His name is Wayne. Wayne Octain.

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I was reading the job ads (in a waiting room) and I saw the following advertised. ‘Basic salary 40,000, fuel allowance 25,000′ (paraphrase). Amazing, right? Where would your fuel allowance be more than half of your salary? In Sri Lanka I guess.

Via LBO, “Sri Lanka’s consumption of petroleum products has doubled in the three years since the end of a war an official said, as economic activity picked up requiring more energy to run the economy.”

One major problem is that Sri Lanka relies on petroleum products for both transport and electricity generation. If it doesn’t rain we don’t have hydro power and we essentially run the entire country off a generator (ie, thermal power, ie, burning oil to power, like, jet turbines) – see infographic. If you were wondering, this is insane. They recently ‘opened’ a coal burning plant in Norochcholai, but it keeps catching fire, and not in the way it’s supposed to.

Still, petroleum demand doubling post-war is pretty intense, tho I guess it makes sense. Vehicle ownership has doubled in about the same time period. As the Honorable Minister Secretary says, however, ‘”If this trend continues at this pace – doubling of the petroleum bill every three years – we will need a lot of resources,” Samaratunga told a forum organised by the central bank.’

The Petrol Bill

I would think this more than anything is putting pressure on Sri Lanka’s foreign exchange, being offset largely by remittances from foreign workers, whose income isn’t really doubling. Throughout the world they’re struggling with energy prices, but SL is unique in that we’ve had like 30 years of pent-up demand released in three years.

The global solution is supposed to be renewable energy, but SL already depends on renewable energy (hydro) for like 50% of supply, so that doesn’t work on its own. Another solution, from the transport side, is hybrid and electric cars, but SL has already encouraged hybrids by taxing them significantly less than regular cars. So we already have a lot of them on the streets. There’s even hydrogen trishaws in Galle, tho that’s a donor funded demo. Electric cars are largely pointless, because we’re burning oil to generate electricity.

So, what to do. One thing I say, nay, demand is better public transit. I see so many single occupancy cars in traffic and A) it sucks for them and B) it sucks for everybody else. If a middle class person could take the bus with convenience and comfort, I think we’d be able to minimize our problem. I’ve taken the new Micro/Volvo bus and it’s pretty nice, but I have a 2% chance of ever catching one again. Beyond that, however, there simply will be growth. Families need cars and private transport. It is what it is. On a certain level the government has to manage both energy policy and the basic economic fundamentals better so that it doesn’t choke off one of the main sources of growth.

Posted on Friday, June 1st, 2012 in Business, economics, Energy, Sri Lanka.