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Observations on Electricity Bill

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Kanchana Wijesekera and Charitha Herath

Prof. Charitha Herath’s letter to Minister of Power and Energy Kanchana Wijesekera

Having reviewed the recently published Sri Lanka Electricity Bill in the gazette, I wish to express my appreciation for the improvements made compared to previous drafts. It’s evident that considerable effort has been invested in refining this version of the bill, making it notably more comprehensive and effective.

Nevertheless, I have identified some fundamental issues in this draft as well. I believe that the forthcoming discussions on this draft will provide an opportunity to address these concerns. Given that the drafting committee appears to have finalized their positions on the matter, I suggest that the proposed changes to the bill should be subjected to scrutiny first in the Supreme Court and subsequently in the Parliament. I anticipate that certain comments and issues regarding the bill will be raised during the legal submission to the courts and in the policymaking exercise within the Parliament.

In the meantime, I wanted to share some of the issues I’ve noticed at the forefront of the bill with you. I believe your consideration, as the incumbent Minister of Power and Energy, is crucial regarding these matters. Thus, I aim to bring these issues into the national discussion surrounding this significant legislative process.

Reforms are Needed

As many would concur, I share the belief that reforms in the Power and Energy sector are paramount. This necessity has been a focal point in policy-level discussions over the past two decades. The current regulations governing the Power Sector, established under the Ceylon Electricity Board Act No. 17 of 1969 and the Electricity Act No. 20 of 2009, have highlighted numerous lapses and legal complexities. These issues have resulted in delays and, in some cases, hindered the development within the sector.

In my view, the reform requirement mentioned above was not adequately addressed by the gazetted bill on 17/4/2024. Instead, it appears to provide excessive leeway for political actors to intervene in the regulatory mechanism of the Power sector. In essence, the proposed bill could exacerbate existing difficulties in certain areas and potentially delegate decision-making power entirely to political entities.

When examining international experiences, Power sector reforms typically unfold in three stages:

1. Unbundling and corporatization, often adopting a single buyer model.

2. Establishment of a wholesale market.

3. Establishment of a retail market.

These stages represent a structured approach to reform aimed at enhancing efficiency and promoting competition within the sector.

The overarching goal of reform experiences is to transform initially highly regulated existing markets, where the regulator decides on allowed Revenue and Returns of Investment (ROI) except Power Purchasing Agreements (PPAs). Consequently, reforms typically advance towards deregulation, wherein prices are determined through competition. This progression aims to foster greater market efficiency and encourage innovation within the sector.

The gazetted Bill, dated 18/04/2024, outlines an initial proposal for unbundling and corporatization, operating within a single buyer model. Under this framework, the National System Operator (NSO) is tasked with purchasing electricity from Generation Companies (Gencos) and subsequently selling it to Distribution Companies (Discos). Additionally, the bill aims to establish a wholesale market model, wherein prices are determined through competition between Gencos and Discos. This approach signifies a pivotal step towards fostering market efficiency and promoting competition within the sector.

Given that approximately 85% of the cost of electricity in Sri Lanka is attributed to generation, it is imperative to prioritize the establishment of competition within the generation sector. Therefore, in alignment with the overarching reform expectations, it is crucial to thoroughly examine the gazetted bill. This careful scrutiny will ensure that the proposed reforms effectively address the need for competition in the generation sector, ultimately contributing to greater efficiency and affordability in the electricity market.

Some Observations

·

In order to effectively implement new reforms in the Power sector, there are two crucial aspects to consider at a conceptual level. Firstly, it is imperative to consult and involve the main stakeholders of the industry in the proposed legal and institutional reforms. It is essential to ensure that their voices are heard and that they are actively engaged in the process, regardless of whether all stakeholders are in agreement with the Bill. Secondly, it is vital to ensure that the proposed reforms adequately address the core issues at hand. Unfortunately, it is my belief that the Government has failed to address both of these highly important issues.

· The proposed bill signifies a notable shift towards increased Politicization of the Electricity Sector. It is clear that key institutions to be established under this bill will be subject to substantial political influence. For example, following the bill’s passage, entities like the Long Term Generation Expansion Plan (LTGEP), National System Operator (NSO), Power Sector Reform Secretariat (PSRS), and certain functions of the Public Utilities Commission of Sri Lanka (PUCSL) will come under direct political control.

· The independence of successor companies and corporate good governance will no longer be maintained, as management control will now rest with the Minister in Charge.

· The Electricity Reform Act no 28 of 2002(that was not implemented due to political reasons)had proposed the establishment of an independent agency known as the “Monitoring and Advisory Committee” to spearhead the reform project. This committee was intended to have the authority to advise the Minister on the appointment and dismissal of directors of the proposed successor companies. However, the recently gazetted new Bill (17/04/2024) does not include this independent mechanism, giving the Minister the power to appoint the Board of Directors of the successor companies. Furthermore, the Minister’s consent is now required for the appointment of the CEO of NSO, as outlined in Section 10 (1)(b) & (c) of the new Bill.

· The “Long Term Power System Development Plan” is formulated by NSO and then forwarded to the Minister for assessment, followed by submission to the Cabinet for approval (as outlined in the recently gazetted Bill, Section 10 (7) (b)).

· Weakening of the Regulator, PUCSL

· The PUCSL no longer holds the power to approve the “Long Term Power System Development Plan” as it has been transferred to the cabinet of Ministers, as per the newly gazetted Bill, Section 10 (7) (b).

· According to Section 3(1)(a) of the Sri Lanka Electricity Act 2009, the PUCSL has the authority to provide advice to the government on matters within their jurisdiction. Nevertheless, the recently gazetted Bill has revoked these powers and transferred them to the National Electricity Advisory Council, which will be appointed by the Minister (new Bill, Section 3 (3)).

· According to Section 20 (2) of the Bill that was gazetted in December 2023, the Regulator is required to simply “inform the Minister” when granting licenses for generation, transmission, and distribution. However, in the recently gazetted Bill, the Regulator now needs to seek the “concurrence of the Minister” before granting licenses.

· The Bill’s Section 4 (10) includes provisions that enable the bypassing of competitive tendering through the provision of incentives to select technologies.

· Illogical Timeline – proposed approach to rescind the current Acts in 6 months without any preconditions, unveiling the Transfer Plan after the specified date, and more.

· As per the new Act, the functions currently executed by CEB will be transferred to the newly formed successor companies within a maximum duration of six months. Section 1 (2) of the Act ensures automatic appointment within this timeframe.

· The process of setting up new successor companies includes drafting detailed Memorandums and Articles of Associations, reallocating assets, liabilities, and human resources, preparing new balance sheets, creating financial models for tariff development, and finalizing the incorporation of other supporting functions. The unrealistic timeline proposed in this new Act is a significant issue.

·It’s not just the impracticality, the legality of forming companies according to a transfer plan which has not been approved and gazetted is also another serious issue.

·Electricity Pricing – guaranteeing fair returns, measures to establish private monopolies, minister directs policy guidelines to encourage specific projects/technologies, no safeguards for regional trade below domestic market prices, permitting current generation licensees to engage with distribution licensees before entering the Wholesale market.

· The increase in electricity prices is tied to the requirement for a justifiable return on investment as outlined in the recently published Bill, Section 29 (5) and (9)(a). This will cause prices to rise, with the Regulator being legally required to ensure that profits are kept at a reasonable level. In times of high inflation or interest rates, electricity prices may see an uptick. The assurance of a reasonable ROI can be accomplished through tariff policies, which are not legally mandated, giving the Regulator the ability to lower profits during tough economic times.

·Granting free access and allowing Captive Generation without comprehensive study as stipulated under Section 12 could lead to the general public being unable to access cost-effective power plants, ultimately causing prices to escalate.

· Section 30(4) permits distribution licensees to engage in power purchase agreements with generation licensees before the Wholesale Electricity Market is established. The competition between distribution licensees for access to inexpensive power plants will drive up prices.

· In the December 2023 gazetted Bill, there was a provision that prohibited the acquisition of combinations of licenses without any qualifications (Section 19 (6)). However, in the new Bill, this prohibition only applies if a company owns more than 50% of the ownership. For instance, if a company owns 49% of the National Network service provider, it can still acquire a Distribution license and shares of multiple other companies as long as its ownership remains below 50%. Additionally, with the introduction of Additional Transmission Licenses, it is possible for a few companies to have control over more than 50% of the National Grid.

· Private companies have been granted Additional Transmission Licences under the new Bill, as stated in Section 14 (2). Nevertheless, Section 10 does not grant the NSO the authority to utilize transmission lines owned by these Additional Transmission Licensees in order to ensure a consistent electricity supply.

· The new Act does not include any provisions to address monopolies, anti-competitive practices, collusion, abuses of dominant position, and merger situations that could impact competition in the Electricity Industry. Rather than enacting specific laws to combat these issues, Section 28 grants the Minister the authority to issue policy guidelines.

· Additionally, as per Section 10(13)(b), it is stipulated that the terms of Electricity trading with foreign nations must receive approval from the Cabinet of Ministers. Given that this trading has a direct impact on the sovereignty of the nation, these terms should be ratified by Parliament, especially for fundamental conditions.

· The exportation of low-cost renewable energy to other countries may result in the deprivation of citizens from accessing affordable electricity. Regional trading lacks protection against prices below the local market costs.

As mentioned earlier, stakeholders and policymakers will have limited avenues for correcting the draft bill once it has been gazetted and tabled in parliament. One option is to seek determinations from the Supreme Court, while the other is to propose amendments during the Committee Stage of the parliamentary debate. However, given the current government’s approach to passing acts in parliament, there are doubts about the feasibility of making amendments through the parliamentary process. The considerable majority power of SLPP MPs is likely to heavily influence and potentially override discussions on the issue within parliament.

I urge the Honourable Minister to carefully consider the observations outlined above and take necessary steps to amend the bill accordingly from the government side. Furthermore, I strongly encourage the Honourable Minister to convey these observations to your advisory council for their expert input and recommendations in rectifying the identified issues. This proactive approach will ensure that the bill is revised comprehensively to address concerns and uphold the principles of fairness and effectiveness in the reform process.

Lastly, I would like to reference an important excerpt from Sally Hunt’s influential book, “Making Competition Work” (2002), which directly relates to the subject under discussion here: “In the US energy industry, it is fairly clear that the major problems with the old structure lay in the generation part of the industry – the efficiency of the investment decision, its regulation, and the tendency for decisions on generation to become politicised” (p. 28).

What I have observed throughout the process of drafting the new Electricity Act is a concerning trend towards politicization of decisions regarding generation. I strongly urge you to take decisive steps to halt this trend and address the issues present in the bill accordingly. It is imperative that we uphold the integrity of the legislative process and prioritize the best interests of the public and the energy sector as a whole.

Charitha Herath (MP)



Opinion

Pope decries ‘major crisis’ of Trump’s mass deportation plans, rejects Vance’s theology

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Pope Francis

by Christopher White Vatican Correspondent

Pope Francis has written a sweeping letter to the U.S. bishops decrying the “major crisis” triggered by President Donald Trump’s mass deportation plans and explicitly rejecting Vice President JD Vance’s attempts to use Catholic theology to justify the administration’s immigration crackdown.

“The act of deporting people who in many cases have left their own land for reasons of extreme poverty, insecurity, exploitation, persecution or serious deterioration of the environment, damages the dignity of many men and women, and of entire families, and places them in a state of particular vulnerability and defencelessness,” reads the pope’s Feb. 11 letter.

Since taking office on Jan. 20, the Republican president has taken more than 20 executive actions aimed at overhauling the U.S. immigration system, including plans to ratchet up the deportations of undocumented migrants and halt the processing of asylum seekers.

The pope’s letter, published by the Vatican in both English and Spanish, offered his solidarity with U.S. bishops who are engaged in migration advocacy and draws a parallel between Jesus’ own experience as a migrant and the current geopolitical situation.

“Jesus Christ … did not live apart from the difficult experience of being expelled from his own land because of an imminent risk to his life, and from the experience of having to take refuge in a society and a culture foreign to his own,” writes Francis.

While the letter acknowledges the right of every country to enact necessary policies to defend itself and promote public safety, the pope said that all laws must be enacted “in the light of the dignity of the person and his or her fundamental rights, not vice versa.”

The pontiff also goes on to clearly reject efforts to characterise the migrants as criminals, a frequent rhetorical device used by Trump administration officials.

“The rightly formed conscience cannot fail to make a critical judgment and express its disagreement with any measure that tacitly or explicitly identifies the illegal status of some migrants with criminality,” the pope writes.

Soon after Trump took office, Vice President JD Vance — a recent convert to Roman Catholicism — attempted to defend the administration’s migration crackdown by appealing to St. Thomas Aquinas’ concept of ordo amoris.

“Just google ‘ordo amoris,’ ” Vance posted on social media on Jan. 30 in response to criticism he received following a Fox News interview.

During that interview, Vance said: “You love your family, and then you love your neighbour, and then you love your community, and then you love your fellow citizens in your own country. And then after that, you can focus and prioritise the rest of the world.”

While not mentioning Vance directly by name, Francis used his Feb. 11 letter to directly reject that interpretation of Catholic theology.

“The true ordo amoris that must be promoted is that which we discover by meditating constantly on the parable of the ‘Good Samaritan,’ that is, by meditating on the love that builds a fraternity open to all, without exception,” wrote the pope.

Since his election in 2013, Francis has become one of the world’s most vocal champions. His latest letter, however, marks a rare moment when the pontiff has directly waded into a country’s policy debates.

In the letter, however, he states that this is a “decisive moment in history” that requires reaffirming “not only our faith in a God who is always close, incarnate, migrant and refugee, but also the infinite and transcendent dignity of every human person.”

“What is built on the basis of force, and not on the truth about the equal dignity of every human being, begins badly and will end badly,” the pope warned.

In a brief post on social media, the U.S. bishops’ conference shared the pope’s letter with its online followers.

“We are grateful for the support, moral encouragement, and prayers of the Holy Father, to the Bishops in affirmation of their work upholding the God-given dignity of the human person,” read the statement.

(The National Catholic Reporter)

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Opinion

Is Sri Lanka’s war on three-wheelers an attack on the poor?

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For decades, three-wheelers—commonly known as tuk-tuks—have been a vital part of Sri Lanka’s transportation system. They provide an affordable and convenient way for people to get around, especially in areas where public transport is unreliable. However, successive governments have repeatedly discouraged their use without offering a viable alternative. While concerns about traffic congestion, safety, and regulations are valid, cracking down on three-wheelers without a proper replacement is unfair to both commuters and drivers.

For millions of Sri Lankans, three-wheelers are not just a convenience but a necessity. They serve as the primary mode of transport for those who cannot afford a private vehicle and as the only reliable last-mile option when buses and trains are not accessible. Senior citizens, people with disabilities, and those carrying groceries or luggage rely on tuk-tuks for their ease and accessibility. Unlike buses, which often require long walks to and from stops, three-wheelers offer door-to-door service, making them indispensable for those with mobility challenges.

In rural areas, where public transport is scarce, three-wheelers are even more critical. Many villages lack frequent bus services, and trains do not serve short-distance travel needs. Tuk-tuks fill this gap, ensuring people can reach markets, hospitals, and workplaces without difficulty. In urban areas, they provide a quick and affordable alternative to taxis and private vehicles, especially for short trips.

Despite their importance, three-wheelers have increasingly come under government scrutiny. Restrictions on new registrations, negative rhetoric about their role in traffic congestion, and limits on their operation in cities suggest that policymakers view them as a problem rather than a necessity. Authorities often cite traffic congestion, safety concerns, and lack of regulation as reasons for discouraging tuk-tuks. While these issues are valid, banning or restricting them without addressing the underlying transport challenges is not the solution.

The biggest flaw in the government’s approach is the absence of a proper alternative. Sri Lanka’s public transport system remains unreliable, overcrowded, and often inaccessible for many. Buses and trains do not provide efficient coverage across all areas, and ride-hailing services like Uber and PickMe, while convenient, are often too expensive for daily use. Without a suitable replacement, discouraging three-wheelers only makes commuting more difficult for those who rely on them the most.

Beyond the inconvenience to passengers, the economic impact of limiting three-wheelers is significant. Thousands of drivers depend on tuk-tuks for their livelihoods, and with rising fuel prices and economic instability, they are already struggling to make ends meet. Further restrictions will push many into financial hardship, increasing unemployment and poverty. For passengers, particularly those from lower-income backgrounds, losing three-wheelers as an option means higher transport costs and fewer choices.

Instead of discouraging tuk-tuks, the government should focus on improving and regulating them. Many countries have successfully integrated three-wheelers into their transport systems through proper policies. Sri Lanka could do the same by enforcing proper licensing and training for drivers, introducing digital fare meters to prevent disputes, ensuring better vehicle maintenance for safety, and designating tuk-tuk lanes in high-traffic areas to reduce congestion. These measures would make three-wheelers safer and more efficient rather than eliminating them without a backup plan.

The government’s push to restrict three-wheelers without providing a suitable alternative is both unfair and impractical. Tuk-tuks remain the only viable transport option for many Sri Lankans, particularly senior citizens, low-income commuters, and those in rural areas. Instead of treating them as a nuisance, authorities should recognise their importance and focus on making them safer and more efficient. Until a proper substitute is in place, discouraging three-wheelers will only create more problems for the very people who need them the most.

P. Uyangoda

Director-Education (retired)

Nedimala

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Opinion

Government by the people for the people: Plea from citizenry

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Independence Day 2025

By an Old Connoisseur

The incumbent rulers keep on reminding the people, ad nauseam, that the current administration is a government for the people by the people. They have claimed the current government was born out of the uprising of the people.

All governments in democratic societies are born out of the will of the people. In such a context, all such governments have to work towards the well-being of the people with undiluted commitment. There is no doubt in the minds of even the most discerning citizens of Sri Lanka that all these promulgations are indeed the most noble of objectives and one would justifiably expect such contentions to even warm the cockles of the hearts of all and sundry.

Yet for all this, we do need to remember and firmly reiterate to our politicians that this principle should be the bedrock on which the political governance of any democracy is based. The people of a country should come first and foremost in all considerations of any legally elected democratic government. True enough, we do know for sure that even despite the very loud vocal grandiloquence of all previous governments, and I repeat all previous governments, they did not go even a little distance to hold the welfare of the people to be sacred, and their deeds and interests were completely at loggerheads with such an honourable foundation as well as essential and admirable attitudes. Without any significant exceptions, all previous political systems over the last 77 years of independence of our much-loved Motherland, have gone on record as institutions that put themselves first in all their considerations.

In point of fact, we also have to agree even unequivocally that this noble task cannot be achieved by the politicians alone. Politicians will have to take steps to stimulate, facilitate and unite all sections of society so that our people will put their collective shoulder to the wheel in a concerted initiative to lift up this country from the mire into which it has been pushed by politicians of various hues. Delving deeper into the depths of this contention, the question arises as to what or who are understood as people. In any society when one talks of people, we should focus on all people; the rich and the poor, the able and the disabled, the educated and the not so well educated, the employed and the unemployed, public-sector workers and the private-sector workers, the farmers as well as the white-collar workers, government enterprises as well as community organisations, and the business enterprises; in fact, the whole lot of Homo sapiens in our country. To improve the well-being of people we need the participation and unstinted cooperation of all these groups in our populace. An abiding sense of patriotism in the psyche of all of our people is definitely the need of the hour.

Politicians lay down the policies and the public sector ensures the implementation of these rules and regulations to improve the wellbeing of people. The public sector, including all politicians of different sorts, are servants of the people and are not deities with unlimited power just to take care of themselves and their political institutions as well as their kith and kin and acolytes. To realise these exalted goals we have to ensure that we have certain universal rules including respect for our people at all times, fair distribution of resources in an equitable manner, kindness, empathy and respect for the freedom of others, preservation and conservation of nature and the environment, adherence to the rule of law, unmitigated compliance with basic human rights and dignity, as well as the development of those very fine humane attributes such as beneficence, non-maleficence and altruism.

If we are to develop by transforming society by the people for the people, we will have to internalise and translate these attributes in our behaviour all the time and in all sectors of the community. Political leadership alone cannot do this honourable task. Society has to unite under these values and other attributes to be articulated and facilitated by the leadership. This is what many other progressive countries have attempted, some of them forging ahead with great success. For this to happen the entire society will have to work together over a long time with respect and minimal adversity. The stakeholders for this endeavour would be all individuals of society, Public Service including the political leadership, Private Sector and their leading figures and Community Organisations including their management. Every member of the population of our wonderful country should be invited to put his or her shoulder to the common wheel in a trek towards prosperity to enable everybody to enjoy an era of opulence.

The most admirable theme for the celebrations of our independence on the 4th of February this year was “Let us join the National Renaissance”. It was a clarion call to enable us to rise up like the proverbial phoenix from the ashes towards a magnificent revival. In addition to all that has been written above, the government and its leadership, for their part, have an abiding duty to take all necessary steps to facilitate the revitalisation of patriotism to urge the populace to contribute to the prospect of national resurgence. Towards that end, the general public has to be happy in this thrice blessed land and they need to live in a country that is safe and affluent. The powers that be need to realise most urgently that unless corruption is completely eliminated, the drug lords effectively neutralised, murderers and other law-breakers swiftly brought to book, various Mafia-type impertinent audacious organised collectives such as Rice Millers, Egg Manipulators, Coconut Wheeler-dealers, and Private Transport Syndicates; all of which hold the public to ransom, are ruthlessly tamed, there is no way in which we can rise and march towards any kind of Nationwide Resurgence. Of course, equally importantly, the farmers who provide sustenance to the entire nation should be looked after like royalty. It is also ever so important that vital and purposeful steps are taken to develop the rural impoverished areas and take steps to alleviate the poverty of the downtrodden. If these things are not attended to, at least for a start, the grandiose but implausible and tenuous rhetoric of that call to rally would just be a ‘pus vedilla’, and could even be a virtual non-starter.

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