Editorial : The tariff foundling and its energy policy parents

25 April 2013 07:08 pm - 0 - {{hitsCtrl.values.hits}}

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Tariffs are parentless babies and the fact is emphasised when they grow up. The Minister of Power and Energy, Pavitra Wanniarachchi passed the tariff baby to her predecessor and cabinet colleague Patali Champika Ranawaka, who refuses to accept paternity. Parentage notwithstanding, the baby is alive and growing and it is the general public that has to deal with it.

To the credit of Ranawaka, he has never shied away from fielding tough questions on tariffs (or on any other matter) in a sober, rational manner. In contrast, his successor is demonstrating in no uncertain terms that she’s not up to the task. The baby will not go away, though.

It is all about free lunches, also known as subsidies, some argue. In other words, if you want something, you pay for it or do without it. That’s capitalism (in theory). On the other hand, even the USA dishes out subsidies, especially to its farmers to keep them competitive (and alive). The trick then is to be intelligent in your selectivity.

In this case it is clear that those at the lower end are getting short-changed. No one is saying that people should not pay. No one is saying that wastage should be applauded and wastrels pampered. Everyone should be conscious of the fact that the CEB, for all its faults, subsidises electricity. Only those who do not waste (and that’s a handful of people) have the right to complain. The point is that the high-end consumer has been given a (relative) break.

It is argument that industry needs to be supported. Well, that argument has been made before. Subsidies have often been defended as a policy tool, sometimes to spur economic activity in a particular sector and sometimes to lessen economic shocks to a level that will not result in insurrection. The positive aspect of subsidy-cut is that people will be forced to consume within their means. The negative element is that there is a limit to belt-tightening.

Part of the agitation can be attributed to the conspicuous wastage (of not just electricity) that the powerful are guilty of. The ‘powerful’ includes politicians as well as the corporate class. If gradation is a legitimate tool in setting different rates for different categories, then over-consumers need to have their subsidies slashed too. The current tariff regime has not done that.

The truth is that subsidies have never proceeded from any logically defensible economic policy. They’ve been markedly ad hoc. So too their removal. It is as though everyone is waiting for the energy crisis to come home in magnitudes that cannot be handled, leave alone understood.

Where is the comprehensive, long-term energy policy that takes into account diminishing resources and serious investment in research towards freeing the country of fossil fuel dependency? Why is ‘renewable’ a fashionable word and only a small part of energy policy? Do the policy makers have any answers?

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Editorial : The tariff foundling and its energy policy parents

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