New Energy Pricing Scheme To Favor Affluent

Electricity costs for commercial and industrial consumers as well as for foreign embassies, NGOs, foreigners and international institutions will see a reduction in tariffs from next month, the state-owned utility Electricite du Cambodge said in a statement yesterday.

But missing among those who will benefit from the new pricing regime are ordinary Cambodian consumers, many of whom are poor and say they will struggle to afford the new prices.

“If the price goes up my livelihood will be affected,” said Och Vanna, 45, a mother of three children living in Takhmau’s Prek Russei commune in Kandal pro­vince. “I will ask for a delay in the payment when I get the bill,” she said.

On Monday, the government announced that electricity costs would rise for residents in Phnom Penh and five other provinces in order to provide more revenue for the government following heavy spending during the course of the global economic crisis.

For the urban poor, however, concerns are mounting that the planned hike in electricity prices will deeply affect their living standards.

In Kandal province, as in Phnom Penh, the price of electricity for those using less than 50 kilowatt-hours a month will be charged at 610 riel, up 56 percent from the current price of 390 riel.

And those using more than 50 kilowatt-hours per month will see prices rise from 610 riel a kilowatt-hour to 720 riel.

Ms Vanna’s home-run business selling different varieties of rice wine and refreshments will often cost her more in overhead costs than it does in earnings, she said.

The bill for electricity consumption during the month of December, which arrived at her small, aged, wooden house on Jan 9, came to 19,500 riel, or about $5. When new pricing terms and conditions come into force next month, her bill will rise to about $7.50 for the same power consumption.

Her husband, a motorbike taxi driver, earns about $4 a day, most of which goes toward school fees for their three children. Other expenses on water, which costs 25,000 riel every two months, and food, mean she is left with very little surplus cash at the end of the month, she said.

“I will choose to reduce my electricity consumption otherwise I won’t be able to send my children to school,” she said.

Chan Saron, 61, is another EdC customer in Prek Russei commune, who is bracing herself for the proposed rise in electricity prices come Feb 1.

Her invoice, dated Jan 9, showed electricity consumption of 87 kilowatt-hours for the month of December, costing her 53,070 riel. At her current rate of consumption she will experience a rise in monthly costs of about 18 percent.

But with her health deteriorating and three of her grandchildren needing fees to attend school, her ability to pay up is hard challenged, she said.

Since the global financial crisis hit Cambodia in late 2008, her small porridge selling business has found it hard to sustain a steady flow of customers.

During an interview yesterday at Ms Saron’s house, a moneylender arrived asking her to pay the interest on a loan she had taken out. Ms Saron was unable to pay.

“I find it hard to sell rice noodles and porridge at the market,” she said. “I am afraid that I will not be able to find money to pay the bill at the new price.”

The UN Development program said on Tuesday that the planned rise in prices will most hurt the urban poor who are vulnerable to a rise in living costs, especially as tens of thousands of people have lost their jobs in the garment sector as a result of weak demand from importing nations like the US.

“Those who have electricity, who have very low incomes, these are the people who are going to be affected,” said Francis Perez, country lead for Oxfam International. “That would be a sizeable amount of people living in Phnom Penh.”

Mr Perez said that many people living in apartments in the capital already found electricity bills costly and sometimes refrained from using simple household appliances like refrigerators.

“The electricity price is actually very high already,” he said. A rise in prices “would be a big blow to people and would probably drive them further toward poverty.”

The price of electricity is just one aspect of life for ordinary Cambodians that has seen considerable hikes over the past three years.

In 2008, the global food crisis sent staple food items skyrocketing upward in Cambodian towns and the countryside. Fuel costs have also seen large, sustained increases due to international crude oil prices.

The government announced in May 2008 that year-on-year inflation stood at 25.7 percent. The inflation rate has since continued to rise even though spending power amongst consumers has been squeezed during the course of the global economic crisis.

According to statistics from the government, the year-on-year inflation rate for the month of December was 5.3 percent.

According to a statement released by EdC yesterday, “commercial and industrial customers” will see a reduction in electricity tariffs from next month, though the statement did not give specific numbers for the reductions.

In a separate statement, EdC said that foreign embassies, international institutions, rented houses for foreigners and NGOs will also see tariffs fall from 890 riel per kilowatt-hour to 820 riel from next month.

Long Sopheap, 37, whose six-member family earns $70 per month from renting part of their land in Prek Hou commune, said the loss of the 390 riel tariff next month would cause her family to reassess how they consume energy in the house.

“Although it is difficult, I have to use electricity as I cannot live without it,” she said, “I must find the money to pay.”

 

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