Dollar Crunch Hits Electricity Expansion


Electricity is associated with economic wellbeing. Generally, where there is a growth in electricity consumption there is economic growth, while the obverse also holds true.

Currently, for a record number of weeks, if not months, Sri Lanka has been subject to hours-long daily power cuts because the island is foreign currency cash strapped to import the required coal, gas and diesel needed to provide uninterrupted power, discounting the ‘always breakdown’ Norochcholai Coal Fired Power Plant, built during the current Premier Mahinda Rajapaksa’s regime by entertaining an unsolicited Chinese bid.

Small wonder that the World Bank, in a publication released last month, cut Sri Lanka’s growth forecast this year by 1.8 percentage points to 0.3 per cent, from its earlier estimate of 2.1 per cent made four months ago, in January. According to the Central Bank of Sri Lanka the economy grew by 3.7 per cent last year aided by a historically low growth of minus (-) 3.6 per cent it suffered the previous year 2020.

Meanwhile, the newest victims of the country’s parlous state of foreign currency are not only existing electricity consumers, but also those who are awaiting new connections after paying for same. Yesterday this newspaper carried an article titled ‘New electricity connections put on hold’. It said, to quote excerpts, “Due to a shortage of material, CEB has decided to limit new electricity connections.

Acting CEB General Manager (GM) Engineer (Dr) D.C.R. Abeysekara cited the inability to purchase material needed for new connections in the face of the prevailing economic crisis. “This is due to a lack of material and the CEB is operating on a low budget. It will continue until the economic crisis is resolved to some extent.”

Abeysekara’s move however, is contrary to CEB’s ‘vision’, ‘mission’ and ‘corporate responsibility’ statements which said, “Vision: Enrich Life Through Power,” Mission, to quote excerpts, “To develop and maintain an efficient, coordinated and economical system of electricity supply to the whole of Sri Lanka” and Corporate responsibility, to quote excerpts, “CEB is empowered to generate, transmit and distribute electrical energy to reach all categories of consumers.”

Further, MR’s younger brother, President Gotabaya Rajapaksa’s Presidential Election Manifesto, titled ‘Vistas of Prosperity and Splendour’, released on the eve of the 2019 Presidential Poll, said, to quote excerpts, “Our policy is built upon the ‘Gama Samaga Pilisandara’- ‘Dialogue with the Village’ programme that encompasses ideas from the inhabitants of 25,000 villages. This approach helped us to clearly understand critical issues such as; how many houses require electricity?  Since these issues are already identified, we will be able to allocate the necessary funds from the national budget with ease. Through these activities, we shall launch an appropriate system to ensure that all villages are provided with all essential facilities.”

Clearly, Abeysekara ‘s move to place on hold electricity penetration, due to a lack of cash, go against CEB’s vision, mission and corporate responsibility statements and also the President’s Manifesto .

Nonetheless, his move, at least, on the face of it is understandable, given the fact that most, if not all electricity distribution material needed to increase electricity penetration in the country have to be imported. And to make imports one need foreign currency led by US dollars, the world’s reserve currency.

Due to a dollar crunch, the Government last month suspended all foreign debt repayments other than to multilateral donor agencies and Sri Lanka Development Bond holders until such time it reaches a debt restructuring programme with its creditors.

However, impeding electricity penetration may not only inure economic growth, but may also lead to social instability. It’s also an injustice rendered to prospective consumers who have had already paid to the CEB for new connections.

But, considering the fact that no attempts have been made to pay compensation to the families of victims who have recently died while waiting in long queues for imported essentials such as kerosene, petrol and diesel, needed for cooking and to power their vehicles, three wheelers, motorcycles and scooters and the false promises made in GR’s Manifesto, for the Rajapaksa Government to withhold electricity connections to those who have already paid for such may not be surprising.