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LNG Scam is a Hangman’s Noose

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by Kumar David

There has been a news blackout on the liquid natural gas (LNG) deal that Basil Rajapaksa’s Ministry has entered into with the American company New Fortress Energy (NFE). The Sunday Island Editorial last week 26 September expressed concern about lack of transparency of facts and secrecy in negotiations. The deal is a response to an “unsolicited bid” is the official line but how much soliciting and wheeler-dealing went on no one will never know. The negotiations though commenced when Prime Minister Mahinda Rajapaksa was Finance Minister. I am not picking on the deal because it’s an American company, not at all. I am expressing disquiet about negotiating conduct, technical issues and potential long-term implications.

Before pitching into the topic I will define that ugly acronym FSRu&P (Floating Storage and Regasification unit & Pipelines). Natural gas globally is the fossil fuel of choice to replace King Coal. There is much disputation about whether one or two final coal-fired power stations will be built in Lanka in the next 15 years, but natural gas will be the eventual successor. Once released from the bowels of the earth, gas can be piped across continents. When chilled to very low temperatures it liquefies, ready for confinement in strong containers that can be brought into your kitchen or transported thousands of miles in huge tankers.

When a tanker arrives the FSRu&P game starts. Tankers can dock at a harbour designed for the purpose if you have one; if not a floating terminal is launched about five miles out at sea where LNG is stored. It can when needed be regasified – as in your kitchen gas cooker – and sent ashore via undersea pipelines. That’s the FSRU&P storyline and one of these is coming on the west coast, north of Colombo. The gas can be used in power-stations, industries and homes.

The plan is to convert the currently coal-fired 310MW West Coast Power Station (WCPS), Yugadhanavi, to gas, and to make the proposed Sobadhanavi 350MW station also gas fired. The gas-fired capacity will then be 660MW, but this is only the start. The CEB and the CPC (Petroleum Corporation) have reached an advanced stage in preparation and issue of documents calling for international bids for an FRSU and Pipelines, but not yet for the supply of LNG. Then suddenly and out of the blue the process was scuttled – it was infected by a bacillus. The Finance Ministry signed a Framework Agreement to proceed with the unsolicited or privately canvassed bid from NFE. A so-called Framework Agreement was inked in September in secrecy.

There are three harmful aspects. The first is unnecessary secrecy and unseemly sabotage of ongoing tender procedures. The second is a likely financial rip-off that may raise electricity prices and the third is a trap that will endanger Lanka’s long-term energy security and put the country’s neck into a hangman’s noose.

First things first. It is a violation of good practice to make an award to an unsolicited bid when tenders have been called; it rings alarm bells whether someone took 10%. International Competitive Tenders were called by GoSL for an FSRu&P and bid documents were issued but the Finance Ministry inked a secret deal to sell 40% of WCPS to NFE in the midst of this. The deal was reported in New Fortress’s website but not in local media. When Sirasa TV asked Power & Energy Minister Dulles Alahapperuma, he denied any agreement. Something is fishy.

https://www.newfortressenergy.com/stories/New-Fortress-Energy-finalizes-contract-with-government-of-Sri-Lanka

Basil’s defenders and the CEB Engineers Union have locked horns. A Sinhala video by CEBEU President Saumya Kumaravadu provides an excellent summary: https://www.youtube.com/watch?v=VjWQ9tvIz1k

An English statement is at:

https://economynext.com/sri-lankas-could-lose-billions-through-unsolicited-new-fortress-energy-deal-cebeu-86396/

The second shock is that in terms of the Framework Agreement the government has entered into a Take-or- Pay (ToP) deal for LNG. ToP is a bad idea if the amount contracted is large or if the donkeys writing the contracts have little understanding of electricity generation or the complexities of manoeuvring in global LNG markets. Under the tender care of these goofs Lanka will be played for a sucker – recall the oil hedging fiasco a few years ago. Suppose a petrol company offers you a fleet of taxis free (the BAIT), but on condition you buy your petrol exclusively from it for five years (the TRAP). Suppose the value of the fleet is Rs 25 million but the cost of the petrol to be consumed in the five year period is Rs 500 million. Whether you need it or not you must buy an agreed quantum from the petrol company. The BAIT in LNG story is that NFE will buy 40% of WCPS for $250 million (investment) and the TRAP is compulsory purchase of LNG for both power stations and any others subsequently taking gas from this facility.

Pricing could also be a problem. LNG prices are volatile and swings have become mercurial in the aftermath of recent supply chain disruptions. Spot-prices vary widely between Henry Hub, Japan-Korea and the Netherlands TTF spot-markets. Bangladesh bought a cargo for delivery last month at $29.9 per million-Btu, the highest the country has paid for super-chilled fuel. The average LNG price for November 2021 delivery to Northeast Asia is $27 per million-Btu. A wise man surely will keep purchasing manoeuvrability in his own hands.

Say the CEB incurs fuel supply expenditure of $500 million per annum – I am pricing natural gas at $14.5 per million-Btu; see Technical Note below for quantity estimate. If NFE makes, say 10% to 15% on the sale it will make a profit of $50 million to $75 million per year (example only). You might say “What’s the problem we have to buy LNG from somewhere?” But if in any year (lots of rainfall say) the CEB does not need that much, too bad; it will have to Take-or-Pay even if it does not use it, like alimony to an estranged wife. There will also be a fixed charge spread over the period by means of which NFE will recover its entire investment costs.

Finally the hangman’s noose. Sri Lanka has been trapped; it is infeasible to build a second FRSU and pipelines in a relatively small country since the investment is large. Once Lanka builds one, that’s it for a decade or more. We will neither need, nor be able to afford a second for a long time. India has only six terminals in operation. In the meantime the CEB long-term generation expansion plan envisages the addition of about 3GW (3000 MW) of gas-fired generation in the period from now to 2037. LNG will become the bedrock of electricity production in the period to 2040, displacing coal. The implication of the deal with NFE is that country will be in the pocket of a foreign company for energy security for the foreseeable future. The government is doing more to jeopardise natural security than any youthful, slogan-intoning, racist or religious hothead!

Renewable energy will and should be encouraged though it’s not going to provide 70% of primary energy for electricity by 2030 except in Aesop’s Fables. The cynic will read a dangerous trick written into a shady contract. Remember how in the 1990s corrupt presidents, politicos and businessmen made a killing from oil-fired private power-plant construction and operation while the CEB, grossly unfairly, carried the flak? Something reminiscent is possible if corrupt politicos and greedy renewable energy (RE) investors act in consort. Today RE investors demand that they be paid at a rate corresponding to avoided-cost. Since one unit of RE electricity can displace one unit of fossil-fuel electricity they demand to be paid the avoided cost, which is the cost of the most expensive unit then on grid. But what if you play the following game: First jack up the price of fossil energy, then enact the drama of the brave saviour lopping off a bit at the top? It could be the game of unscrupulous politicians and RE investors to jack up the price of ‘going-to-be-avoided’ electricity first and after that play the drama of avoided-cost. I don’t need to explain; you can work out what the cynic is saying. And let’s not forget that corrupt politicos and market players impede, not assist, ecological goodness.

Technical Note

If 0.66 GW (660MW) were to run flat out, non-stop, every hour of the year the electrical energy output will be 0.66x24x365 = 5,782 GWh. Since plant cannot run without maintenance and since full output is not maintained all the time the actual plant-factor is, say, 70%. The output is then reduced to 5782×0.7 = 4,047 GWh. If the efficiency of generation is 40%, then the primary-source energy need at the input is 4047/0.4 = 10,118 GWh-equivalent of LNG energy. Now 1 GWh is the same as 3412×106 Btu (British thermal unit). Therefore the input LNG energy that is needed for both power-stations is 10,118 x 3412×106.which works out at 34.5 million-million-Btu per year, or dividing by 365 we get an average of 94,520 million-Btu per day (44,420 for Yugadhanavi and 50,100 for Sobadhanavi). Someone younger than age-80 kindly check these sums.

However the New Fortress Website declares: “New Fortress will initially provide the equivalent of an estimated 1.2 million gallons of LNG (~35,000 MMBtu) per day to GOSL, with the expectation of significant growth as new power-plant become operational.” There seems to be a cockup in NFE’s numbers, or maybe it’s meant to obfuscate Ministers and Administrators.

https://economynext.com/us-based-new-fortress-energy-says-strikes-lng-supply-deal-with-sri-lanka-86367/

[MM stands for Metric-Million. The initial “Metric” is redundant and will be thrown out of the window in self-respecting scientific discourse. So MM simply stands for million].



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Features

Rebuilding the country requires consultation

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A positive feature of the government that is emerging is its responsiveness to public opinion. The manner in which it has been responding to the furore over the Grade 6 English Reader, in which a weblink to a gay dating site was inserted, has been constructive. Government leaders have taken pains to explain the mishap and reassure everyone concerned that it was not meant to be there and would be removed. They have been meeting religious prelates, educationists and community leaders. In a context where public trust in institutions has been badly eroded over many years, such responsiveness matters. It signals that the government sees itself as accountable to society, including to parents, teachers, and those concerned about the values transmitted through the school system.

This incident also appears to have strengthened unity within the government. The attempt by some opposition politicians and gender misogynists to pin responsibility for this lapse on Prime Minister Dr Harini Amarasuriya, who is also the Minister of Education, has prompted other senior members of the government to come to her defence. This is contrary to speculation that the powerful JVP component of the government is unhappy with the prime minister. More importantly, it demonstrates an understanding within the government that individual ministers should not be scapegoated for systemic shortcomings. Effective governance depends on collective responsibility and solidarity within the leadership, especially during moments of public controversy.

The continuing important role of the prime minister in the government is evident in her meetings with international dignitaries and also in addressing the general public. Last week she chaired the inaugural meeting of the Presidential Task Force to Rebuild Sri Lanka in the aftermath of Cyclone Ditwah. The composition of the task force once again reflects the responsiveness of the government to public opinion. Unlike previous mechanisms set up by governments, which were either all male or without ethnic minority representation, this one includes both, and also includes civil society representation. Decision-making bodies in which there is diversity are more likely to command public legitimacy.

Task Force

The Presidential Task Force to Rebuild Sri Lanka overlooks eight committees to manage different aspects of the recovery, each headed by a sector minister. These committees will focus on Needs Assessment, Restoration of Public Infrastructure, Housing, Local Economies and Livelihoods, Social Infrastructure, Finance and Funding, Data and Information Systems, and Public Communication. This structure appears comprehensive and well designed. However, experience from post-disaster reconstruction in countries such as Indonesia and Sri Lanka after the 2004 tsunami suggests that institutional design alone does not guarantee success. What matters equally is how far these committees engage with those on the ground and remain open to feedback that may complicate, slow down, or even challenge initial plans.

An option that the task force might wish to consider is to develop a linkage with civil society groups with expertise in the areas that the task force is expected to work. The CSO Collective for Emergency Relief has set up several committees that could be linked to the committees supervised by the task force. Such linkages would not weaken the government’s authority but strengthen it by grounding policy in lived realities. Recent findings emphasise the idea of “co-production”, where state and society jointly shape solutions in which sustainable outcomes often emerge when communities are treated not as passive beneficiaries but as partners in problem-solving.

Cyclone Ditwah destroyed more than physical infrastructure. It also destroyed communities. Some were swallowed by landslides and floods, while many others will need to be moved from their homes as they live in areas vulnerable to future disasters. The trauma of displacement is not merely material but social and psychological. Moving communities to new locations requires careful planning. It is not simply a matter of providing people with houses. They need to be relocated to locations and in a manner that permits communities to live together and to have livelihoods. This will require consultation with those who are displaced. Post-disaster evaluations have acknowledged that relocation schemes imposed without community consent often fail, leading to abandonment of new settlements or the emergence of new forms of marginalisation. Even today, abandoned tsunami housing is to be seen in various places that were affected by the 2004 tsunami.

Malaiyaha Tamils

The large-scale reconstruction that needs to take place in parts of the country most severely affected by Cyclone Ditwah also brings an opportunity to deal with the special problems of the Malaiyaha Tamil population. These are people of recent Indian origin who were unjustly treated at the time of Independence and denied rights of citizenship such as land ownership and the vote. This has been a festering problem and a blot on the conscience of the country. The need to resettle people living in those parts of the hill country which are vulnerable to landslides is an opportunity to do justice by the Malaiyaha Tamil community. Technocratic solutions such as high-rise apartments or English-style townhouses that have or are being contemplated may be cost-effective, but may also be culturally inappropriate and socially disruptive. The task is not simply to build houses but to rebuild communities.

The resettlement of people who have lost their homes and communities requires consultation with them. In the same manner, the education reform programme, of which the textbook controversy is only a small part, too needs to be discussed with concerned stakeholders including school teachers and university faculty. Opening up for discussion does not mean giving up one’s own position or values. Rather, it means recognising that better solutions emerge when different perspectives are heard and negotiated. Consultation takes time and can be frustrating, particularly in contexts of crisis where pressure for quick results is intense. However, solutions developed with stakeholder participation are more resilient and less costly in the long run.

Rebuilding after Cyclone Ditwah, addressing historical injustices faced by the Malaiyaha Tamil community, advancing education reform, changing the electoral system to hold provincial elections without further delay and other challenges facing the government, including national reconciliation, all require dialogue across differences and patience with disagreement. Opening up for discussion is not to give up on one’s own position or values, but to listen, to learn, and to arrive at solutions that have wider acceptance. Consultation needs to be treated as an investment in sustainability and legitimacy and not as an obstacle to rapid decisionmaking. Addressing the problems together, especially engagement with affected parties and those who work with them, offers the best chance of rebuilding not only physical infrastructure but also trust between the government and people in the year ahead.

 

by Jehan Perera

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PSTA: Terrorism without terror continues

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When the government appointed a committee, led by Rienzie Arsekularatne, Senior President’s Counsel, to draft a new law to replace the Prevention of Terrorism Act (PTA), as promised by the ruling NPP, the writer, in an article published in this journal in July 2025, expressed optimism that, given Arsekularatne’s experience in criminal justice, he would be able to address issues from the perspectives of the State, criminal justice, human rights, suspects, accused, activists, and victims. The draft Protection of the State from Terrorism Act (PSTA), produced by the Committee, has been sharply criticised by individuals and organisations who expected a better outcome that aligns with modern criminal justice and human rights principles.

This article is limited to a discussion of the definition of terrorism. As the writer explained previously, the dangers of an overly broad definition go beyond conviction and increased punishment. Special laws on terrorism allow deviations from standard laws in areas such as preventive detention, arrest, administrative detention, restrictions on judicial decisions regarding bail, lengthy pre-trial detention, the use of confessions, superadded punishments, such as confiscation of property and cancellation of professional licences, banning organisations, and restrictions on publications, among others. The misuse of such laws is not uncommon. Drastic legislation, such as the PTA and emergency regulations, although intended to be used to curb intense violence and deal with emergencies, has been exploited to suppress political opposition.

 

International Standards

The writer’s basic premise is that, for an act to come within the definition of terrorism, it must either involve “terror” or a “state of intense or overwhelming fear” or be committed to achieve an objective of an individual or organisation that uses “terror” or a “state of intense or overwhelming fear” to realise its aims. The UN General Assembly has accepted that the threshold for a possible general offence of terrorism is the provocation of “a state of terror” (Resolution 60/43). The Parliamentary Assembly of the Council of Europe has taken a similar view, using the phrase “to create a climate of terror.”

In his 2023 report on the implementation of the UN Global Counter-Terrorism Strategy, the Secretary-General warned that vague and overly broad definitions of terrorism in domestic law, often lacking adequate safeguards, violate the principle of legality under international human rights law. He noted that such laws lead to heavy-handed, ineffective, and counterproductive counter-terrorism practices and are frequently misused to target civil society actors and human rights defenders by labelling them as terrorists to obstruct their work.

The United Nations Office on Drugs and Crime (UNODC) has stressed in its Handbook on Criminal Justice Responses to Terrorism that definitions of terrorist acts must use precise and unambiguous language, narrowly define punishable conduct and clearly distinguish it from non-punishable behaviour or offences subject to other penalties. The handbook was developed over several months by a team of international experts, including the writer, and was finalised at a workshop in Vienna.

 

Anti-Terrorism Bill, 2023

A five-member Bench of the Supreme Court that examined the Anti-Terrorism Bill, 2023, agreed with the petitioners that the definition of terrorism in the Bill was too broad and infringed Article 12(1) of the Constitution, and recommended that an exemption (“carve out”) similar to that used in New Zealand under which “the fact that a person engages in any protest, advocacy, or dissent, or engages in any strike, lockout, or other industrial action, is not, by itself, a sufficient basis for inferring that the person” committed the wrongful acts that would otherwise constitute terrorism.

While recognising the Court’s finding that the definition was too broad, the writer argued, in his previous article, that the political, administrative, and law enforcement cultures of the country concerned are crucial factors to consider. Countries such as New Zealand are well ahead of developing nations, where the risk of misuse is higher, and, therefore, definitions should be narrower, with broader and more precise exemptions. How such a “carve out” would play out in practice is uncertain.

In the Supreme Court, it was submitted that for an act to constitute an offence, under a special law on terrorism, there must be terror unleashed in the commission of the act, or it must be carried out in pursuance of the object of an organisation that uses terror to achieve its objectives. In general, only acts that aim at creating “terror” or a “state of intense or overwhelming fear” should come under the definition of terrorism. There can be terrorism-related acts without violence, for example, when a member of an extremist organisation remotely sabotages an electronic, automated or computerised system in pursuance of the organisation’s goal. But when the same act is committed by, say, a whizz-kid without such a connection, that would be illegal and should be punished, but not under a special law on terrorism. In its determination of the Bill, the Court did not address this submission.

 

PSTA Proposal

Proposed section 3(1) of the PSTA reads:

Any person who, intentionally or knowingly, commits any act which causes a consequence specified in subsection (2), for the purpose of-

(a) provoking a state of terror;

(b) intimidating the public or any section of the public;

(c) compelling the Government of Sri Lanka, or any other Government, or an international organisation, to do or to abstain from doing any act; or

(d) propagating war, or violating territorial integrity or infringing the sovereignty of Sri Lanka or any other sovereign country, commits the offence of terrorism.

The consequences listed in sub-section (2) include: death; hurt; hostage-taking; abduction or kidnapping; serious damage to any place of public use, any public property, any public or private transportation system or any infrastructure facility or environment; robbery, extortion or theft of public or private property; serious risk to the health and safety of the public or a section of the public; serious obstruction or damage to, or interference with, any electronic or automated or computerised system or network or cyber environment of domains assigned to, or websites registered with such domains assigned to Sri Lanka; destruction of, or serious damage to, religious or cultural property; serious obstruction or damage to, or interference with any electronic, analogue, digital or other wire-linked or wireless transmission system, including signal transmission and any other frequency-based transmission system; without lawful authority, importing, exporting, manufacturing, collecting, obtaining, supplying, trafficking, possessing or using firearms, offensive weapons, ammunition, explosives, articles or things used in the manufacture of explosives or combustible or corrosive substances and biological, chemical, electric, electronic or nuclear weapons, other nuclear explosive devices, nuclear material, radioactive substances, or radiation-emitting devices.

Under section 3(5), “any person who commits an act which constitutes an offence under the nine international treaties on terrorism, ratified by Sri Lanka, also commits the offence of terrorism.” No one would contest that.

The New Zealand “carve-out” is found in sub-section (4): “The fact that a person engages in any protest, advocacy or dissent or engages in any strike, lockout or other industrial action, is not by itself a sufficient basis for inferring that such person (a) commits or attempts, abets, conspires, or prepares to commit the act with the intention or knowledge specified in subsection (1); or (b) is intending to cause or knowingly causes an outcome specified in subsection (2).”

While the Arsekularatne Committee has proposed, including the New Zealand “carve out”, it has ignored a crucial qualification in section 5(2) of that country’s Terrorism Suppression Act, that for an act to be considered a terrorist act, it must be carried out for one or more purposes that are or include advancing “an ideological, political, or religious cause”, with the intention of either intimidating a population or coercing or forcing a government or an international organisation to do or abstain from doing any act.

When the Committee was appointed, the Human Rights Commission of Sri Lanka opined that any new offence with respect to “terrorism” should contain a specific and narrow definition of terrorism, such as the following: “Any person who by the use of force or violence unlawfully targets the civilian population or a segment of the civilian population with the intent to spread fear among such population or segment thereof in furtherance of a political, ideological, or religious cause commits the offence of terrorism”.

The writer submits that, rather than bringing in the requirement of “a political, ideological, or religious cause”, it would be prudent to qualify proposed section 3(1) by the requirement that only acts that aim at creating “terror” or a “state of intense or overwhelming fear” or are carried out to achieve a goal of an individual or organisation that employs “terror” or a “state of intense or overwhelming fear” to attain its objectives should come under the definition of terrorism. Such a threshold is recognised internationally; no “carve out” is then needed, and the concerns of the Human Rights Commission would also be addressed.

 

by Dr. Jayampathy Wickramaratne
President’s Counsel

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Features

ROCK meets REGGAE 2026

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JAYASRI: From Vienna, Austria

We generally have in our midst the famous JAYASRI twins, Rohitha and Rohan, who are based in Austria but make it a point to entertain their fans in Sri Lanka on a regular basis.

Well, rock and reggae fans get ready for a major happening on 28th February (Oops, a special day where I’m concerned!) as the much-awaited ROCK meets REGGAE event booms into action at the Nelum Pokuna outdoor theatre.

It was seven years ago, in 2019, that the last ROCK meets REGGAE concert was held in Colombo, and then the Covid scene cropped up.

Chitral Somapala with BLACK MAJESTY

This year’s event will feature our rock star Chitral Somapala with the Australian Rock+Metal band BLACK MAJESTY, and the reggae twins Rohitha and Rohan Jayalath with the original JAYASRI – the full band, with seven members from Vienna, Austria.

According to Rohitha, the JAYASRI outfit is enthusiastically looking forward to entertaining music lovers here with their brand of music.

Their playlist for 28th February will consist of the songs they do at festivals in Europe, as well as originals, and also English and Sinhala hits, and selected covers.

Says Rohitha: “We have put up a great team, here in Sri Lanka, to give this event an international setting and maintain high standards, and this will be a great experience for our Sri Lankan music lovers … not only for Rock and Reggae fans. Yes, there will be some opening acts, and many surprises, as well.”

Rohitha, Chitral and Rohan: Big scene at ROCK meets REGGAE

Rohitha and Rohan also conveyed their love and festive blessings to everyone in Sri Lanka, stating “This Christmas was different as our country faced a catastrophic situation and, indeed, it’s a great time to help and share the real love of Jesus Christ by helping the poor, the needy and the homeless people. Let’s RISE UP as a great nation in 2026.”

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