Need for sustainable solutions remain:
Voters not swayed by arbitrary price reductions:
Engineer Dr. Tilak Siyambalapitiya noted the existing inefficiency of subsidies in the energy sector. The crisis, marked by frequent power outages and rising energy costs, has sparked a national debate on the sustainability of the country’s electricity supply.
He points out that while subsidies intend to ease the burden on consumers, they often lead to inefficiencies and financial strain on the government. “Subsidies, in the long run, do more harm than good. They distort market signals and discourage efficient use of electricity,” he explains.
Dr. Siyambalapitya was speaking on January 18 to the Institute of Engineers Sri Lanka on their session ‘Electricity Crisis – Why and Way Forward’.
The inefficiency of subsidies is not just a financial issue but also contributes to a lack of investment in sustainable energy sources. Dr. Siyambalapitiya stresses the need for a more balanced approach. “We need to rethink our subsidy models. They should be targeted and designed in a way that promotes energy efficiency and investment in renewable sources,” he suggests.
This viewpoint is significant in the context of Sri Lanka’s heavy reliance on fossil fuels for electricity generation. The subsidies have historically kept consumer prices artificially low, discouraging energy-saving practices and the adoption of renewable technologies.
“When electricity is perceived as cheap, there is little incentive for consumers to save or for industries to invest in cleaner technologies,” Dr. Siyambalapitiya notes.
The financial impact of these subsidies is also a major concern. Dr. Siyambalapitiya highlights the burden on the national treasury, emphasizing the need for fiscal prudence. “Continuing these subsidies is not sustainable. It’s a significant drain on our financial resources, which could be better utilized elsewhere,” he states.
Dr. Siyambalapitiya’s insights come at a crucial time as Sri Lanka grapples with the dual challenge of ensuring a reliable electricity supply and transitioning to sustainable energy sources. His recommendations for reforming subsidies and promoting efficient energy use are seen as vital steps towards addressing the electricity crisis.
In the year when the Norocholai power plant began full operation, Sri Lanka experienced a decrease in electricity costs. This coincided with an election year, where the incumbent political party that reduced electricity prices expected electoral success due to this decision.
Despite the political intentions of the subsequent government, electricity prices remained relatively constant from 2015 to 2022, leading to a significant regulatory shortfall of cash, amounting to 530 billion rupees by mid-2022.
This scenario underlines the complex relationship between political decisions, public response, and the financial realities of managing a nation’s energy sector. (TP)
