Cheap power was touted as the prime attraction of Sri Lanka´s brave adventure to liberalise its economy 20 years ago when the country became the first South Asian to go free market. Electricity at bargain prices was supposed to draw investors to the island´s first free trade zone near Colombo International Airport at Katunayake. The massive Mahaweli hydroelectric schemes were just coming on line and it was possible to offer foreign businesses inexpensive energy. Politicians even talked airily of selling electricity to South India.
All that seemed like a fantasy in May as the nation sweltered under massive power cuts that lasted days on end (See Himal, April 1996). The power shortage was caused by profligate use of electricity during the Economic imperatives are forcing the government rightward against the will of many of those who helped it to be elected to office Cricket World Cup, a long spell of dry weather, and a delayed (or failed) southwest monsoon aggravated by a strike by employees of the state-owned Ceylon Electricity Board (CEB).
Former President JR. Jayewardene and more so his successor, the late Ranasinghe Premadasa, had visions of transforming Sri Lanka into a Singapore. A series of big dams were built, and as electricity became abundant it led to an urban development strategy full of air-conditioned highrise buildings with which Colombo is now too well served. Many of these concrete monstrosities have no windows to open. Affluent Colombans have discovered that their city is uninhabitable without electricity.
Many services long taken for granted suddenly disappeared as CEB strikers even crippled the water supply in Greater Colombo and elsewhere by taking away vital components of stand-by generators servicing the pumping system. Predictably, there were angry fulminations, with the government alleging sabotage and the state media, quoting governmental sources, pointing accusing fingers at the United National Party (UNP) opposition.
Even before the strike, when there was no one to blame but the weather, General Anuruddha Ratwatte, the Minister of Power, Energy and Irrigation, had accused the previous administration of not planning ahead, leaving the country overly dependent on hydro-power. (Ratwatte is clearly an over-worked minister. In addition to the power, irrigation and energy portfolio he, as deputy defence minister, is in charge of the day-to-day operational command of the armed forces.)
There is no doubt that Sri Lanka is overly dependent on hydro-electricity, with 82 percent of the system capacity hydro based. Up to now, the necessary thermal back-up, though expensive, was available for periods of dry weather. But electricity generated by fuel guzzling gas turbines and diesel generators does not come cheap. The CEB strike, though short-lived, gave Sri Lankans living outside the country´s war zone a taste of what the population of the Jaffna peninsula has suffered for the past 13 years when they had no electricity at all.
President Chandrika Kumaratunga could not go on television (without electricity, telecasts were not possible) to point an accusing finger at her predecessors. But that did not stop her from alleging a UNP conspiracy behind the CEB strike, rooted in opposition to the government´s policy of breaking the state monopoly in the generation and distribution of electricity. The fact is that the government does not have the money to meet the growth in demand for power. BOT (build, own and transfer) and BOO (build, own and operate) projects are the only answer.
Sri Lanka´s experience in this area, in fact, holds lessons for other countries in the region looking to privatise state enterprises. Employees generally do not favour divestment. They fear loss of employment and harsher work demands under tight private sector management. They also know that there will be less influence peddling as the enterprises begin to function under commercial principles.
The late President Premadasa sweetened the pill by devising a formula of gifting 10 percent of all privatised undertakings to their employees. The number of shares beneficiaries received was related to their years of service only and not to the position they held. Very small people were therefore able to get hefty slices of cake in some privatised companies. The Chandrika administration is continuing this policy, but given the strong opposition to privatisation within the ruling People´s Alliance itself, even the sugar is not tasting as sweet as it should.
President Kumaratunga was barely into her teens when her father, Prime Minister S.W.R.D. Bandaranaike, was virtually crippled by leftist inspired strikes before his 1959 assassination. Economic imperatives are forcing the government rightward against the will of many of those who helped it to be elected to office. Recent victories on the war front are on the plus side of the president´s ledger. But she herself does not under-estimate the formidable economic challenges that confront her as members of the government pull in different directions.