Tag: electricity subsidy

Fenaka blames arsonists for fire at Addu City office

The state utility Fenaka Corporation has blamed arsonists for a fire at its offices in Addu City on Saturday.

A group of people poured kerosene and set fire to an area adjacent to the Fenaka sub station, which houses a transformer in Addu City. The fire was an attempt to disrupt electricity services in the area, the company said in a statement yesterday.

The station’s doors were damaged in the fire.

“We believe this was an attempt to damage the transformer at the station. If the transformer had been damaged there would have been difficulties in providing electricity to residents in the area as well as Muhyiddeen School,” the company said in a statement.

“We appeal [to the public] not to commit acts that may damage important service infrastructure for the sake of obtaining certain benefits.”

The police said no arrests have been made yet.

The fire comes two weeks after a group of people threw rocks and shattered windows at the home of Fenaka’s regional director Abdulla Zuhair.

A retail shop owner in Addu City Inaz Mohamed said the fire at the Fenaka sub station and the attack on Zubair’s house may be a result of “desperation” due to an unresolved dispute over electricity prices between the power company and local businesses.

Addu City businesses have been protesting since April over what they called a sudden hike in electricity prices.

In March, Fenaka increased prices in Addu and cut electricity subsides in other atolls in a bid to save MVR11 million (US$713,359) per month from the state budget.

Power bills have increased by 30 percent, shop owner Inaz Mohamed Didi said.

Inaz said businessmen in Addu had lodged separate petitions with government offices, the parliament and the courts. “But no one in this government is listening to us.”

He said he does not know who was responsible for the attacks and said businessmen in Addu do not encourage violence and have always prioritised dialogue.

Businessmen across the country closed their shops in protest in April. But the company said its hands were tied as it was only implementing government policies.

Fenaka is the main electricity provider in the atolls and operates in 151 of the 188 inhabited islands of the Maldives.

Addu City deputy mayor Abdulla Thoyyib meanwhile expressed concern over differences in electricity prices, noting that charges in Addu City and Fuvahmulah are up to 37 per cent higher than in capital Malé.

Higher electricity prices reduce investment in the southernmost city, he said.

In early May, Fenaka cut off electricity to several businesses, including a private hospital, when owners refused to pay bills.

Four businesses lodged a complaint with a magistrate court over power cuts. The court initially issued a stay order, but a new judge appointed to oversee the case overturned the ruling and said Fenaka was authorised to cut electricity if businesses fail to pay bills.

Presenting the 2015 budget in parliament, the government said it would target electricity subsidies to the poor.

But businesses and the opposition say the government failed to inform the public of the change in prices.

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Power cut at Addu hospital in dispute over electricity subsidy

A private hospital in Addu City is operating with a backup generator after the state owned utility Fenaka Corporation cut off its power supply.

Fenaka stopped providing electricity to the International Medical and Diagnostic Centre (IMDC) around 1:30pm yesterday after the hospital refused to pay electricity bills in solidarity with other businesses in the southernmost atoll.

Shops and business across the country have refused to pay bills in protest over the government’s decision to cease electricity subsidies in March, which led to monthly charges doubling and tripling in some cases.

“We are running the hospital on our backup generator. However, we still cannot produce enough electricity for the whole hospital,” said IMDC’s manager Fathuhulla Anees.

Anees said the hospital was only able to start the generator at around 11:00pm last night, causing a lot of difficulties in providing medical assistance to the 10 patients currently admitted at the 38-bed capacity hospital in the Hithadhoo ward of Addu City.

Hospital staff worked by candlelight until technical problems with the generator were resolved.

“We had to discharge some of the patients and transfer others to the regional hospital, because we were unable to provide urgent services,” he said.

Fenaka is the main electricity provider in the atolls and operates in 151 of the 188 inhabited islands of the Maldives.

Former health minister Dr Mariyam Shakeela – a shareholder in the Simdi Company that operates the hospital – has condemned the corporation’s move as inhumane.

In a tweet last night, Shakeela slammed Fenaka for cutting off electricity services to a hospital “without giving the opportunity to find a solution”.

Fenaka also reportedly cut off electricity to the Simdi showroom in Hithadhoo on Sunday.

Shakeela lost the health minister’s post in August last year after pro-government MPs voted against her reappointment to the cabinet. She has since been critical of the president Abdulla Yameen’s administration and has participated in an anti-government rally on May 1.

A businessman in Addu City meanwhile has filed a case at the Hithadhoo magistrate court seeking a court order to compel Fenaka to continue providing services despite unpaid bills. The court initially granted a stay order pending a judgment in the case.

Anees, who is also suing Fenaka over the power cut, said the magistrate court has since ruled against the businessman.

“They wanted to cancel the stay order, so they just ruled that Fenaka can cut power if bills are not paid. I don’t believe we will get justice from the new magistrate at the court,” he said.

Anees said that the hospital will not pay the bill until the court orders them to do so. The hospital refused to accept bills for March and April.

“We are not paying it because we are not able to. We are not paying it because we think it is unjust and discriminatory,” he said.

Electricity charges in Addu City and Fuvahmulah are up to 37 per cent higher than in capital Malé, according to figures from Fenaka.

The government’s decision to cut electricity subsidies to businesses in March left more than 5,700 businesses in the atolls facing millions extra between them in electricity charges.

The government previously provided Fenaka with about MVR11 million (US$713,359) a month to subsidise electricity for atoll businesses, but this cost must now be borne by the companies themselves.

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Businessman to sue state over discriminatory electricity prices

A businessman in the northern hub of Kulhudhuffushi has lodged a complaint with a magistrate court over alleged discrimination in electricity prices.

Adam Shareef says prices in the northern Haa Alif, Haa Dhaal, and Shaviyani atolls are 72 percent higher than in the capital Malé.

Businessmen from Ihavandhoo in Haa Alif atoll and Fuvahmulah in the south have also submitted petitions to the government over the doubling of their electricity bills.

As the constitution entitles all citizens to economic and social rights without discrimination of any kind, Shareef said the state-owned Fenaka Corporation is obliged to provide electricity at equal rates throughout the country.

Fenaka is the main electricity provider in the atolls and operates in 151 of the 188 inhabited islands of the Maldives.

The Kulhudhuffushi magistrate court rejected Shareef’s case today saying it has no jurisdiction. Shareef says he is now preparing to file the case at Malé’s civil court.

The government has previously said that the large distances between the Maldives’ remote islands mean that services such as electricity will inevitably be more expensive in the atolls.

Businesses across the Maldives protested by closing shops last month after the government’s decision to cut electricity subsidies left more than 5,700 businesses facing millions extra between them in electricity charges.

Fenaka has 46,590 meters in 151 islands, of which 5,765 meters were registered as business consumers.

Electricity bills for businesses doubled, and in some case tripled, when the subsidy was discontinued in March.

Fenaka officials previously said bills in Kulhudhufushi are higher than other islands because businesses were charged a much lower rate than the tariff structure approved by the energy authority in 2009, leading to a threefold increase when the subsidy was removed.

While the actual rate was 7.50 laari per unit for usage above 400 units, the now-defunct upper north utility corporation charged 2.75 laari per unit for Kulhudhufushi businesses.

Addu City mayor Abdulla ‘Sobe’ Sodiq has also urged Fenaka to levy equal fees, saying higher prices affect investments in the southernmost city.

“Electricity is a basic right. The service must be provided equally to everyone. There cannot be any discrimination,” he told the press yesterday

Prices in Addu City and Fuvahmulah are up to 37 per cent higher than in Malé, according to figures from Fenaka.

But Fenaka says its hands are tied as the company is only implementing government policies, which are intended to curb rising expenditure. The International Monetary Fund had urged the government to move its subsidies to a targeted system, rather than blanket payments.

Meanwhile, grocery shops have increased prices of goods in Ihavandhoo due to higher electricity prices.

Owners have also decided to keep shops closed from 6:00pm to 8:00pm.

“Almost all businesses in Ihavandhoo have decided to raise the prices of goods, as the electricity expenses cost approximately 60 percent more now,” said Abdul Mueed Ibrahim, vice president of the Ihavandhoo council

Profits are considerably lower due to the higher electricity bills, said a local Ihavandhoo shop owner, Ahmed ‘Jizuvan’ Rilwan.

Businessmen in Ihavandhoo had submitted a petition regarding the issue to the island council and Fenaka, he said, but was yet to receive a response.

Jizuvan said that the shops had raised the prices of 118 varieties of goods.

“Nobody likes to raise the prices of products as it only burdens the local citizens. However, most of us do not have any other choice,” he said.

Jizuan suggested that Fenaka earned enough income to charge lower rates, but says it’s decision to increase mangers from two to five – each with a monthly salalry of about MVR 12,000 – might have led to higher operating costs.

“I believe the providers are taking more than what is necessary,” he said.

Jizuvan said he had received text messages accusing him of trying to defame the ruling Progressive Party of Maldives MP for Ihavandhoo, Mohamed Abdulla, and warning him that he could be jailed.

The government previously provided Fenaka with about MVR11 million (US$713,359) a month to subsidise electricity for atoll businesses, but this cost must now be borne by the companies themselves.

 

 

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Power subsidy deadline extended amid public anger

The government today extended a deadline for households to seek subsidies for electricity by a month as hundreds queued up for hours to submit forms.

Shops in Haa Dhaal Vaikaradhoo shut down today to join growing protests against the government’s decision to cut subsidies for businesses, and Gaaf Dhaal Gahdhoo council said it will now seek rent on lands leased to the state owned electricity company.

The government says the current blanket electricity subsidy benefits the affluent over the needy, and targeting subsidies will rein in expenditure and increase aid to the poor.

But many who queued up to submit forms today were unsure whether they would receive the subsidy as the government has not yet revealed the criteria for a successful application.

“I really don’t know if I will get subsidies. But I’m applying in the hope the government will be fair about it,” applicant Abdul Latheef said.

In an interview with Haveeru last week, the chief executive of the National Social Protection Agency, Mujthaba Jaleel, said that “everyone who applies for subsidy will get it.” But yesterday he said that “the criteria have not yet been set”.

Mujthaba was unavailable for comment today.

People in queues today complained of the extensive documentation required for the application, which includes rent contracts, wage details, and the number of household appliances that use power.

“This application form is a hazard. We have to get a lot of unnecessary documents. It would have been better if they set up an online system instead of making us wait in queues for hours, only to later reject my application,” Mohamed Yoosuf said as he waited in a queue.

The new deadline for form submission has been moved from April 9 to May 9, Ahmed Nihan, an MP for the ruling Progressive Party of the Maldives, said in a tweet.

However, the government has stood by its decision to cut subsidies for businesses, despite critics claiming the move would destroy small and medium-sized enterprises on rural islands. Some businesses say their bills have doubled or tripled.

After closing shops earlier this week, businesses in Haa Dhaal Kulhdhuffushi, Gaafu Dhaal Thinadhoo, and Addu City have set up committees to negotiate with the government.

Gahdhoo in Gaaf Dhaal asked state electricity company Fenaka to pay the council MVR 506,840 (US $39,585) for plots of land rented to the company.

“Fenaka has never cooperated with us. Once we got lights to put in the harbour area but Fenaka refused to give power. Then this issue has come up with subsidies. So we have also severed ties with them,” councilor Mohamed Shujau said.

Businesses in Vaikaradhoo are also preparing a petition after a one day shop shut down, while those on southern Fuvahmulah have already submitted a petition demanding a fair price for electricity.

Shop owners have also taken issue with the higher electricity prices in the atolls as compared to Malé City.

Electricity prices are up to 72 percent higher in northern Haa Alif , Haa Dhaal, and Shaviyani Atolls and up to 37 percent higher in Addu City and Fuvahmulaku than in Male’ City, according to figures from Fenaka.

 

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Businesses around Maldives protest electricity subsidy cut

Most shops, cafés and restaurants in the northern business hub of Haa Dhaal Kulhuduhfushi were closed in protest over electricity subsidy cuts on Sunday as anger builds among companies around the Maldives over steep rises in power bills.

Businessmen demonstrated in Addu City in the south, while others in Gaaf Dhaal Thinadhoo are preparing to boycott paying their bills, which in some cases tripled overnight when the subsidy was removed.

In Kulhuduhfushi, more than 100 shops and restaurants will be closed until 8pm Sunday in protest over “unfair electricity rates” and subsidy cuts, while more than 100 people have been protesting outside the office of electricity company Fenaka since this morning.

Shops would normally open from the early morning until 10pm.

“We will continue to raise our voice till the government is ready to listen to us,” said Adam Shareef, a member of the steering committee on electricity subsidy cuts in the island.

“We will continue our protest outside the electricity company till the government responds, but the shops will reopen tonight.”

The government has removed electricity subsidies to companies from last month onwards, while domestic households have been told to reapply for subsidies before April 9.

Businesses in Kulhuduhfushi, Addu and Thinadhoo have condemned the subsidy cuts and are also angry about the high price of electricity in the atolls compared with the capital, Male’ City.

Only a few shops were open in Kulhuduhfushi today, including the two state owned shops run by State Trading Organization and the businesses of Mohamed Zuhair, a well-known businessman in the atoll.

“I do support the cause and I think the differences in electricity prices are a gross discrimination between the peoples of the atolls and the people of Male’ City,” said Zuhair, also a member of the steering committee.

“But closing down all the shops without giving due warning to the public will not benefit them. That’s why all of my shops are open.”

Zuhair said one of his shops had previously received monthly bills of MRV 23,000 ($1,500) and these have now shot up to 60,000, while another store’s bill tripled from MVR 7,000 to MVR 21,000.

The difference in electricity prices between Male’ and the atolls is an issue of big public concern.

Prices in Haa Alif, Haa Dhaal, and Shaviyani atolls are 72 percent higher than in the capital, while those in Addu City and Fuvahmulak are up to 37 per cent higher than in Male’ city, according to figures from Fenaka Corporation, which provides electricity for most islands in the Maldives.

Mohamed Ismail, a local from Kulhuduhfushi, said: “We feel like we are second class citizens. The state is providing electricity for the islands as well as Male’.

“So why should there be any difference? Are we not worthy of being treated fairly?”.

Meanwhile a group of businessmen in Addu City in the south also protested over differences in electricity prices and the subsidy cut.

“Some businesses did not accept the electricity bills and today a number of businessmen protested outside the electricity company office,” said the mayor of Addu City, Abdulla “Sobe” Soadhig.

Businesses in Gaafu Dhaalu Thinadhoo, also in the south, have decided not to pay the electricity bill until the government reinstates subsidies or prices fall.

“We are in talks with the government to find a solution to this problem. But we cannot simply wait and hope for a government response,” said Abdulla Saneef, a Thinadhoo council member.

“The steering committee, which pretty much covers all businesses, has already decided not to pay the electricity bills.”

The government has previously said that the large distances between the Maldives’ remote islands mean that services such as electricity will inevitably be more expensive in the atolls.

The International Monetary Fund has urged the government to move its subsidies to a targeted system, rather than blanket payments.

Fenaka had not responded to queries at the time of going to press, while President’s Office spokesperson Ibrahim Muaz was unavailable for comment.

The government, presenting its 2015 budget, said that it would target electricity subsidies to the poor, while rumours have been circulating on the social media that households with air conditioning systems would not receive the domestic subsidy.

However, Mujthaba Jaleel, CEO of National Social Protection Agency (NSPA) said that “every household that applies for the subsidies will get it,” according to Haveeru.

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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.

 

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Public debt to reach MVR31 billion by end of 2014, reveals finance minister

Public debt is expected to reach MVR31 billion (US$2 billion) or 67 percent of GDP at the end of 2014, Finance Minister Abdulla Jihad has revealed.

“Despite achieving economic progress, the Maldivian economy is fragile and the Maldives’ financial situation is not in the most appropriate state at present,” Jihad cautioned in his budget speech at parliament today.

“The main reason for this is the year on year increase of the budget deficit and the state’s debt because of expenditure being higher than state revenue in recent years,” he explained.

The country’s balance of payments worsened and foreign currency reserves dwindled as a result of both the persisting fiscal deficit as well as outflow of foreign currency, Jihad added.

He noted that the dramatic increase of expenditure on public sector wages, subsidies, and social security programmes was also responsible for the fiscal imbalances.

Expenditure on state employees in 2014 would reach MVR15.8 billion (US$1 billion), Jihad observed, while MVR3.2 billion (US$207 million) would have been spent on subsidies and social security benefits.

Out of every MVR100 collected as revenue or income, Jihad explained that MVR40 was spent on employees and MVR22 on social protection and subsidies.

Consequently, the government was facing serious difficulties in “managing the state’s cash flow and financing the budget” as well as securing loans for budget support, Jihad said.

The budget was mainly financed by selling and rolling over treasury bills (T-bills), he said, which involves repayment at high interest rates.

According to the central bank, the total outstanding stock of government securities was MVR13.6 billion (US$881 million) at the end of September.

“The growth in government securities was contributed by the increase in the amount of T-bills issued by the government to manage its cash flow requirements,” reads the Maldives Monetary Authority’s (MMA) latest monthly economic review.

Targeting subsidies

In May, Jihad continued, the government ceased obtaining funds from the central bank to finance the budget and the inflation rate has remained low as a result.

The government has also decided to freeze hiring new employees in 2015 in favour of conducting training programmes and optimising productivity. The defence minister last week criticised civil servants, saying they were providing “poor service” to the public.

Parliament needed to pass legislation on the state’s wage policy for a lasting solution to discrepancies in pay among state institutions, Jihad suggested.

He also revealed plans to revise the electricity subsidy, which he said currently benefits the affluent more than the needy.

Targeting the electricity subsidy to low-income families or households would save 40 percent of the government’s expenditure on the subsidy, Jihad explained.

The government was also working on revising the Aasandha health insurance programme – expanded by the current government – to ensure sustainability, he added, in addition to plans to target food subsidies in 2015.

In May, MMA Governor Dr Azeema Adam called for “bold decisions” to ensure macroeconomic stability by reducing expenditure – “especially the un-targeted subsidies” – and increasing revenue.

The MMA had previously warned that shortfalls in revenue and overruns in expenditure could jeopardise the country’s debt sustainability.

The International Monetary Fund (IMF) has also recommended targeting subsidies to the poor.

“The electricity subsidy is one that goes to even the richest strata of society. Basic food subsidies are being enjoyed now by the resorts, and never mind the resorts, are being enjoyed by wealthy foreign visitors who stay at the resorts,” Dr Koshy Mathai, resident representative to Sri Lanka and Maldives, told MPs on the public accounts committee in February.

“That to us seems like a totally unnecessary policy.”

He added that “substantial savings” could be made from the budget by targeting subsidies to those most in need of assistance.

Despite the cost-cutting measures, Jihad cautioned today that the government’s recurrent expenditure could not be reduced while people reside in 188 geographically dispersed islands.

Providing services to small populations was difficult and costly, he observed, stressing the importance of formulating and implementing a population consolidation policy.

On plans to tackle the high rate of unemployment, Jihad noted that MVR332 million (US$20 million) was allocated in the 2015 budget for higher education programmes, with special emphasis on training doctors and health sector professionals.

The implementation of the government’s economic policy – with the introduction of special economic zones – would spur job creation and attract foreign investment, he added.

Jihad appealed for support from MPs for the government’s proposed revenue raising measures, warning that public services could be disrupted if anticipated revenue is not realised.

“The estimated budget for 2015 is a budget that lays the foundation to build the future of the current generation and future generations,” he said.

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