Businesses warn of huge inflation as electricity subsidies cut

Businesses in two atolls have warned of retail prices skyrocketing after government electricity subsidy cuts took effect this month, and called for the policy to be reversed.

Companies will no longer receive government subsidies for electricity from March onwards, while domestic households must reapply for subsidies before 9 April.

Businesses in Haa Dhaal atoll Kulhudhufushi and Gaaf Dhaal atoll Thinadhoo, which act as business hubs for their surrounding atolls have created steering committees to negotiate with the government to reinstate subsidies.

“Prices will go up 50 percent in Kulhudufushi and nearby atolls. Businesses will close and ultimately it is the public that will suffer,” said Adam Shareef, a local businessman and steering committee member for businesses in Kulhuduhfushi.

The steering committees for businesses in Kulhuduhfushi and Thinadhoo also raised concerns over the differences in electricity prices between Male’ City and the atolls.

“There is a vast difference between prices of electricity in Male’ City, southern atolls and the northern atolls. If the government doesn’t reinstate subsidies for businesses we believe it is discrimination towards us,” Adam said.

Electricity prices are up to 72 percent higher in Haa Alif , Haa Dhaal, and Shaviyani atoll and up to 37 percent higher in Addu City and Fuvahmulaku than in Male’ City, according to figures from Fenaka Corporation, which provides electricity for most islands in the Maldives.

Electricity bills for the month of March have already arrived, with some local shops reporting a bill 129 per cent higher than before.

The steering committee for businesses in Thinadhoo met today and has decided to try and negotiate a “fair price” for electricity in the atolls, or a return of subsidies.

“As this is a matter related to the public, the Council of Thinadhoo will abide and help the steering committee in negotiating with the government,” said Thinadhoo Council member Saudh Ali.

The National Social Protection Agency (NSPA) , which determines who receives subsidies, had not yet responded to queries on its response at the time of going to press.

Meanwhile the Kulhuduhfushi steering committee has already sent letters to the President’s Office, Fenaka Corporation and NSPA.

Members of the Kulhuduhfushi steering committee have been receiving threatening messages to their mobile phones since the letters were sent. Adam Shareef said the letters sent by the committee included full names and mobile phone numbers of committee members.

“We demand that you stop creating conflict between the lawful government and its people disguised in the name of getting subsidies,” said the text messages forwarded by a member of the committee to Minivan News.

President Abdulla Yameen said last year at an event by Fenaka Corporation that his administration would not discriminate between the people of the atolls and the capital city.

“I’ve recently come across news media trying to prove that we differentiate or discriminate the atolls compared to the Capital. I would say such claims hold no value and such work is based on empty grounds,” he said.

The previous Maldivian Democratic Party (MDP) government changed the system of electricity subsidies so that they are allotted to individual households and businesses. Earlier, the state had subsidised Stelco, a state-run electricity company that serves the capital.



One thought on “Businesses warn of huge inflation as electricity subsidies cut”

  1. Could this be effect of "Economist" taking over reins?
    Prices may hike, but are the people not getting more than what they pay for!
    If people are getting more than before, why whine about it!
    I am sure there will be some heroes who will ask this same question even though they do not have an answer!


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