the entire power generation by Mahaweli was absorbed by the demand growth.

Q: What is the reason for the present power crisis?

A: From 2011 May to 2012 May, total inflows to our hydro reservoirs were about 2300 GW hours. That was the lowest ever inflow to our reservoirs during the entire CEB history.

Because of that we had to burn more fuel to supply the growing demand. In 1996, the number of consumers was around 1.3 million. It has now risen to five million. Due to a severe drought in 1996 we imposed a seven hour power cut.

The demand today has increased by four-fold. We have been affected by the drought but power is supplied.

Tamil Nadu imposes 8-12 hours power cuts to cope with the energy crisis. An industrial holiday of two days per week was imposed in addition.

In Bangladesh they are imposing an eight hour power cut and the government yesterday informed industries that it can provide power uninterrupted if industries are ready to pay double the normal tariff. In Sri Lanka the tariff is about Rs. 24 and Rs. 9 for industries.

Most of the Opposition parties who are not aware of the situation or pretend to be unaware talk about the high cost of power. But in other countries such as India, Pakistan and Bangladesh there is so much of load shedding. If these countries continue uninterrupted supply the cost per unit will be very much higher than now. That is the reality.

In 2010, CEB’s fuel bill was about Rs. 82 billion. Now it is Rs.163 billion. This is a 100% increase. Because of the massive fuel bill and subsidies given to low-income families the CEB incures losses.

The subsidies for households who consume less than 120 units have resulted in Rs. 17 billion loss in 2012, Rs. 7 billion from the industrial sector and Rs. 500 million from religious places. Altogether we are losing nearly Rs. 25 billion due to subsidies.

In Sri Lanka the power supply is a service not a business. If we were allowed to run it as a business, we could have shown profits. But we don’t pass our burden to the consumers.

When I took over in September 2010 fuel prices were comparatively low. The fuel which is a bi-product from our refinery was about Rs. 26 per barrel then, now it has risen to Rs.65 whereas the power tariff was revised just once during this period and that was only by 1%. The burden on the CEB is too much.

In England they are planning to increase the tariff because of their heavy dependence on gas. The UK Government is also contemplating power cuts. The electricity tariff there is about Rs. 35.

In the past when the water level in reservoirs dropped, the solution was to impose power cuts. But we avoid power cuts, as we don’t want the economy to suffer as a result. The CEB is making losses but the economy is gaining. The eight percent growth rate was possible due to the sacrifices made by CEB to maintain an uninterrupted power supply.

Q: Fuel prices will keep rising, hence the crisis. How can Sri Lanka find a sustainable and a viable solution to the power crisis and meet the energy demand in the future?

A: It’s a very serious problem. It’s not just Sri Lanka’s problem or our ministry’s problem. It’s a civilisational crisis. All the oil reserves remaining in the world contain to about 1,200 billion barrels.

The petroleum consumption rate today is about 90 million barrels per day. In 2012 it will be around 24 billion barrels. It has been predicted that by end of 2041, all petroleum deposits will depleted.

Before that the prices will escalate at an unimaginable rate. At this rate I am not surprised if the price of oil hits US $ 500 per barrel in 2020. At the moment we don’t have a possible alternative to fossil fuel.

Q: Have we thought about nuclear energy as a means for power generation? How feasible is the use of renewable energy sources?

A: Nuclear power could be an option. But there is a very high risk involved. This risk is two-fold. The disposal of nuclear waste. To my knowledge, there is no repository to contain this ash in a 100 % safe manner. They are facing this problem in Russia, England, Japan and USA.

The second concern is the possibility of accidents and leakage of radiation. In Japan robots were handling the power stations but there was a big disaster in Fukushima due to a tsunami. In Ukraine there was the Chernobyl disaster and the Three Mile Island accident in the US.

It’s a possible alternative but due to these factors, even highly developed countries such as Germany is reluctant to use nuclear energy.

As far as renewable energy is concerned there are two constraints. One is the resource variability, like in solar power and wind power. But fossil fuels like coal and oil are firm energy, we could generate energy at your wish.

But the variables are not like that and we cannot dispatch this energy. These energies cannot be absorbed by the power grid. Because of the intermittent nature, not more than 9 % of the power generated by renewable energy sources are permitted to be absorbed by Sri Lanka’s main grid.

We have 4,000 MW of wind power but we can only absorb 2,000 MW. We have given permits to generate 100 MW. There is another constraint as well, financial viability. The solar and wind power generation is a high cost affair as against thermal power, at present. But when fuel prices soar to extreme levels in the coming years, these energy sources may seem cheaper.

Q: Can’t you popularise solar energy in households?

A: We introduced a net metering system in 2010. We are encouraging high-end customers to have their own solar panels so that they can generate energy and sell it to the CEB when there is a surplus and when there is a need we could supply.

We allowed them to have a net metering option. Most of the high end customers have been encouraged to opt for solar energy. But we are not addressing individual households.

Q: The CEB workers initiated a trade union action over a pay hike?

A: The JVP and UNP unions are always agitating and trying to scare the people in this country. From January onwards they had been announcing that we are planning a strike, a sick leave action. But we made sure that there was no power interruption.

Their demands are unjustifiable. When you compare other public institutions for example, the basic salary of the lowest grade (a labourer) is about Rs. 12,000. In CEB the workers in the lowest category get a basic of Rs. 23,000.

Their take home pay sometimes is about Rs. 30,000 with the overtime claims. It is more than the university lecturer’s basic salary of Rs. 26,000. You need to be a first class graduate to be a university lecturer and the selections are done in a highly competitive method.

In addition the CEB employees get one month’s bonus and another month’s salary as medical incentives and 56 kinds of other welfare benefits. Hence, their demands are highly unreasonable.

The media, I feel, is kind of responsible for giving undue recognition to these trade unions driven by ‘hidden agendas’ and their disruptive campaign.

Nevertheless, we will not allow these so called trade union leaders to hijack the power sector to serve their political interests.

I want to warn that because of their actions the people will one day rise up against them.

They need to learn from Great Britain. When Margaret Thatcher took over, a wave of strikes was launched against her.

In 1982, she decided to completely liberalize the power sector, and people gave her a mandate to do so because of their frustration, due to unnecessary force used by the so called trade unions. That is how the ‘Iron Lady’ of Britain regained control.

In 2002, Ranil Wickremesinghe with the help of the same people who drew up plans for Margaret Thatcher tried to ‘unbundle’ the CEB as well.

The CEB was separated into six entities – six licensed companies. That structure is still intact. These six entities are responsible to the Public Utilities Commission. If the PUCSL strictly enforces the power vested in it by the 2009 Act the CEB will be in serious trouble.

Q: The salary revision for the executive staff and engineers, disregarding minor workers’ woes, is reported to have led to this present crisis within CEB?

A: Specialised people in the CEB, such as electrical engineers, etc have been rewarded to retain their services, as a solution to the brain drain which is a serious problem for a country such as Sri Lanka.

There are international companies who are ready to hire these well experienced and qualified personnel. This was a decision taken by the Cabinet to prevent them from migrating. Over 30 senior electrical engineers are planning to go to Iraq shortly.

The ordinary workers should not compare their salaries with highly qualified professionals. In the banking sector the total salary increase for executives was 21 percent as against labourers which was about 13%. This ‘gap’ is not exclusive to the CEB.

At the beginning the Cabinet approved a 23% wage hike to the basic salary of ordinary workers plus a Rs. 2,500 allowance. If they accepted this, their salary would have been increased by 35%. These so called unions stopped that.

JVP unions believe that they should not allow a peaceful atmosphere in the country. They rejected the Cabinet decision to continue with their irrational campaign. It was not a decision taken in the interest of the workers.

Q: One allegation against the UPFA government is that they try to monopolise the services sector and its impact is negative because it blocks healthy competition and progress?

A: It is partially correct because lack of competition has resulted in this mess within the CEB which has monopolized power distribution sector.

We saw how the banking sector was reformed with the introduction of private banks. When private banks were not strong enough to challenge the State banks, the State banking sector was riddled with strikes.

Now they do not resort to such action because if they do, the customers will withdraw their money and transact with private banks.

That is how the trade union convulsions in the banking sector have been kept under check, because of private sector competition and not by the responsible behaviour of trade unions. When the private banks offered new facilities the State banks too had to fall in line.

The same change was witnessed in the CPC due to the Indian Oil Company’s (IOC) arrival. When the IOC upgraded their franchises, the CPC outlets too had to follow suit.

We are now trying to create a healthy competition within the CEB, among the regions. I believe that we should go for serious structural changes as well. State ownership may be retained since we had a bad experience with private sector participation in power generation, but we must create internal competition to improve the services of the CEB and go for a merit based appraisal system.

We cannot allow trade unions to work for political agendas. I appeal to the consumers not to let these corrupt unions and their leaders dictate terms with your electricity rights.