15 July
By Shin Min
Continued from Yesterday
U Ko Ko (Industrial College): Dr Aung Tun Thet, could you further elaborate your opinion on this matter?
Dr Aung Tun Thet: The price of something depends on supply and demand. Our country is developing and the demand for electricity is increasing along with it. People who’ve never had electricity before are beginning to use it.
Naturally, supply has to follow the increase in demand otherwise the price will be unstable. Successive government generations have resolved the demand and supply issue with subsidies. It’s not just our country, other developing countries have subsidy rates too.
If everyone is just focusing their attention on the increase in price then it will be difficult in the long run. We must consider if the electric utility is public property or accountable to individual consumers.
It is considered public property in the past and the State subsidized it. No one dared to lower it from fear of political criticism. But now, they are reducing the subsidy and I think that’s a very bold management choice.
They will need to carefully explain why they are doing this and what benefits it will bring to the consumers. Everyone has their own self-interest. We discussed earlier how it’s fine to increase the electricity bill as long as there will be no more power cuts.
In reality, the electric bill wasn’t increased, the subsidy was decreased. They need to explain this clearly to the public.
There’s another thing that’s never mentioned, which I don’t think will be accepted enthusiastically. Just as there is a responsible business there is responsible consumption. The consumer needs to act responsibly.
Some houses have air-con in every room operating 24/7, and it’s the same thing in offices. Why? Because of the subsidy. In a way, this action is like increasing your discipline. People will criticize if it’s said like that. They’ll say it’s approving with both eyes closed but this isn’t about showing approval. This is the reality of the current situation.
But we can’t hear the voices of the people who have no electricity. The people speaking of protest have full lights at home and ample access to electricity. And it’s because their subsidy has been decreased.
If the authorities can properly explain things then the people will at least understand why this is being done, which I believe is also the aim of the event we are attending right now.
U Ko Ko: Sayama, you look like you have something to discuss after the Deputy Minister’s explanation. Could you share that with us?
Daw Khine Khine Nwe: I accept what the Deputy Minister said. The State has decreased its subsidy and everyone would accept it if it is explained properly. Which is why I said earlier to raise the price but not cut the power.
It will add to the cost of the consumer but if electric cuts continue after the price hike then diesel consumption will skyrocket. Businesses will have to spend 30 to 40 per cent more.
We are also using more machinery and computers so I’d like to request you to handle the voltage stability. The price will have to go up since the State has subsidized a lot, but how will you help us lower our costs?
Without voltage stability, our computerized machines would get damaged and frankly, there aren’t enough technicians here to deal with the new technology. Hence, we have to order them from abroad and that increases our costs.
Sometimes, we may have to call a foreign expert and that slows production, takes up more time and adds to our costs. That’s why the State can increase the electric bill but how will it help to keep our other costs in check. If they can help prevent us from using diesel then I’m more than welcome to the idea.
As an example, the textile industry requires a lot of human resources. We use machines that are one horsepower and they are very simple. But other businesses that use more power-consuming machinery will have to cover their costs through their products. It’s worrying for the consumers.
U Ko Ko: Deputy Minister, could you explain why there are different rates to the electric meter rate increase? Also, to be honest, your ministry has made mistakes in the past with these calculations. So, some worry if the readings will be wrong with so many different rates. What is your response to that?
Deputy Minister: We had to conduct a preliminary analysis when we decided to change the electric meter rates. We constructed a database detailing how many units each individual meter across the country consumes per month.
Then we analyzed the size of the working class demographic and how much electricity is being consumed. From these results, we had our first category of people who consume less than 30 units a month. This category houses 25 percent of the national electric-consuming population.
One million people are in the household category and four million people receive electricity in the entire country. The one million category uses less than 30 units.
U Ko Ko: 25 per cent consuming only 30 units really is a low number. How did you gather that data? There are cities that receive electricity around the clock while others only get half a day. Do you think there are more people receiving only part time? Part-timers would consume less since they receive less time. Could you tell us how you came to the conclusion that 25 per cent of the people use only 30 units?
Deputy Minister: We only collected data from the areas that received 24-hour electric supply in the years 2017-2018. We didn’t include the households that received limited power through diesel generators.
So, we based our findings on how much 24-hour electricity receivers use each month. That’s why out of the 4 million who use under 30 units, only one million consume less than 30 units. We decided to bill them with the current rate at K35 so that the 25 per cent who already have access to electricity won’t incur losses.
When we collected data nationwide, we searched for which townships and areas consumed less than 30 units. We found out there were a lot of households that use this amount in Hlinethaya, Sanchaung, Kyimyindine and Hlegu in Yangon Region.
Hence, we thought of a fair general concept for the entire country. To answer your question, there are many categories because if we continue the current K35 rate to protect low-income families then the subsidy amount will continue to be high.
If we want to reduce the subsidy then we need to amend the electric rates for some consumers. If we immediately charge them K80, K90 or K100 then it will be too big a change.
That’s why we have the second group of users under 50 units. There are 360,000 households in that group and 9 per cent of people who already have electric access are in it. We increased the base price by K15 so now it costs K50 per unit for them. So, that family will have to pay K300 more for 20 units than before.
Then there are 440,000 households that consume between 51 to 75 units. They make up about 11 percent. They will have to pay K1,175 more on average after the price changes.
There are 400,000 households that consume from 76 to 100 units, making up 10 percent, and so on and so forth. This is why there are many categories. For the homes that can afford a lot of electric equipment and use a lot of electricity, we had to raise the rates for them a bit higher.
Of course, we also had to factor in if so many categories would complicate calculating electric rates. We had to design computer programs for this and we will distribute them to all our offices.
However, we’re also designing handy graphs for our rural offices that don’t have computer systems. The logarithm will look at the rate on one side and the cost on the other. We didn’t want to put extra work on our accountants.
Another method is a very easy and instantaneous formula that can be worked out with a calculator. We will hang these up in offices for the general public. We have considered how to reduce complications among the staff, avoid miscalculations and ensure there are no losses among the public.
Translated by Pen Dali
