Friday, October 18, 2013

Electricity is also about the Quality

Most of us in northern parts of Thimphu town (Zilukha, Motithang, Hejo and Lanjophakha) have been experiencing lot of frequent black outs over the last couple of days. The 1250 Compliant number is not of much use then they tell that their people are working on the problem. This has interestingly come at the same time when BEA/MOEA and the minister was announcing the much awaited power tariff increase.

I was immediately made to think of the cost vis-à-vis quality of electricity that we are provided with. While BEA/BPC or DGPC are justifying that even the new increased cost is low compared to the region, we perhaps should come out of the box and also compare it to other parts of the world. Electricity tariff in other parts of the world are definitely higher than Bhutan’s in terms of actual dollars, but we have to compare the quality of the service they receive both in terms of the electricity reliability (blackout, brownouts, voltage fluctuations) back up services, time to resolve an issue and payment methods. If it takes BPC a week to fix a problem in Thimphu, I wonder about the service in other parts of the country! Most regulators across the globe penalize unexplained blackouts and also require utilities to restore power within minimum time frame. He do have BEA, its about time we also enforce such regulations and let our service providers pull up their stockings instead of just allowing for tariff increase and give out bonuses and boast about having a state-of-the-art National Load Dispatch Center. The problem was at Motithang and it has taken then almost a week to sort it out!

We should also look into the cost of electricity compared to the overall affordability of the citizens. For example in Singapore the cost for 100kWh electricity is US $20.9 (i.e., @S$26.08/kWh), where as in California, USA the same will be US$ 13 (100kWh*13C/Kwh) and in Bhutan it will be only US $ 1.63 (100kWh*Nu .98/kWh). However the average GDP of Bhutan is US$ 2,399, Singapore US$ 51,709 and USA at US$ 49,965 in 2012. So if we compare GDP versus our cost of electricity to Singapore and USA; while our electricity is cheaper by 8-13 times to USA and Singapore, our GDP is lower by almost 21 times to both. If we consider that someone consume 100kWh/month for 12 months, a Bhutanese would spend 0.82% of GDP on electricity alone, whereas for the same about of electricity, Americans and Singaporeans would only spend 0.31% and 0.49% of their GDP respectively. So I do not think that we have the cheapest electricity!

The other thing is also to find out what consists of electricity tariff in other countries. For example, California electricity cost, one of the highest in the USA, consists of investments for Energy Efficiency measures that are pumped back into the society such as distribution of free CFL bulbs for the public, Grants to do energy efficiency improvement projects, and also Nuclear Decommissioning investments. Therefore, we cannot compare the face value of our electricity tariff to other countries and claim that we provide cheap electricity.

Certain increase of cost I do believe is inevitable, even if it is just to catch up with inflation, but at the same time, we need to justify our stands rather properly and also ensuring that we do not eye wash the public. We need to improve the service reliability, investment into rural programs. It is also true that our cost of generation is cheaper compared to other countries by nature which would mean that our electricity should infact remain cheaper and it is not a favour that BPC/DGPC is doing for us.

Chhimi Dorji


Wednesday, June 19, 2013

Flawed Water Metering and Tariff System in Bhutan

There has been lot of discussions on the proposed electricity tariff revision, but none on the proposed Water Tariff Revision in Thimphu. It also seems there is no authority/agency besides the cabinet that is there to check the Water Tariff unlike electricity or other goods. I would like to point out some serious flaws with the overall water metering and tariff system all across the country and in particular in Thimphu city.
1.     Currently, people living in multiple apartment buildings in Thimphu pay the higher rates, as the rates are higher for more consumption. For instance a house in Thimphu with City water connection is allowed to and provided with only one water meter for a household and not for every family/ apartment. This is probably not by law, but implemented by the existing system and practicality of metering and plumbing ease. The water tariff for three slabs of consumption with lower rates for lower consumption and higher rates for higher use thus are not applicable as the consumption of 4-10 families living inside the whole house is clubbed together. This totally defeats the calculation that Kuensel or other agencies have made for each family for all buildings with multiple families and apartments. In this regard, I think we should first look at either providing individual meters for each apartments or take the total number of apartments connected to a water meter into consideration instead of taking the total consumption of the whole building together and using the corresponding rate. This will ensure that we determine actual consumption of each family and apply the appropriate rates. If we look carefully at the bills, rich people in Thimphu living in individual cottages and duplexes with individual meters would be paying lower water tariff than less-to-do people living in apartment complexes.

2.     Non-commercial residents in Norzin Lam are charged with commercial rates as well. If we look at the buildings on Norzin Lam, most of them do have commercial establishments such as shops, offices or restaurant on the first 1-2 floors, but more than half of the spaces in all buildings are residential. But all the buildings I know of on Norzin Lam are charged with Commercial Water tariff as there is only one water meter for the whole house. So while10-20% of the space are for commercial purpose, all other 80-90% occupants with residential homes land up paying the commercial rate which is more than twice the rate for domestic water use. Therefore there should be a scrutiny of the actual user types on Norzin Lam, and maybe in other places too, instead of continuing with charging with commercial rates.

3.     The reason for Water Tariff revision as recommended by World Bank and ADB should not be our justifications for tariff revision. According to the Kuensel report on May 25, 2013 it says that “ for Thimphu Thromde total revenue generation through water and sewerage service was Nu 345.9M while their expenditure stood at Nu 187.6M with an annual excess of Nu 79.1M.” Based on this figures, it is very clear that the Thromde is generating more than enough money to pay for the expenses. World Bank and ADB indeed are very important donors and partners for Bhutan and Thromde, but then we have to use our own logic and calculations before a tariff revision that will burden the common citizens of Bhutan. Whenever there is electricity, gas or any other utility service tariff revision there should be an economic analysis. Is there such a calculation for Thromde? Simply going by some donor’s recommendation should not be our decision as they would definitely understand that we have social issues at home to be taken care.

4.     Improvement of the service would be required before a rate revision or atleast a plan on improvement or how to use the excess money. We should know that water is an indispensible requirement and it also involves cost to get water everywhere. However, if look around in Thimphu City, half of the city receives only water for 3-4 hrs a day. Good example is Norzin Lam- the heart of Thimphu city! where there is only water supply for 2-3hrs a day. People have to use all sorts of measures such as giant tanks to buckets to jerry cans to store water and at times get it from other areas. I seriously think it will be necessary for the Thromde to work on providing a better service or atleast start that process before a rate revision that does not even seem necessary at the moment. If there is reliable adequate water supply for 24hrs, I don’t think people will mind paying for the service.