The small and medium sector enterprises 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.
“The damage to businesses due to 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 Fernando, a poultry farmer in Kurunegala said.
Electricity tariffs were slashed by 20 percent, a fortnight ago, by the Public Utilities Commission following a long battle by the less affluent working class 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 tariffs at one point 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 as a much- needed lifeline to stay in the game.
The Sri Lanka Chamber of Small and Medium Industries (SLCSMI) said it welcomed the tariff reduction which gave 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, “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 duty 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 waive off duty of SMEs who lose in the tender process to foreign suppliers.
The latter are not subject to levies and streamline the system and procedure by bringing all institutions such as the Export Development Board, Industrial Development Board and other amalgamated bodies to operate as a ‘One Stop Shop’.
The Ceylon Chamber of Commerce Chief Economic Policy Advisor, Shiran Fernando said the tariff reduction will support in managing the cash flow expenses of most SME industries and the 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 hope to use the savings of the tariff reduction to buy machinery and to train staff. However, Fernando also said 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.
