Chief Technical Officer of the State Electricity Company (STELCO) Dr Zaid Mohamed has said that the problem of state run companies not paying their electricity bills is a long term one, made more urgent by recent rises in the price of oil.
“This problem has gone for a long time – a couple of years but lately the bills have been getting higher,” said Zaid.
Zaid said that the recent rise in fuel prices was beginning to threaten the company’s ability to operate and so the board made the decision to disconnect certain companies.
The most recent figures from the Maldives Monetary Authority (MMA) show the price of crude oil to have risen 9 percent in the last month and 6 percent between August 2011 and August 2012.
STELCO has since started discussions with the government to resolve the issue.
“We have payments to make to our suppliers,” said Zaid, who was reluctant to discuss individual clients while the company was holding discussions with the government.
However, local media reported earlier this week that STELCO had sent staff to both the Maldives Broadcasting Corporation (MBC) and the headquarters of Malé City Council (MCC) to disconnect their electricity.
MCC councillor Kareem told Minivan News that the money had now been sent to the finance ministry.
MBC have released a statement blaming the government for a lack of financial assistance resulting in the possible suspension of its services – Television Maldives (TVM) and Voice of Maldives (VOM), reported Haveeru.
The statement added that it had received warnings for non-payment of bills from several other service providers.
“The average monthly revenue of this corporation during the year has been MVR1.6 million. Due to the highlighted financial difficulties most services and other items had been sought on credit,” the statement was reported to have read.
Minivan News was unable to obtain comment from the Finance Ministry regarding this matter at the time of press.
Haveeru reported that STELCO was owed MVR7.1 million (US$460,000) and MVR6.8 million (US$440,000) by MBC and the MCC, respectively.
The paper discovered that STELCO is owed MVR150 million (US$10 million) from various state institutions, including the Malé Health Service Corporation (MHSC), the police and the Maldives National Defence Force (MNDF).
The Maldives dependency on oil was discussed yesterday by President Dr Mohamed Waheed Hassan at the World Energy Forum in Dubai.
“A development path primarily based on expensive diesel generated electricity is unsustainable in any country, let alone a small country like Maldives,” said Waheed at the forum’s opening ceremony.
“Today, we spend the equivalent of 20 percent of our GDP on diesel for electricity and transportation. We have already reached the point where the current expenditure on oil has become an obstacle to economic growth and development,” he continued.
President Waheed explained that the current price of 35-70 US cents per KW hour meant that the government was being forced to provide “heavy subsidies” to consumers, giving little option but to move towards a low carbon alternative.
The Maldives Energy Authority recently announced that its US$138 million project would convert ten islands within the country entirely to renewable energy with 30 percent of the total energy demands of a further 30 islands provided from renewable sources.
“Under this strategy, through installation of up to 27 megawatts of renewable electricity, we will be saving on the use of 22 million liters of diesel per year and reduce up to 65,000 tons of carbon dioxide emissions each year,” Waheed explained in Dubai.
“In addition we will be making significant savings from the heavy fuel and other electricity usage subsidies that are currently in place,” he added.
“We are mindful that these programmes cannot be implemented without the engagement of the private sector. In order to make the investment environment more favorable for the private investors, a number of attractive financial guarantee instruments and measures will be adopted.”
Some of the key behind the Scaling-Up Renewable Energy Program (SREP) for the former government said earlier this year that the project had fallen through after political instability following February’s controversial transfer of power had deterred potential investors in the scheme.
The SREP plan revealed the scale of the problem: “If the oil price rises to $150/bbl by 2020, and consumption grows by four percent per annum, oil imports are expected to reach around US$700 million.”
This figure equates to around US$700 million or almost US$2,000 per head of population, whose per capita income – based on the most recent government figures – is just under US$4000.