The small and medium sector enterprises mostly accounting for the informal sector of the economy while applauding the recent downward revision on electricity tariffs also expressed disappointment over the adverse impact of the unbearably high tariffs that were imposed on consumers to meet IMF conditions.
They damage to businesses due to the high electricity tariffs was irrevocable said small and medium scale business proprietors.
“Increasing energy tariffs to unaffordable levels which lasted far too long and then reducing it by a non substantial amount does not make a big difference as I had already incurred huge losses, Sunimal Feando, poultry farmer in Kurunegala said.
Electricity tariffs were slashed a fortnight ago by Public Utilities Commission by 20 percent after a long battle to by poor working class masses and small scale businessmen who found it extremely difficult to put up with unbearable bills that took away a sizeable portion of their income.
“The electricity bills at one point were went over the roof forcing me to look for employment elsewhere,” Rohana Kumara, a food supplier to offices in Colombo said.
However, the tariff reduction was lauded by many sectors that considered it much needed lifeline to stay in the game.
Sri Lanka Chamber of Small and Medium Industries (SLCSMI) said that it welcomes the tariff reduction which gives some respite to SME businesses which have been going through tough times since the Easter Sunday attacks, the global pandemic followed by the economic crisis in 2022.
“The electricity tariff reduction is something better than nothing,” SLCSMI President Rohan De Silva said adding that as the government is aiming at an industrial economy with a focus on exports it must address the cost of imported raw material due to the high duties which makes our exports non-competitive in the global market.
He said while steps have been taken to ease the burden of energy reliant industries it would be beneficial if the authorities could wave off the duties to SMEs who lose in the tendering process to foreign suppliers who are not subject to levies and streamline the systems and procedures by bringing all institutions such as the EDB, IDB and other amalgamated bodies to operate as a ‘One Stop Shop’.
Ceylon Chamber of Commerce Chief Economy Policy Advisor Shiran Fernando said the tariff reduction will support in managing the cash flow expenses of most SME industries and services sector in particular tourism.
Export firms from the Centre for SMEs said the reduction will help in pricing products more competitively in international markets, especially when competing with lower-cost producers from competing countries. The SMEs cite the unstable global raw material prices and skilled labour shortages as other factors that are challenging the SME sector.
He said some SMEs are hoping to use the savings of the tariff reduction to purchase machinery and training staff. However, Fernando also noted that tariff changes must be carried out in a sustainable manner so that the industry and the public do not see sudden or ad hoc changes.
