Opinion
Bloated public sector – a major impediment to development
Minister Kanchana Wijesekera has publicly stated that the Ceylon Petroleum Corporation (CPC) and the Ceylon Electricity Board (CEB) have employees far in excess than required for the normal functioning of these institutions. For instance, Ceylon Petroleum Storage Terminals Ltd., has 4,200 employees where only 500 are required, and the CEB has around 26,000 employees when half that number is sufficient. He also admitted that Rs. 3 billion has been paid as overtime for the workers at the Petroleum refinery at Sapugaskanda last year.
Politicians of all colours and hues have filled these institutions regularly with their supporters, beyond cadre provisions, leading to the current disastrous situation. The politicians only consider their future political survival, and not the economic well-being of the country. These result in a massive loss to the Government, since these loss-making entities have to pay the salaries and overtime to unproductive employees, which invariably come from the Government coffers. Successive governments have taken the easy way out, by requesting the Treasury to bail them out, resulting in an extra burden to the general public in the form of indirect taxes in purchasing consumer goods. None of our leaders had the courage to control the despicable acts of ministers who continue to fill non-existing vacancies in Government Institutions. The taxes collected either directly by the Internal revenue department, and indirectly from each and every citizen during purchasing household items from the market, go to maintain these white elephants. Money which can otherwise go into development projects, to buy medicines for the hospitals or repairing school buildings, end up to pay the salaries and overtime of idling workers at institutions such as the CPC and the CEB. These institutions suffer losses of billions of rupees, and our politicians continue to exploit these unnecessary appointments hoping they can win future elections with these political appointees.
This phenomenal curse is not restricted to only CEB and CPC, it is rampant in virtually all government departments, semi-government corporations and boards, and politicians are directly responsible for the bloated public sector. The Secretary to the Ministry of Public Administration stated on television that annually one trillion (1,000 billion) rupees is spent on paying salaries of public sector employees, and the number of employees can be reduced to one-third of its present number without affecting the services provided. Some of these institutions are full of directors and managers who are neither directing nor managing the institutions.
There are also a large number of redundant Corporations and Boards, which can be easily closed. Boards and Corporations with unnecessary duplication of duties are common. There is the State Pharmaceutical Corporation and a State Pharmaceutical Manufacturing Corporation, which can easily be amalgamated to a single entity. There is Paranthan Chemicals Ltd. which earlier ran the now defunct Paranthan Chemical Factory, still exists, with their only job now is importing chlorine gas for use by the Water Board. Why the Water Board cannot directly import chlorine is the thousand-dollar question. There is the Ceylon Petroleum Storage Terminals Ltd. which can be managed by the CPC, and the Fisheries Harbour Corporation which can be under the Ceylon Fisheries Corporation. Multiple organisations are created solely for the politicians to appoint their friends and political supporters to positions such as Chairmen and other jobs on these boards.
The biggest burden on our tax payers is SriLankan Airlines, which has made every citizen in Sri Lanka indebted to the tune of around Rs. 18,000. It made profits under Emirates management until 2008, and that year it recorded a profit of Rs. 4.4 billion. When a former president and its entourage were refused seats on an already fully booked flight, the government decided to send Emirates home, and appoint a person with no knowledge on aviation management as Chairman. From 2008, SriLankan Airlines has been making losses, and the accumulated losses as revealed at a COPE meeting was a staggering Rs. 372,015 million. It also revealed that a senior management official has been paid a monthly salary Rs. 3.1 million, and several others earning salaries of over Rs. 1 million, and no wonder why the daily loss for the airline is Rs. 84 million, and our Treasury has been pumping money to this loss-making venture ever since this was acquired by the Sri Lankan Government. In 2022 alone, till April it suffered a colossal loss of Rs. 248 billion. Excessive politicisation and wasteful expenditure are often cited as the reasons for such losses, but our leaders are not doing anything to control such excesses. This is unpardonable.
If we take the case of the CEB, the first quarter of 2022 reported a loss of Rs. 65 billion, and the losses incurred during the period 2010-2019 are over 240 billion rupees. CEB has been taking refuge in politically linked unions to hide their inefficiencies and waste, and blocked 4000 MW of non-conventional renewable energy (NCRE) including mini-hydro, wind, solar and biomass. Had these been given approval, 800 MW of NCRE could have offset 400 million litres of diesel fuel annually, and the net financial savings to CEB will be Rs. 37 billion. The losses incurred by the CEB are primarily due to the use of expensive sources to produce energy, such as diesel and emergency power purchases at exorbitant rates from the private sector. CEB management is keen to purchase emergency power for obvious reasons. A senior CEB official is under scrutiny for emptying the Randenigala reservoir to reduce hydropower generation – so that they can purchase emergency power from their friends who own private power plants.
The other reason why CEB is incurring losses is due to excessive staff and the exorbitant salaries paid to its employees. The Board of Management of the CEB is a law unto themselves with scant disregard for Cabinet decisions and finance ministry circulars. They are a government within a government, and carry on actions contravening government directives. It is alleged that some senior engineers at CEB receive a take-home pay of around Rs. 900,000 a month with all kinds of allowances such as travel, site inspection, outdoor duties, overtime, fuel advance, telephone bill reimbursement, bonus and gratuities. Metre readers are said to get around Rs. 120,000 each a month including overtime, and drivers around 116,000 each. It is said that they get an allowance for reading the metre correctly too! These employees are entitled to EPF and ETF and their income tax is also fully paid for by the CEB. This is highly irregular, since a certain percentage of the salary has to be deducted from an employee for the EPF, while the Institution too contributes a larger share to this amount.
Most semi-government institutions such as universities deduct 10% of workers’ salaries for the EPF while contributing 15%. There is a Supreme Court decision against the payment of PAYE tax by the CEB to its employees. Until recently they have disregarded this court decision and paid the income tax of its employees. It is also amazing how an employee with a 20-year service, gets a pension paid by the CEB for a lifetime in spite of getting the EPF and ETF. Again, it is the lack of action by the ministers in charge of CEB and the Finance Ministry, which has allowed these illegal payments. High-handedness of trade unions, and an equally ineffective Board of Management, are responsible for such daylight robberies of public funds.
During a strike in 2012, engineers of the CEB were able to maintain power supplies with the help of manpower workers who were outsourced. However, all these manpower workers were absorbed into the permanent staff by the then President Maithripala Sirisena for political gain amidst fanfare, and all these workers join the unions and resort to trade union action now at the drop of a hat.
What is even more astonishing is that the CEB, which is one of the biggest loss-making institutions, pays annual bonuses and grant salary increases owing to a collective agreement with the unions of 25% every three years. Now, these unions are demanding a 36% salary increase, and they are so strong that the government meekly surrenders to their demands, creating severe salary anomalies with other similar workers in the government.
The CPC is another loss-making institution, where the daily loss is Rs. 551 million, but it also pays three annual bonuses, at a cost of Rs. 1,500 million, to its 5,200 employees; and the annual overtime payments alone stand at around Rs. 300 million. At the same time CPC owes about Rs. 750 billion to banks. Bonuses are meant to reward achieving high level targets and not for day-to-day functions.
It remains to be seen whether Minister Wijesekera can bring about a radical change to correct these gross anomalies. Earlier too, former Minister Patali Champika tried to rectify some of the illegal procedures, but he was transferred due to objections to a controversial coal tender. He blamed the coal mafia with links to the government. Unless these problems are sorted out without relenting to the unreasonable demands of unions, such colossal losses will continue to be a burden to the general public. What is needed is a complete privatisation of these loss-making entities. Trade unions are bound to object to privatisation because they cannot earn such high salaries and allowances. The general public of this country should support moves aiming to reduce losses if the country is to stand on its feet, instead of going around with the begging bowl.
Retired academic
by Chula Goonasekera
Rev. Dato’ (Sir) Sumana Siri
We, the citizens of Sri Lanka, have already witnessed significant reforms in governance under AKD’s leadership. This personally led process must continue consistently, free of bias, and within the framework of the law to ensure sustainable governance by the State, not the individual. Such efforts will help minimise the waste of public funds and lay a strong foundation for the nation’s development in the long term. We often look to Lee Kuan Yew (LKY), Singapore’s founding father, as an example of transformative leadership. He united three diverse ethnic groups—Chinese, Malay, and Indian—under the principle of honesty. Today, Sri Lanka faces profound challenges from past political corruption, economic instability, and social divisions. LKY’s leadership serves as a reminder that integrity, accountability, and a commitment to the greater good can redefine a nation’s destiny, regardless of its size or resources, similar to Singapore.
When Singapore gained independence in 1965, it was a small, resource-scarce nation facing political unrest and ethnic divisions. Yet, within one generation, it became a global financial hub and a first-world country. LKY’s leadership was pivotal, centred on three core principles: meritocracy, integrity, and pragmatic governance. He prioritised national security, social cohesion, and economic growth. His efforts to foster ethnic harmony included implementing bilingual education policies and enforcing anti-discrimination laws. Similarly, AKD should consider enacting legislation to prevent racially motivated demands, i.e. anti-discrimination laws, to safeguard the government from evil, selfish minds trying to destabilise the government’s commitment to equality. Such legislation will stop this burden falling on the leadership case by case.
LKY’s policies, though sometimes harsh, were rooted in practicality and long-term thinking. The Internal Security Act ensured peace and stability during critical years. Likewise, his investments in education and infrastructure established a foundation for sustained growth. His focus on political stability, a robust legal system, and zero tolerance for corruption inspired investor confidence. Singapore’s Corrupt Practices Investigation Bureau (CPIB) was empowered to tackle corruption at all levels. Sri Lanka must adopt a similar mindset to revitalise the Bribery and Corruption Commission, moving away from populism and short-term fixes in favour of strategic, future-oriented policies.
AKD’s primary election theme was anti-corruption, reflecting a key aspect of LKY’s leadership. His unwavering stance against corruption defined LKY’s pragmatic governance. He held public officials to the highest accountability standards, ensuring that anyone guilty of corruption faced severe consequences, including dismissal, public exposure, and prosecution. By rooting out corruption, Singapore built domestic credibility and attracted global investment. We in Sri Lanka need such legislation at the earliest opportunity to deal with various kinds of corruption that are appearing again and involving many public officials.
In Sri Lanka, corruption has long undermined public trust in institutions and stifled economic growth. With overwhelming public support, AKD is well-positioned to deliver on his promise to combat corruption. However, this needs to be done early before the government gets entangled with controversy over its own ‘tiered’ standards. Through comprehensive legislative measures, Sri Lanka can rebuild its institutions, restore public confidence, and chart a course toward sustainable development.
LKY was considered “cruel” by some because he treated all races equally without favouring any. AKD shares a similar stance. One of the hallmarks of LKY’s leadership was his unwavering commitment to meritocracy. This created a culture of excellence where the best and brightest minds were responsible for leading the country. In Singapore, recruitment and promotions across all sectors were strictly based on merit—capabilities, skill sets, and abilities—not on connections, nepotism, racial considerations, or personal favouritism. Although challenging to implement, meritocracy can be implemented with the open advertisement of qualifications needed, a transparent appointment process, strict job plans with annual reviews linked to customer feedback, and personal development strategies that are considered a necessity to continue. This approach will foster a culture of excellence and innovation, like Singapore, ensuring that the most capable individuals propel the country forward.
Sri Lanka must break free from the grip of favouritism and focus on nurturing talent through equal opportunities for all citizens, regardless of ethnicity or social background. Early signs of this approach are visible under AKD’s leadership. LKY understood that for a nation to progress, its institutions must be led by those who are truly capable, irrespective of their background. By adopting meritocracy, Sri Lanka could break the cycle of favouritism, nepotism, and ethnic division that has often hindered its development. Establishing a system where opportunities are based on ability and performance could unlock the full potential of Sri Lanka’s people, fostering a culture of innovation, growth, and national unity.
After gaining independence in 1965, during Singapore’s formative years, LKY focused on eliminating corruption, gang activities, and communist threats to create a peaceful and secure nation. The Internal Security Act (ISA) granted his administration discretionary powers to arrest and detain individuals without trial, when necessary, to prevent actions deemed harmful to Singapore’s security, public order, or essential services.
The ISA allowed preventive detention, suppression of subversion, and countering of organised violence against persons and property. Sri Lanka urgently needs a similar act to ensure that politicians and public officials comply with legally binding measures. With its Parliament still in its formative stages, we hope Sri Lanka will soon establish a comparable Internal Security Act. By eliminating corruption at all levels, as LKY did, Sri Lanka can inspire public trust and attract international investors who view stability and a corruption-free environment as prerequisites for investment. This approach could transform Sri Lanka into a manufacturing, business, and financial hub for the Indian Ocean region.
Under LKY’s leadership—often described as strict—Singapore transformed from a third-world nation into a first-world country. Sri Lanka has the potential to achieve even more, given its abundant natural resources, strategic location, and educated population that can be developed into a skilled workforce. With its prime position in the Indian Ocean, Sri Lanka could become a regional economic powerhouse—provided it fosters a stable and investor-friendly environment. Like Singapore, Sri Lanka should adhere to a non-aligned foreign policy to emerge as a crucial node in global trade and finance, maintaining friendly ties with Eastern, Western, and Asian powers while leveraging its strategic location.
While some label LKY’s methods as “cruel,” his leadership was not about oppression but discipline and fairness. Whether these policies were “cruel” or benevolent is debatable, but their results speak for themselves. He treated all races equally, fostering harmony in a diverse society by ensuring everyone felt they had a stake in Singapore’s future. Moreover, LKY’s economic policies were marked by simplicity and foresight. Low personal income taxes, the absence of capital gains and inheritance taxes, and a business-friendly environment encouraged reinvestment and entrepreneurship. By positioning Singapore as a global trade and financial hub, LKY ensured its economic resilience. Sri Lanka, too, must prioritise national unity. Divisive politics and ethnic biases must be curtailed to build a shared vision of prosperity and peace, as AKD is striving to do.
LKY’s leadership was built on three core tenets relevant to Sri Lanka today: meritocracy, integrity, and pragmatism. Encouragingly, AKD appears to be moving in a similar direction. One of LKY’s greatest strengths was his pragmatic, long-term approach to governance. He maintained tight control over domestic finances, preventing the internationalisation of the Singapore dollar and limiting the operations of foreign banks. This created an environment that attracted international firms eager to establish themselves in Singapore. Sound financial policies, a corruption-free environment, and a focus on technological advancement helped Singapore become a hub for multinational companies like General Electric. State-owned enterprises like Temasek Holdings and Singapore Airlines were run with business efficiency, often outperforming private sector competitors. Sri Lanka could adopt a similar model to enhance the performance of its state-owned enterprises and boost economic growth.
Singapore adopted a two-pronged financial strategy: becoming an international financial hub while ensuring its financial sector supported key domestic industries like manufacturing and shipping. Additionally, integrating foreign and local talent fuelled decades of sustained economic growth. LKY’s focus on economic development, making Singapore an attractive investment destination, and drawing world-class manpower offer valuable lessons for Sri Lanka.
To replicate such success, Sri Lanka must invest in state-of-the-art infrastructure, establish excellent air and sea linkages, and maintain a low and transparent tax regime.
Clean and efficient bureaucracy, a strong regulatory and legal framework, and a neutral diplomatic policy—balancing relations with global powers like the US and China—are critical. Developing clean, green cities powered by sustainable energy will also be key to achieving remarkable economic success akin to Singapore’s.
Reference the above-captioned letter in The Island of 16 Decembe, its writer, Philosophiae Doctor (PD), he is incorrect in his analysis of a Ph. D degree as a title. As Dr. Upul Wijewardena has said, only a Ph. D holder who can use the title ‘Dr’. However, the tradition is for those who have a medical degree to be called Dr. PD has written about the history of universities and quoted chapter and verse about the origin of degrees. We are now in the twenty first century and most universities have their own system of awarding Ph. Ds. For instance, British universities award Ph. Ds based on 100 per cent research whereas in American universities Ph. D degrees are awarded on the basis of 50 per cent research and 50 per cent course work. The research degree is given more weight at interviews.
PD has also said that a Masters’ Degree (MA) is essential to teach in a university. Many universities including universities in Sri Lanka offer Assistant Lecturer positions to those who have first degrees with classes. Some time ago, the Dean of the faculty of Arts at Otago university, New Zealand had only a B.A. He was appointed Professor because of his publications. In American universities lecturers with a Ph. D are addressed as Assistant Professor. Then a Professor after retirement has to get permission from his university to use the title as Professor (Emeritus). There is no such requirement for a person with a Ph. D to use the title Dr. Modern universities do not follow procedures that were adopted in old Europe mentioned by PD.
Dr. P. A. Samaraweera
Ceylon Electricity Board (CEB) has apparently become a law unto itself; it is increasing the salaries and other perks for senior staff at their will. There are 26,131 employees of CEB and its monthly salary bill is around Rs. 3,000 million, out of which 600 million goes for the salaries of engineers. A special grade engineer’s monthly take-home salary is reportedly about Rs. 919, 432 while an E1 grade engineer draws around Rs. 694,240 a month. These include a vehicle allowance of Rs. 250,000 and other benefits. The CEB has thought it is fit to regularly increase the salaries at the insistence of the powerful engineers’ union every three years without getting the approval of the cabinet or the public accounts committee of the finance ministry.
Out of the total number of employees at least 50% are political appointees recrutied by successive ministers of the power and energy ministry. Even the salary of a meter reader is Rs. 54,420 and it comes to around Rs. 125,000 a month. This is far higher and about 100% more than a graduate teacher. With such an excessive workforce earning exorbitant salaries no wonder that the CEB cannot reduce the electricity bills of consumers. There are 6.29 employees for every megawatt (MW) of power generated by CEB while the Malaysian Electricity Board generates six times more power and has only 1.15 employees for one MW of power generated!
PAYE tax should be borne by the employee and it is against the Inland Revenue Act for an institution to pay the PAYE tax due from its employees. It has been revealed before the COPE (the Committee on Public Enterprises) that Rs. 5 billion has been paid by the CEB as PAYE tax to its employees during the period 2010-2019 in contravention of a Cabinet decision on 13 December 2007. This, the CEB has been doing at the expense of consumers, who have to pay higher tariffs.
Verite Research has revealed that Sri Lankan households pay 2.5 to 3 times more for electricity than the average cost to their counterparts in South Asian countries. Our rates are much higher than in Bangladesh and Afghanistan. For instance, a consumer using 300 units of electricity has to pay an electricity bill of Rs. 21,860 while the average equivalent rate in South Asia is only Rs. 7,340. This shows how our professional engineers have managed the CEB power generation so inefficiently over the years.
The reason for this inefficiency is due to the neglect of renewable energies in Sri Lanka. The CEB engineers have always advocated for more and more coal-powered plants. They have deliberately blocked renewable energy projects for obvious reasons. The Supreme Court has found the CEB guilty of blocking a proposal by Vavuniya Solar Power Private limited for a solar energy plant and ordered it to pay Rs 01 million rupees as damages. This, too, would have been paid from CEB funds and those who took such corrupt decisions have got off scot-free. The technical officers of CEB allege that CEB management has purchased power from private power plants despite an increase in hydro power generation. In case hydropower is insufficient to meet the demand another idling turbine at Norochcholai could have been put into operation. There are serious allegations that CEB engineers are intimately connected to such private power plants and even own all or part of them. The new government should appoint an independent commission to investigate allegations against the CEB.
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