A subsidy is
assistance to a business or economic sector or producers. Most subsidies are
set in place by the government for producers or are distributed as subventions
in an industry to prevent the decline of that industry. Subsidies are one
powerful policy tools in the hands of the government to rectify the economic
and social impacts. In many countries used subsidies for decades to achieve a
range of economic, social and environmental objectives. Indeed, one of the most
challenging responsibilities of a government is allocating financial resources
to achieve public good. There are number of criteria by which a subsidy policy
may be assessed. Sometimes it may be serving a public, rather than a private
interest. Sometimes it may be achieving its intended objective efficiently,
whether it has any negative, unintended consequences, such as corruption or
environmental degradation. Only when citizens are in possession of this
information can they make an informed decision on whether their government is
spending money wisely.
The focus
of this research is to find the negative impacts of electricity subsidy in Sri
Lanka. In addition to forming a large part of government expenditure in Sri
Lanka, subsidies for electricity have a tremendous impact on the lives of citizens.
At the most immediate level, these subsidies affect how much people pay for
energy. But digging deeper reveals that they have a profound effect on the
environments in which people live and the economies in which they earn their
living.
The system
for providing electricity subsidies is more complex than other products, since
policies and tariff rates on electricity differ between consumer categories and
among different blocks. Moreover, state governments not only provide subsidies
on tariff rates (by providing electricity to consumers at discounted rates),
but also grant capital subsidies to the state utilities. The utilities then
approach the state government and the respective state electricity regulatory
commissions for approval of the tariff rates. The final seal of approval is
provided by the regulatory commission called Public Utility Commission of Sri
Lanka (PUCSL). The approved tariffs are often lower than those petitioned for
by the utilities. This markdown is done with the aim of meeting social and
development objectives for different consuming categories.
In Sri Lanka block tariff structure is
applicable to domestic electricity consumers. Each block is consisted 30 kWh.
Average consumer details taken of the country are given below. These data has
been extracted from the consumer details of Ceylon Electricity Board in 2012.
Blocks
|
Average No of Consumers
|
Consumer Percentage in Blocks
|
Consumption (kWh Units)
|
Consumption Percentage
|
Average
Charge per Account (Rs)
|
Actual Cost
(Rs)
|
Units
<= 30
|
818,374
|
19.68%
|
15,488,111
|
5.40%
|
78.02
|
397.43
|
30
> Units <= 60
|
1,257,004
|
30.23%
|
56,780,577
|
19.80%
|
237.41
|
948.60
|
60
> Units <= 90
|
1,136,860
|
27.34%
|
84,574,379
|
29.49%
|
518.92
|
1,562.25
|
90
> Units <= 120
|
512,048
|
12.32%
|
52,291,083
|
18.23%
|
1,162.83
|
2,144.55
|
120
> Units <= 150
|
217,271
|
5.23%
|
28,582,917
|
9.97%
|
2,064.88
|
2,762.64
|
150
> Units <= 180
|
98,819
|
2.38%
|
15,951,746
|
5.56%
|
3,107.53
|
3,389.90
|
Units
> 180
|
117,134
|
2.82%
|
33,143,785
|
11.56%
|
6,864.23
|
5,942.08
|
Total
|
4,157,510
|
100.00%
|
286,812,598
|
100.00%
|
|
|
According to the above data first four blocks
are receiving electricity subsidy. Consumer in blocks over 120 units of
electricity charged more than amount the consumed. The consumption pattern
among these consumers and electricity equipment are different. To have an idea
of distribution of energy inefficient apparatus usage a data survey has been
done. Incandescent lamp is the common energy inefficient equipment in Sri
Lanka. As a pilot project sample data has been collected from a randomly
selected houses in Kahawaththa DS Division. These sample data can be used for a
prediction of whole country. The data collected format and the calculation is
given below.
No
|
From
|
To
|
Incandescent
Lamps
|
Energy
saving (kWh)
|
15
W
|
25
W
|
40
W
|
60
W
|
100
W
|
Total
(W)
|
Possible
Saving (W)
|
1
|
17:30
|
18:30
|
|
|
1
|
1
|
|
100
|
80
|
0.24
|
2
|
18:30
|
21:30
|
|
|
2
|
2
|
|
200
|
160
|
0.48
|
3
|
21:30
|
06:00
|
|
|
1
|
|
|
40
|
32
|
0.272
|
|
|
|
|
|
|
|
|
|
|
0.992
|
Energy consumption of CFL lamp (5 stared
rating) is about one fifth of the consumption of incandescent lamp. Quantify
the electricity wastage caused by energy inefficient equipment. Hence 80% of
power could be saved by using CFLs instead of incandescent. Consumption pattern
and usage among different tariff blocks were investigated from random sample of
648 houses. Then the data sorted for the blocks and got the sum of demand
saving and the energy saving. The summary of the data survey is given below.
Average possible demand saving for a individual consumer of a given block per
day and Average Energy saving per day by a individual consumer in a given block
has been calculated.
Block
|
Consumers
|
Possible demand
Saving (W)
|
Average demand Saving (W)
|
Energy Saving (kWh)
|
Average Energy Saving (kWh)
|
Below 30
|
162
|
14,077
|
87
|
61.56
|
0.38
|
31 to 60
|
276
|
31,035
|
112
|
132.78
|
0.48
|
61 to 90
|
170
|
19,616
|
115
|
84.57
|
0.5
|
91 to 120
|
26
|
3,146
|
121
|
18.93
|
0.73
|
121 to 150
|
12
|
1,148
|
96
|
5.23
|
0.44
|
151 to 180
|
2
|
75
|
38
|
0.23
|
0.11
|
Total
|
648
|
69,097
|
|
303.3
|
|
Those data
can be extended for the country values since the total number of consumers in
each category is known. The predicted possible energy saving for the country
would be shown in below.
Category
|
Average
consumers in the population
|
Possible
saving per one consumer (kWh)
|
Possible
saving (MWh)
|
Below 30
|
818,374
|
0.38
|
310.98
|
31 to 60
|
1,257,004
|
0.48
|
603.36
|
61 to 90
|
1,136,860
|
0.50
|
568.43
|
91 to 120
|
512,048
|
0.73
|
373.8
|
121 to 150
|
217,271
|
0.44
|
95.6
|
151 to 180
|
98,819
|
0.11
|
10.87
|
Total
|
1,963.04
|
According to the Poverty
Indicators on Household Income and Expenditure Survey - 2009/10, (Volume 1 -
Issue 2) published by Ministry of Finance and Planning on May 2011 latest calculation of poverty indices shows
that poverty level of the country is
8.9% and Ratnapura District is 10.5%. Then the estimated energy saving
is about 1.7 GWh. However the average daily energy consumption in
Sri Lanka is about 30 GWh as per
"Generation Statistics “ of Ceylon Electricity Board.
Hence the possible energy
saving is about 5.7 %. Further the average generation cost
around *Rs. 18 per kWh. Then eestimated saving would be about Rs. 30 million per day.
Similarly the peak demand reduction also could
be predicted as follows. The actual value would be less than the predicted
value. To rectifier the error 0.7 factor could be introduced. Then the possible
demand would be around 300 MW.
Category
|
Average
consumers in the population
|
Possible
saving per one consumer (W)
|
Possible
saving (MW)
|
Below 30
|
818,374
|
87
|
71.2
|
31 to 60
|
1,257,004
|
112
|
140.78
|
61 to 90
|
1,136,860
|
115
|
130.74
|
91 to 120
|
512,048
|
121
|
61.96
|
121 to 150
|
217,271
|
96
|
20.86
|
151 to 180
|
98,819
|
38
|
3.76
|
Total
|
429.30
|
Predicted
daily demand curve is shown below. Normal daily demand curve has been extracted
from system control data of Ceylon Electricity Board.
Intention for the electricity subsidy is lack
of intelligent of reality. It is clear that 90% of electricity wastage due to energy
inefficient equipment is responsible subsidized electricity users. By other hand objectives of electricity subsidies are not achieved. As a
result Government has to bear the unnecessary burden of wasted energy inside
the subsidized electricity consumers since electricity subsidy encourages the
usage of energy inefficient equipment. In the country view, it is wide to
provide subsidy on energy efficient equipment such as CFLs and promoting LED
lamps for street lighting to minimize the electricity wastage.
References
Ø
Domestic
consumer account details, Billing Section, Ceylon Electricity Board.
Ø
Generation
Statistics - 2011, Ceylon Electricity Board.
Ø
Energy
consumption specification and cost of incandescent and CFL manufacturers.
Ø
Tariff
details, Public Utility Commission, Sri Lanka.
Ø
System
Control data of daily demand curve, Ceylon Electricity Board.
