The proposed increase in electricity tariffs is likely to affect certain energy-intensive sectors the most with industries such as hospitality, construction and ceramic manufacturing industries likely to be affected the most, analysts said last week.
With limited scope for alternative energy sources in the field concerned, Managing Director at Lanka Walltiles Plc, a premier ceramic manufacturing company in the island, Mahendra Jayasekara revealed that the additional cost for the company per year had been calculated at Rs.100m, under the proposed tariff scheme effective from April 01, 2013.
“There is lot of energy-consumption involved in the manufacturing process. According to the figures released by the Public Utilities Commission of Sri Lanka (PUCSL), an 8% hike in tariff will bring down the margins of the company to which will thereby affect the competitiveness of products in both local and international markets”, he charged.
According to Jayasekara, personnel attached to the ceramic ware manufacturing field are looking at making representations to PUCSL and the Ceylon Electricity Board (CEB) regarding the matter.
Meanwhile, immediate past president of Tourist Hotels Association of Sri Lanka (THASL), Anura Lokuhetty highlighted that despite Sri Lanka being the country with the highest room rates in the region, a further increase in the electricity tariff is likely to catalyze a constriction in the tourism industry. “Among different factors that tourists take into account when selecting a destination for a visit or vacation, room rates are the most important. Therefore when the rates are high, our market is likely to divert elsewhere - to better affordable destinations like Maldives”, he said. Adding further he also said that the hoteliers were not consulted prior to formulation of the new scheme. But however, he believed that at least if the authorities consider charging the hotels the same rates as any other industry, it would be a timely move.
To keep up with country’s holistic development approach subsequent to revision in tariff, the government should encourage private entrepreneurs to generate energy through alternate sources, President of the Construction Chamber Surath Wickramasinghe suggested. Furthermore, he emphasized that rather than giving concessions to industrialists, it would be more profitable in the long run, to provide stakeholders with incentives for alternate power generation projects.
“The policymakers should encourage alternate power generation as it is also profitable in the long run, as the conventional sources, or the non-renewable media are said to be fast depleting. The government should act immediately and take initiative in experimenting with novel sources like solar or wind, and ensure that whatever hike does not present a barrier for construction activities”, he added.