Pakistan introduces financial incentives for green energy

By Waqar Mustafa, Thomson Reuters Foundation

The new government of energy-starved Pakistan has proposed financial measures aimed at cutting the use of fossil fuels and promoting alternative energy sources, while also protecting the environment.

Presenting the government’s first budget, which is expected to be passed thanks to the ruling party’s majority, Finance Minister Ishaq Dar said duties would be lifted on imports of small hybrid cars, solar and wind power equipment, and energy-saving devices like LED bulbs.

“Use of imported POL (petrol, oil and lubricant) products as a major source of energy has not only led to a high import bill, but has also created a negative environmental impact,” Dar told the National Assembly in a speech on June 12, outlining budgetary measures for the new fiscal year starting on July 1.

Pakistan’s import bill for fossil fuels surged by 26 percent to $15.25 billion in the 2011-2012 fiscal year, against $12.08 billion the previous year, with the fuel used primarily to generate electricity, according to the Pakistan Bureau of Statistics.

The use of energy-efficient Hybrid Electric Vehicles (HEVs) needs to be encouraged, Dar said, adding that imports of HEVs with an engine capacity of up to 1200CC will be exempted from withholding tax. In addition, the tax will be reduced by 50 percent for hybrid cars up to 1800CC and 25 percent for vehicles up to 2500CC.

Local car vendors, however, are not happy about the move.

Munir K. Bana, chairman of the Pakistan Association of Automotive Parts and Accessories Manufacturers (PAAPAM), told journalists in Karachi that importing 20,000 standard hybrid cars and 5,000 luxury hybrids would cost the government $423 million in lost taxes, while cutting the national fuel import bill by just 0.16 per cent a year.

“Instead of allowing zero-rated imports of hybrid vehicles, the government should have emphasised the transfer of hybrid technology to existing local auto manufacturers and encouraged new entrants for job creation,” he said.

POLICY FOR THE RICH

Environmental lawyer Ahmad Rafay Alam said the real test lies in whether the lower cost of the hybrid cars will attract hire-purchase customers, as most cars are sold through such payment schemes.

He added that Pakistan’s high levels of poverty mean hybrid cars are unlikely to have a wide appeal.

“Cars are, basically, an elite issue. Only the rich can afford cars. It remains to be seen if the rich care about the environment,” he said.

The new government, sworn in early this month, is grappling with a weak economy, and may not see the environment as a top concern. But faced with chronic electricity blackouts, it cannot ignore the question of where the country’s future power supplies will come from, and who will pay for them.

According to a National Planning Commission report, at the end of 2012 the debt carried by the country’s energy industry was $9.1 billion, or about 4 percent of GDP. This has hit the electricity supply-chain hard, holding up economic growth by at least 2 percent a year.

Meanwhile, expensive gas and oil imports are eating into the country’s scant foreign-exchange reserves.

The World Bank - which has launched a new programme to help nine developing countries map their renewable energy potential - says Pakistan has abundant renewable resources, including solar, wind, hydropower and biomass , but has done very little to utilise them so far.

Announcing the government’s planned shift towards renewable energy sources, which he called “a need of the time”, Finance Minister Dar said the procedure would be simplified for duty-free imports of solar and wind machinery and equipment. Energy-saving devices like energy-efficient light bulbs and solar water pumps will also be exempted from duties.

Separately, the local government in Pakistan's most populous province, Punjab, has allocated Rs7.5 billion ($76 million) to subsidise biogas and tube wells fitted with solar-powered pumps for small farmers.

The continued power crisis has caught farmers and the agriculture sector in a vicious circle of low yields, Punjab’s minister for finance, Mujtaba Shujaur Rehman, said in a budget speech on June 17.

HIRE-PURCHASE SOLAR?

The national government’s measures to boost installation of solar and wind energy have been welcomed by environmental activists.

“The exemption to solar kits will be truly successful if it extends to individual parts as well,” said lawyer Alam, adding that vendors can then stock back-up supplies cheaply. “Also I believe that if financial institutions begin looking to solar products as something they can offer on hire-purchase, a policy winner is possible.”

Wind products are likely to be limited to well-known wind corridors, he said, including one in Karachi where several people he knows have small 3kV turbines on their roofs.

Alam suggested the transition to a more sustainable energy future could be further supported by the introduction of a feed-in tariff by the energy regulator and utilities. That would enable individuals and businesses that produce surplus green power to sell it back to the national grid, offering an added incentive to install renewable energy systems.

Before this can happen, energy utilities will have to upgrade their infrastructure, he added. Such improvements have been on the agenda at several meetings to address Pakistan’s energy crisis, convened by Prime Minister Nawaz Sharif since he was inaugurated early this month.

Pakistan introduces financial incentives for green energy

Will the New Alliance help Africa's poor?

A year after the launch of a US-led initiative to lift millions out of poverty and hunger in Africa, we examine the New Alliance for Food Security and Nutrition. The alliance was formed at the 2012 G8 summit led by the United States. Its stated goal was to reduce hunger and lift 50 million Africans out of poverty over the next decade.

Critics say this seemingly noble effort - among wealthy nations, African leaders and international corporations - to increase private sector investment in agriculture, is precisely the problem. Several NGOs and civil society organisations say this solution focuses too heavily on private investment and is the wrong solution to a complex and growing hunger crisis.

Among the concerns is that smallholder farmers could be pushed out of their land to make way for large, powerful international corporations. Inside Story Americas spoke to Tjada D'oyen McKenna, the deputy coordinator for development for Feed the Future, an arm of USAID that is coordinating the US involvement in the Alliance for Food Security and Nutrition. She explained the goals of the initiative, and argued that safeguards were in place to protect local populations.

"The New Alliance for Food Security and Nutrition is very simple, it basically aims to bring together African governments and the citizentry ... to work together to sustainably, and in an inclusive way, reduce poverty and undernutrition in African countries.

"Countries have signed on to it ... as well as individual companies ... the majority of them being local African companies and international companies .... The parties ... have agreed to abide by international standards ... the fact they have signed on and are working in an open transparent manner helps to make sure that we continue to reverse those processes and be in discussion to make sure that we get to get outcomes for all parties," said McKenna Nine African countries have now joined the alliance. Malawi joined this month along with Benin and Nigeria who joined earlier in the year.

In an op-ed in The Guardian, Malawi's president Joyce Banda said the programme's private funds were essential for lifting her country out of poverty. "The New Alliance is important as my government doesn't just view agriculture as an essential means to attaining household and national food security; we see it as a business through which our farmers can generate wealth, improve their livelihoods and transform Malawi's economy.

None of this can be achieved without private sector investment," said Banda To discuss the issue in more detail on Inside Story Americas, presenter Shihab Rattansi is joined by guests: Raj Patel, a writer, activist and academic, and adviser to the United Nations special rapporteur on the right to food; Gawain Kripke, a policy and research director at Oxfam America; and Michael Klosson, the vice president of policy and humanitarian response at Save the Children. 

Will the New Alliance help Africa's poor

World Bank: Warmer World Will Trap Millions in Poverty

Within a few decades rising world temperatures will create food shortages in Sub-Saharan Africa and leave some parts of Asia flooded while other areas will not have enough drinking water. World Bank President Jim Yong Kim says the world must mitigate climate change as he reveals key findings of Turn Down the Heat: Climate Extremes, Regional Impacts, and Case for Resilience, a scientific report on the expected rise of global temperatures by 2 degrees by 2040.

Shades of green

By Linda Kleemann, Kacana Sipangule, Pablo Selaya, D+C

This year’s annual conference of the Poverty Reduction, Equity and Growth Network (PEGNet) will deal with “how to shape environmentally and socially sustainable economies in the developing world”. It will be held in Copenhagen in mid-October.

The terms “green growth and green economy” stand for reconciling business activities and expanding econonmies with nature. They have been on the agenda of policymakers as well as researchers in recent years, inspiring international debate in a time of financial crises and recession. The guiding idea is to fulfil the principle of sustainable development, which was accepted by the international community at the Earth Summit in Rio de Janeiro in 1992 and reaffirmed at the stock-taking conference Rio+20 last year. The goal is to eliminate poverty and to respect our planet’s environmental boundaries at the same time.

In the run-up to Rio+20, several developing countries embraced green strategies for economic development, and many others at least considered doing so. Costa Rica, Sri Lanka, Mauritius, Ghana and Bangladesh are among the many developing nations that take formal account of environmental matters in their national development plans. Rwanda and Ethiopia are considered African beacons, because they have incorporated aspects of green economy into their national growth strategies.

The desire for more environmentally sustainable policies in the developing world is reflected in the Bamako Declaration of African ministers at an AU conference in 2010 (quoted in UNEP 2011): “We will pay our part to spearhead the transition to a green economy in Africa (…) to ensure that green economies contribute to sustainable development and poverty reduction objectives.” Other global leaders have expressed similar optimism. But here are sceptics too. Some experts doubt that green growth can do much to reduce poverty. The core question is whether environmentally-friendly policies are beneficial or detrimental for the poor?

To answer this question one must first identify who the poor are, where they live, and how green-growth strategies will impact on their livelihoods. Extensive work by Andy Sumner (2012, 2012b) shows that the majority of the world’s poor no longer live in low-income countries, but instead in middle-income countries. The implications of green policies, however, are different in low-income and middle-income countries.

Most studies published by international organisations and donor agencies indicate considerable advantages of green-growth strategies for low-income countries. The UN Environment Programme (UNEP 2011) argues, for instance, that many least-developed countries (LDCs) stand to benefit. The essential reason is that their natural capital matters very much in economic activity and must not be compromised by environmentally destructive industries. Moreover, renewable energy solutions offer convincing options for rural electrification, which will contribute to raising people from misery. At the same time, the growth of the renewables sector will generate local jobs.

In line with such assessments, Ethiopia’s current Climate-Resilient Green-Economy Strategy aims to achieve the status of a middle-income country through renewable technologies and energy efficiency. Among other things, the strategy tackles issues such as rural electrification, improved agricultural productivity and forest protection. Feasibility will certainly depend on international policies on climate finance and carbon credits, but there can be no doubt that the strategy has a huge potential.

Ambiguous perspective

For middle-income countries and emerging markets things look different. Many of them experienced high growth rates based on carbon-intensive development in recent years. Much of their existing infrastructure is based on the use of fossil fuels. Accordingly, the transformation to a green economy will be costly in political and economic terms. Deteriorating environmental conditions will adversely affect many poor people of course, but so will rising costs for the energy-related services they rely on.

Green-growth strategies are therefore more ambiguous from poor people’s views in middle-income countries than in low-income countries. In regard to poverty, Holle Wlokas et al. (2012) argue that middle-income countries are better advised to focus on the mitigation of climate change rather than climate protection. Their assessment is based on several case studies.

Scholars and non-governmental organisations warn against adopting green-growth strategies in haste, without first analysing the implications diligently. There may indeed be considerable trade-offs between environmental sustainability and poverty reduction even in low-income countries. Danielle Resnick et al. (2012) have shown that green-growth policies can encourage countries like Malawi to redesign strategies in ways that may be inconsistent with their comparative advantages and current development pathways.

Resnick et al. refer to Malawi’s successful Agricultural Input Subsidy Programme (AISP) which has made a dent in rural poverty and significantly improved food security. The downside is that AISP leads to more greenhouse-gas emissions because it depends on chemical fertilisers. Malawi’s government must thus choose between a strategy that has proven successful and others that are more sustainable in the long run but do less to reduce poverty in the short run. Organic fertilisers are a viable alternative and so are intercropping and minimum tillage. However, these practices are not common in Malawi.

In contrast to many reports that point out that the poor will benefit from green policies, Stefan Dercon (2012) argues in rather general terms that the poor are likely to suffer. According to conventional development theory, economic growth results from a structural transformation in which agriculture becomes less important as other sectors that yield higher returns thrive. Dercon emphasises, however, that the new industries must be labour intensive for poor people to benefit from that transformation. He warns that green-growth policies will not improve poor people’s livelihoods because they will fail to absorb surplus labour from rural areas if they rely on capital-intensive technologies and high-skill employment.

Research of this kind indicates that green growth is certainly not a panacea. Policy implications must be assessed carefully in every single case. It makes sense to consider varying shades of green and let countries tailor their own strategies according to their specific needs.

The way forward

Evidently, there is a need for more research on the matter. We need a better understanding of the local impacts of green-growth strategies, and must assess the trade-offs between short-term and long-term effects. Most of the current literature is based on stylized facts, so more empirical evidence is required to design good policies for developing countries.

This year’s annual PEGNet conference will focus on these questions in Copenhagen on 17 and 18 October. PEGNet is a network that links research institutions, policymakers and development agencies at an international level. Its sponsors include Germany’s Federal Ministry for Economic Cooperation and Development, the agencies GIZ and KFW as well as the Kiel Institute for the World Economy and Göttingen University. This year’s event will be hosted in cooperation with the Department of Economics at the University of Copenhagen. An innovative addition will be a “speedmatching session” that will put non-governmental organisations in touch with development researchers, government agencies and policy makers.

Shades of green

Climate Change Threatens Water and Food Security in Antigua

With their islands devoid of rivers or streams, farmers in Antigua and Barbuda have been building dams and ponds for centuries, harvesting rainwater to irrigate their crops and provide drinking water for their livestock.
But now with the advent of climate change, they are facing major challenges. Stronger and more frequent storms regularly destroy trees planted around catchment areas as watershed as well as grass planted in and around these areas to slow evaporation.
“Since 1995, since Hurricane Luis, we have suffered a lot of damage,” Owolabi Elabanjo, an agriculture extension officer based in Antigua, told IPS. “We have suffered a lot in some of our mini-dams or ponds with the hurricanes and some of the storms.”
In September 1995, Hurricane Luis, a category four hurricane, passed directly over Barbuda, causing catastrophic damage in Antigua and neighbouring islands like St. Barthelemy, St. Martin and Anguilla.
The storm left 19 dead and nearly 70,000 homeless, causing damage estimated at 3 billion U.S. dollars. All of Antigua-Barbuda’s beaches were eroded by hurricane force waves.
Elabanjo said water is one of the most important factors of production in agriculture.
“You can use any other material apart from land to grow food, but we still need water to put into that material, so water becomes the number one factor of production,” he said.
But, he noted, water is a scarce and therefore expensive commodity, not only for agriculture but also for home use.
Elabanjo said the Ministry of Agriculture has been partnering with the Antigua Public Utilities Authority (APUA) and the Food and Agriculture Organisation (FAO) to educate farmers about rainwater harvesting and to create better opportunities for water use.
- See more at: http://www.ipsnews.net/2013/06/climate-change-threatens-water-and-food-security-in-antigua/#.dpuf

With their islands devoid of rivers or streams, farmers in Antigua and Barbuda have been building dams and ponds for centuries, harvesting rainwater to irrigate their crops and provide drinking water for their livestock.
But now with the advent of climate change, they are facing major challenges. Stronger and more frequent storms regularly destroy trees planted around catchment areas as watershed as well as grass planted in and around these areas to slow evaporation.
“Since 1995, since Hurricane Luis, we have suffered a lot of damage,” Owolabi Elabanjo, an agriculture extension officer based in Antigua, told IPS. “We have suffered a lot in some of our mini-dams or ponds with the hurricanes and some of the storms.”
In September 1995, Hurricane Luis, a category four hurricane, passed directly over Barbuda, causing catastrophic damage in Antigua and neighbouring islands like St. Barthelemy, St. Martin and Anguilla.
The storm left 19 dead and nearly 70,000 homeless, causing damage estimated at 3 billion U.S. dollars. All of Antigua-Barbuda’s beaches were eroded by hurricane force waves.
Elabanjo said water is one of the most important factors of production in agriculture.
“You can use any other material apart from land to grow food, but we still need water to put into that material, so water becomes the number one factor of production,” he said.
But, he noted, water is a scarce and therefore expensive commodity, not only for agriculture but also for home use.
Elabanjo said the Ministry of Agriculture has been partnering with the Antigua Public Utilities Authority (APUA) and the Food and Agriculture Organisation (FAO) to educate farmers about rainwater harvesting and to create better opportunities for water use.
- See more at: http://www.ipsnews.net/2013/06/climate-change-threatens-water-and-food-security-in-antigua/#.dpuf

With their islands devoid of rivers or streams, farmers in Antigua and Barbuda have been building dams and ponds for centuries, harvesting rainwater to irrigate their crops and provide drinking water for their livestock.
But now with the advent of climate change, they are facing major challenges. Stronger and more frequent storms regularly destroy trees planted around catchment areas as watershed as well as grass planted in and around these areas to slow evaporation.
“Since 1995, since Hurricane Luis, we have suffered a lot of damage,” Owolabi Elabanjo, an agriculture extension officer based in Antigua, told IPS. “We have suffered a lot in some of our mini-dams or ponds with the hurricanes and some of the storms.”
In September 1995, Hurricane Luis, a category four hurricane, passed directly over Barbuda, causing catastrophic damage in Antigua and neighbouring islands like St. Barthelemy, St. Martin and Anguilla.
The storm left 19 dead and nearly 70,000 homeless, causing damage estimated at 3 billion U.S. dollars. All of Antigua-Barbuda’s beaches were eroded by hurricane force waves.
Elabanjo said water is one of the most important factors of production in agriculture.
“You can use any other material apart from land to grow food, but we still need water to put into that material, so water becomes the number one factor of production,” he said.
But, he noted, water is a scarce and therefore expensive commodity, not only for agriculture but also for home use.
Elabanjo said the Ministry of Agriculture has been partnering with the Antigua Public Utilities Authority (APUA) and the Food and Agriculture Organisation (FAO) to educate farmers about rainwater harvesting and to create better opportunities for water use.
- See more at: http://www.ipsnews.net/2013/06/climate-change-threatens-water-and-food-security-in-antigua/#.dpuf

With their islands devoid of rivers or streams, farmers in Antigua and Barbuda have been building dams and ponds for centuries, harvesting rainwater to irrigate their crops and provide drinking water for their livestock.
But now with the advent of climate change, they are facing major challenges. Stronger and more frequent storms regularly destroy trees planted around catchment areas as watershed as well as grass planted in and around these areas to slow evaporation.
“Since 1995, since Hurricane Luis, we have suffered a lot of damage,” Owolabi Elabanjo, an agriculture extension officer based in Antigua, told IPS. “We have suffered a lot in some of our mini-dams or ponds with the hurricanes and some of the storms.”
In September 1995, Hurricane Luis, a category four hurricane, passed directly over Barbuda, causing catastrophic damage in Antigua and neighbouring islands like St. Barthelemy, St. Martin and Anguilla.
The storm left 19 dead and nearly 70,000 homeless, causing damage estimated at 3 billion U.S. dollars. All of Antigua-Barbuda’s beaches were eroded by hurricane force waves.
Elabanjo said water is one of the most important factors of production in agriculture.
“You can use any other material apart from land to grow food, but we still need water to put into that material, so water becomes the number one factor of production,” he said.
But, he noted, water is a scarce and therefore expensive commodity, not only for agriculture but also for home use.
Elabanjo said the Ministry of Agriculture has been partnering with the Antigua Public Utilities Authority (APUA) and the Food and Agriculture Organisation (FAO) to educate farmers about rainwater harvesting and to create better opportunities for water use.
- See more at: http://www.ipsnews.net/2013/06/climate-change-threatens-water-and-food-security-in-antigua/#.dpuf

By Desmond Brown

With their islands devoid of rivers or streams, farmers in Antigua and Barbuda have been building dams and ponds for centuries, harvesting rainwater to irrigate their crops and provide drinking water for their livestock.

But now with the advent of climate change, they are facing major challenges. Stronger and more frequent storms regularly destroy trees planted around catchment areas as watershed as well as grass planted in and around these areas to slow evaporation.

“Since 1995, since Hurricane Luis, we have suffered a lot of damage,” Owolabi Elabanjo, an agriculture extension officer based in Antigua, told IPS. “We have suffered a lot in some of our mini-dams or ponds with the hurricanes and some of the storms.”

In September 1995, Hurricane Luis, a category four hurricane, passed directly over Barbuda, causing catastrophic damage in Antigua and neighbouring islands like St. Barthelemy, St. Martin and Anguilla.

The storm left 19 dead and nearly 70,000 homeless, causing damage estimated at 3 billion U.S. dollars. All of Antigua-Barbuda’s beaches were eroded by hurricane force waves.

Elabanjo said water is one of the most important factors of production in agriculture.

“You can use any other material apart from land to grow food, but we still need water to put into that material, so water becomes the number one factor of production,” he said.

But, he noted, water is a scarce and therefore expensive commodity, not only for agriculture but also for home use.

Elabanjo said the Ministry of Agriculture has been partnering with the Antigua Public Utilities Authority (APUA) and the Food and Agriculture Organisation (FAO) to educate farmers about rainwater harvesting and to create better opportunities for water use.

“If we are serious about food security and reducing our food import bill, we have to do something about water,” he told IPS.

Water and agriculture

Lystra Fletcher-Paul, land and water officer and the FAO representative for Guyana, agreed, noting that one of the key issues for water management is allocating water for agriculture.

“In a number of countries, you find that the priority is always water for domestic use, water for health, water for manufacturing, and if there is any water left they give it to agriculture,” she told IPS.

“You can’t be serious about food security if you are going to leave water for agriculture as the last priority. You have to have a strategy which says, ‘whether we have a drought or not, agriculture is going to get this amount of water.’”

Fletcher-Paul said the FAO has been active in the region, assisting countries with water management. In Antigua and Barbuda’s case, she said the FAO has been working with authorities since 1991, looking at soil and water management.

In 2008, Antigua was one of eight countries to benefit from a study of the feasibility of rainwater harvesting conducted jointly with the Caribbean Agricultural Research and Development Institute (CARDI), the Inter-American Institute for Cooperation on Agriculture (IICA) and the Caribbean Development Bank (CDB).

At the end of the study, the research group found rainwater harvesting in Antigua to be very feasible because the island receives an average of about 750 millimetres of rain per year.

Fletcher-Paul emphasised the importance of having a disaster risk management plan for the agricultural sector.

“Hurricanes are a normal event now; we’re talking about climate change,” she said, adding that the Caribbean would be facing more extreme weather events.

Protection must be set up in advance, whether well ahead of the hurricane season or just before, Fletcher-Paul said, such as planting trees around dams or grass to help hold soil.

2,010 trees
Agriculture Minister Hilson Baptiste told IPS that Antigua and Barbuda has been taking climate change seriously. And through what’s known as the Climate Project, the Ministry of Agriculture and the Environment Division have been on a drive to combat deforestation, one tree at a time.

Launched in June 2010, the goal of the Climate Change Project was to plant 2010 trees. Three years in, Baptiste boasts, “We plant more trees in Antigua than any other country in the Caribbean.”

Twice a year, school children are taken on a tree-planting trip, planting between 5,000-6,000 trees.

Every year on Arbor Day, “we give out half a million plants to schools, community groups and church groups to encourage citizens to plant a tree,” Baptiste told IPS. “Orange, avocado, breadfruit and mango trees are planted,” he added.

The agriculture minister said that having seen the effects of climate change on crop production, Antigua and Barbuda has no choice but to intensify its efforts to mitigate climate change.

Just as important are the island’s forests, the agriculture minister said, noting that not a single tree is destroyed in the food production process.

“Farming is done in between the forests and sometimes below the forests. No destruction of forests takes place to facilitate agriculture,” he told IPS.

Ashley Joseph, deputy director in the Ministry of Agriculture, agreed the environment should not suffer at the cost of food production.

“If you don’t protect the environment, after a time, your production is going to dwindle. So you have to take into consideration the environment when you are producing,” he told IPS.

For example, the government educates farmers about controlled grazing. “Where there is overgrazing, the grass and the herbage in pastures is depleted,” Joseph described. ”When that happens the ground is left bare, and whenever it rains, the top soil is washed away, and the production becomes less and less.”

Climate Change Threatens Water and Food Security in Antigua

Rio+20 Anniversary Hangout

Sri Lanka's electricity price hike sparks interest in solar

By Amantha Perera, Thomson Reuters Foundation

Angelo de Silva’s mobile phone hasn’t stopped ringing of late. In the month since the Sri Lankan government hiked electricity prices, the boss of Access Solar has been fielding one call after another, answering queries about the solar panels his company provides.

“Yesterday I logged three-and-a-half hours of talk time on my mobile,” he told Thomson Reuters Foundation, adding that callers wanted to find out how solar panels can help them reduce their electricity bills.

It is the same for Herath Dissanayake, head of Wisdom Solar, another company specialising in solar power. “Right now there is a lot of interest, especially from households who are high-end consumers,” Dissanayake said.

The new tariff structure was first announced in April by the debt-laden, state-owned Ceylon Electricity Board (CEB), after repeated requests from the International Monetary Fund for government-run power firms to stem mounting losses.

But the initial plans for rate changes sparked indignation and public protests, as they would have hit all domestic consumers, including the poorest.

In response, Sri Lankan President Mahinda Rajapaksa ordered that the price increases – which took effect from May’s bills - should not apply to consumers using 60 units or less per month.

There are over 5 million households connected to Sri Lanka’s national grid, but of these, only 3 percent use more than 180 units per month. For households with monthly usage of 180 units, bills have risen from around Rs 3,800 ($30) to Rs 7,500 ($60), according to energy experts.

“It is an artificial increase, where the low-level consumers pay less, and at the high end, the consumers are saddled with more surcharges,” said Tilak Siyambalapitiya, an energy expert who has worked in Sri Lanka and the Middle East and is now managing director of RMA Energy Consultants.

The revised pricing structure means that a household using 20 units or less per month will pay only Rs 3.60 ($0.03) per unit, while a customer whose monthly usage is 1,000 units will pay around Rs 50 ($0.40) per unit.

GOOD INVESTMENT FOR SOME

This additional cost burden is pushing heavy electricity users to seek relief by considering a switch to renewable energy sources, especially solar.

Both Access Solar and Wisdom Solar have seen fresh interest from households that consume between 600 and 1,000 units per month, now costing Rs 30,000 ($250) to Rs 50,000 ($450).

“It makes business sense for them, because they can recoup their investment in three to four years,” Access Solar’s de Silva said.

Since the tariff hike, Access Solar has installed new systems to the tune of Rs 25 million ($200,000). Wisdom Solar is currently installing 12 units, with a base value of around Rs 1 million rupees ($ 8,000) each.

Energy expert Siyambalapitiya said it was too early to predict whether the electricity rate hike might create a mass movement towards solar energy. “For the low-end consumer, it simply does not make sense to shift to solar right now,” he said.

Anton Fernando, who uses between 180 and 200 units each month, told Thomson Reuters Foundation he was not interested in paying Rs 1 million to install a solar system. “Even if I have to pay Rs 5,000 ($40) per month (on my bill), I can easily spread that amount over a decade - solar is too expensive right now,” he said.

That situation could change if a shift to solar power among high-end customers shrinks much-needed cash flow to the CEB, forcing it to raise charges for smaller users after all, Siyambalapitiya said.

“Also these high-end users are influential personalities in society - they can influence a lot of others,” he said. Nonetheless, solar costs will have to come down if the renewable source of energy is to become a viable alternative, he added.

FEASIBLE BUT EXPENSIVE

Only 34,000 households use solar as an energy source, a tiny proportion of the country’s 5.1 million households with access to electric power, according to government data.

Sri Lanka depends on thermal power plants, fuelled mainly by imported oil and coal, for around 60 percent of its electricity supply, and hydro for 40 percent. Last year, however, when the rains failed, the proportion generated by fossil fuel plants rose to around 80 percent.

Officials from the Sustainable Energy Authority told Thomson Reuters Foundation solar power is a feasible energy source for almost 80 percent of Sri Lanka, as much of the island nation enjoys sunshine for at least 300 days a year. But the high cost of installation has prevented more consumers from taking up solar, they added.

In addition, there is little interest in incorporating solar energy into the national grid because most is generated during daylight hours, whereas electricity demand peaks between 7 and 10 pm due to heavy domestic usage, when solar is least effective.

Political backing for solar power is also weak, as the government has yet to launch any major schemes aimed at popularising it.

Sri Lanka's electricity price hike sparks interest in solar