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