Features
Power sector reforms- urgent need to revisit them
by Dr Janaka Ratnasiri
The government of Sri Lanka (GoSL), in a policy decision made in 1998, expressed its commitment to power sector reforms and embarked on a programme to restructure it by unbundling the Ceylon Electricity Board (CEB) into separate companies for generation, transmission, and distribution, as reported in the ADB Report on Country Assistance Programme Evaluation: Power Sector Assistance Evaluation, August 2007. To give effect to this policy, a Bill was drafted to introduce reforms in the power sector as far back as 2002.
ELECTRICITY REFORMS ACT 28 OF 2002
The draft titled Electricity Reforms Bill was presented to the Parliament in 2002, outlining sector reforms comprising restructuring of the electricity industry by breaking the Ceylon Electricity Board (CEB) and Lanka Electricity Company (LECO) into several independent state-owned companies to carry out generation, transmission, and distribution functions.
The Bill proposed that independent companies be incorporated for the following purposes:
One company to take over the functions of the CEB relating to hydroelectricity generation and thermal electricity generation,
One company to take over the functions of the CEB relating to transmission and bulk procurement of electricity,
Three or more companies to take over the distribution of electricity, and
One or more companies to take over other functions of the CEB and LECO.
The Bill when presented to the Parliament brought in strong protests from many quarters including the CEB trade unions and other trade unions as well as from several political parties. They saw this Bill as an initial step towards privatizing the CEB and consequently loss of employment for its staff. Once the government gave the workers an assurance that the workers’ rights would be safeguarded, the protests died down and the Bill was passed in March 2002. It was gazetted as Electricity Reforms Act No. 28 of 2002 on 13 December 2002. However, the necessary order to give effect to the Act was not gazetted by the Minister and as a result the Act did not come into operation.
ENERGY EXPERT’S RECOMMENDATIONS FOR UNBUNDLING THE POWER SETOR
Prof. Priyantha Wijayatunga, Director of the South Asia Energy Division of Asian Development Bank (ADB) said at the launching of the Techno 2019 exhibition held in July 2019, that “Sri Lanka still needs to go a long way in relation to sector governance, compared to other countries in the region. It is time that we look at this closely so that we do not lag behind. Reforms will undoubtedly help the energy sector and hence the country’s economic development,” (Daily Mirror, 18.07.2019).
He specifically pointed out that improved governance in the energy sector in India and Bangladesh enormously helped conceptualizing and implementing clean energy initiatives, while enhancing their energy security. He highlighted the important role played by independent energy regulators and separation of functions of the energy sector in these countries, which had paved the way for breakthroughs in clean energy initiatives.
Prof. Wijayatunga elaborated “By now, a large majority of the countries, including many in the developing world around us, have fully unbundled the energy supply industry with a reasonably independent regulatory environment. If we look at South Asia, India and Bangladesh have already significantly advanced and are rapidly progressing in these areas,”. Further, he noted that “reforms also led to an increase in private sector participation in all sub sectors, including generation, distribution and even in transmission business in these countries”.
RECOMMENDATIONS OF INTERNATIONAL ORGANIZATIONS
The GoSL, from time to time, engaged the services of international institutions such as World Bank (WB), Asian Development Bank (ADB) and Japan International Cooperation Agency (JICA) to make recommendations to improve the power sector. Among the reports produced from these studies are:
JICA Master Plan Study on the Development of Power Generation and Transmission System in Sri Lanka, February 2006,
Asian Development Bank report on Assessment of Power Sector Reforms in Sri Lanka, 2015,
JICA Report on Electricity Sector Master Plan Study in Sri Lanka, March, 2018, and
World Bank Group study on Sri Lanka Energy Infrastructure Sector Assessment Programme (InfraSAP), April 2019.
The 2006 JICA report observed that “political intervention is making it impossible for the CEB to manage itself autonomously. As a result, its management has been criticized as inefficient by external parties. Moreover, it has piled up a debt big enough to jeopardize its continued sustenance. One of the areas where politics has been heavily involved is the tariff question. Thus far, political considerations have worked against attempts to raise tariffs, and tariff revisions to reflect the costs have consequently been delayed. To put a halt to political intervention in CEB management as well, it is necessary to lay down the proper conditions for corporate business. This is to be done by unbundling the current CEB, which is a vertically integrated government-owned monopoly; making the generation, transmission, and distribution divisions completely independent”. The report further recommended that “a fundamental reform of the sector is absolutely essential for promotion of long-term investment and increase in the overall efficiency. To this end, the government must present a detailed vision and schedule for CEB unbundling, and swiftly complete the reform, which is currently stalled.” But no follow up action was taken by the GoSL towards unbundling of the CEB.
The 2015 ADB report in its concluding paragraph said that “The next stage of reform requires establishing six independent companies out of the CEB’s generation, transmission, and four distribution licensees. The organization culture in the government-owned company LECO needs to be replicated in the CEB’s distribution licensees by creating corporate entities that report to the CEB holding company. The functional business units currently established within the CEB are adequately staffed and organized to enable the formation of six corporate entities. The corporatization need not involve privatization if political decision makers do not wish to involve private capital more fully in the sector, provided the state-owned firms operate as independent commercial companies”.
The ADB report further said that “The electricity sector was proposed to be restructured to ensure increased efficiency, transparency, autonomy, accountability, competition, and financial viability. The CEB functions were to be vertically and horizontally unbundled. For this purpose, the CEB owned subsidiary companies were planned to be established under the Companies Act No. 17 of 1982. The electricity sector was proposed to be restructured to ensure increased efficiency, transparency, autonomy, accountability, competition, and financial viability. The CEB functions were to be vertically and horizontally unbundled. For this purpose, CEB owned subsidiary companies were planned to be established under the Companies Act No. 17 of 1982”.
The 2018 JICA report reviewed and updated the 2006 JICA Master Plan. However, it did not refer to the issue of unbundling the power sector but recommended incorporation of renewable energy projects as well as natural gas in the energy mix for generation of electricity up to 2040 including consideration of financial commitments. It also considered the option of generation with 100% renewable energy sources by 2040, recommending that to meet the deficit of power arising out of continuing high cloud cover for several days, storage batteries need to be installed at an estimated cost of USD 1,000 million.
The 2019 World Bank report says “Apart from a few recent competitive outcomes, the country has not yet been able to develop utility scale non-conventional renewable energy (NCRE) projects at tariffs comparable with other projects globally or in the region or to tap into commercial financing and private sector participation in larger scale projects. As part of the preparation of the InfraSAP, two pre-feasibility assessments for potential large scale NCRE park sites were conducted for sites in Pooneryn and Moneragala, respectively, totaling about 500 MW of potential generation capacity”.
“The Solar and Wind power has the potential to further optimize the cost of power in the country. In line with what is being witnessed across the globe (i.e. low tariffs in solar and wind-based generation), it seems reasonable to assume that by opening the sector to international players with adequate incentives and risk mitigation mechanisms in place, a significant reduction in cost of power could be achieved in Sri Lanka. The solar and wind-based generation could be potentially used to replace some of the expensive imported oil-based power, which is currently utilized to offset the low availability of hydro resources” (p. 17).
Though the government sought the assistance from these multilateral agencies for improving the performance of the CEB, it has not taken any initiative to implement them, particularly those on reforms. The CEB is also rather slow in pursuing building of large-scale solar energy systems despite the government giving high priority for them and availability of funding from India on a credit line to the extent of USD 100 million specifically for solar energy project development (See The Island of 03.09.2020)
PRE-REQUISITES FOR UNBUNDLING OF CEB
Once the CEB is unbundled, separate companies are to be set up to take over the generation, transmission, distribution and other functions. There will be one company each for generation and transmission and three or more for distribution, according to the draft Act. However, it will be more prudent to have separate generation companies for each of the generation complexes, Kelanitissa, Laxapana, Mahaweli and others including large renewable energy plants. These companies will serve as independent power producers (IPP) and will have to sell the energy they generate to the transmission company, along with other IPPs. Electricity generated at power plants other than from small power plants, is transmitted to grid substations using 220 kV and 132 kV transmission lines.
When the available capacity exceeds the demand, the System Controller will have to decide the amount of power to be purchased from the IPPs based on a merit order system. Generally, plants providing firm output at low cost is given priority according to which power from renewable sources may get low priority. However, with the government policy to meet a minimum of 80% of generation from renewable sources, a mechanism will have to be worked out to accept power from RE sources, possibly by providing storage facilities which will even out their fluctuations.
Before selling energy, it has to be measured to an accuracy of at least ±0.1% using instrumentation which need to be type approved by the Department of Measurement Units, Standards and Services (MUSS) as required by the relevant law. Further, the instruments need to be regularly calibrated by an accredited laboratory. The CEB is already having a Meter Laboratory and this may have to be brought under the control of the transmission company with updated instrumentation serving as secondary standards with accuracy traceable to international standards. This can be verified by calibrating them against the primary standards available at MUSS Department, which is a legal requirement. Every generating unit before being connected to the grid for transmission, needs to go through the metering unit which will monitor the energy dispatched on a daily or monthly basis and transmit the data to the transmission company. It will then pay the IPP at rates agreed to in the power purchase agreement entered into between the IPP and the transmission company, based on the energy dispatched.
For distribution, the CEB has already divided the country into four regional divisions and a subsidiary company, Lanka Electric Company Ltd, covering the Western coastal townships from Negombo to Galle, excluding the city of Colombo. Electricity distribution from 220 kV/132 kV grid substations to the rest of the country is carried out using 33 kV lines which are again converted to 11 kV at load centres for local distribution. The 33 kV or 11 kV line voltage is again converted into 230/400 V for supplying to consumers. Currently, one 33 kV line may extend across two division boundaries, but if these two divisions are to be set up as two independent companies, there has to be separate distribution lines, each covering only one division receiving electricity from one or more GSSs located within the division. It will be then possible to measure the amount of energy transferred to this particular distribution company separately. Hence, certain amount or modifying the distribution system may have to be undertaken prior to unbundling.
FINANCIAL VIABILITY OF CEB
The CEB has been selling electricity to most of its consumers below cost price which is around Rs 20 per unit. For example, the tariff for households consuming up to 90 kWh per month is only Rs. 10 per unit for the last 30 units and less for lower slabs. For industries with demand up to 42 kVA and for other industries during daytime, the tariff is below the cost price. The average cost of generation per unit of electricity in 2017 was Rs 20.40, while the average selling price per unit in 2017 was Rs. 16.26. The corresponding values for 2018 were Rs. 19.12 and Rs. 16.29, respectively. These low tariffs resulted in the CEB incurring a net loss of Rs. 47.6 billion in 2017 and Rs. 30.5 billion in 2018 (AR, 2018).
In view of these losses, the CEB has not been able to settle its dues to the Ceylon Petroleum Corporation (CPC) for supplying fuel in 2016 amounting to Rs. 12.43 billion and also to settle the payments to IPPs for supplying power which amounted to Rs. 21.52 billion in 2016, according to General Manager’s Review appearing in the 2016 Annual Report (AR). Further, the total long-term borrowings as at end of 2016 were recorded as Rs. 220.5 billion, while that for 2018 were recorded as Rs. 281.3 billion, as given in respective annual reports. This poor financial status of CEB is an impediment for it to raise any borrowings from commercial banks.
The subsidies given to low-end consumers amounted to Rs. 70 billion in 2017 and Rs. 60 billion in 2018 (AR 2018). These were partly recovered by selling to high-end consumers at above-average cost price. The surplus recovered by these means in 2017 was Rs. 15.2 billion and Rs. 20.6 billion in 2018. Had the CEB was operating as a commercial enterprise, the logical measure that would have been done was either to increase the selling price above the cost price for all consumers and also reduce the cost of generation.
Being a government organization, the tariff is determined by the government policy to provide electricity to low-income households at an affordable price and hence the CEB is constrained against raising the tariff. However, this issue needs to be carefully studied and an upward revision of the tariff should be considered, removing the subsidies at least partly. Even for industries, to make them competitive in the global market, the government policy is to supply electricity to small and medium industries at below cost, but this policy too needs to be reviewed.
There is also the possibility to reduce the cost of generation. The CEB has been generating electricity from petroleum oil to the extent between 25% – 35% with the generation in 2017 being 5,000 GWh. According to 2016 Generation Performance Report of the Public Utilities Commission of Sri Lanka (PUCSL), the cost of generation from oil-fired power plants has been between Rs/kWh 22 and Rs/kWh 38. On the other hand, the cost of generation from NG fired power plant is no more than Rs/kWh 15 as quoted in the tender for the 300 MW gas power plant to be installed at Kerawalapitiya. If the thermal power plants presently operating with diesel are converted to NG, the saving is of the order of Rs. 50 billion annually.
The Cabinet of Ministers as far back as December 2010 decided to introduce natural gas (NG) in all sectors including power and industries and authorized the Ministry of Petroleum to pursue the matter, but no action was taken either by the Ministry of Petroleum or Ministry of Power and Energy. It is hoped that with the mandate given to the Ministry of Renewable Energy to convert all oil power plants at Kelanitissa complex for operation with NG, will inspire the CEB to give priority for this conversion which will reduce the losses incurred by the CEB.
The other matter that needs to be resolved is the delay in public sector organizations not paying up their bills for electricity on time, and this has caused liquidity problems in the CEB. As a result, the CEB is unable to pay the CPC for the fuel it purchases from the CPC on time and also unable to pay the IPPs for the power it purchases from them on time. With the unbundling of the sector, this system could be improved. Every Distribution Company (DC) should collect the payments due from the consumers on time giving a grace period of say one month. The Transmission Company (TC) should collect the payments from every DC for the electricity sold to them on time and settle the payments due for each of the Generation Companies (GC) on time. The GCs could then settle the payments due for each of the IPPs for the electricity they purchase from them. With the availability of on-line banking facilities and smart metering systems, all these operations could be undertaken without human intervention, other than occasional verification.
PRESENT STATUS OF SRI LANKA’S POWER SECTOR
In 1969, the Ceylon Electricity Board (CEB) was established by an Act of Parliament for the purpose of developing and coordinating of generation, supply and distribution of electricity island-wide, taking over the functions of the Department of Electrical Undertakings. By the end of 2018, the total installed capacity has grown to 4,045 MW of comprising 1,400 MW of hydropower plants, 1,137 MW of oil power plants, 900 MW of coal power plants and 608 MW of other renewal energy plants owned by both CEB and independent power producers. The total electricity generation in 2018 was 15,300 GWh, with the per capita electricity consumption 650 kWh, which is only above the least developed countries in Asia. The forecast for generation in 2030 given in CEB’s long term generation plan is around 31,000 GWh.
In 1983, Lanka Electric Company was established as a subsidiary company of the CEB and took over the distribution of electricity in coastal townships between Negombo and Galle, which resulted in reducing the distribution losses. In 2007, the Sri Lanka Sustainable Energy Authority (SLSEA) was established with the main objective to identify, assess and develop renewable energy resources in the country. However. The SLSEA has been operating more as a regulator than as a promoter of RE projects.
It is noteworthy to compare Sri Lanka’s power sector situation with that of another Asian country, Taiwan, where the population in 2018 (23.78 million) is similar to that of Sri Lanka (21.67 million) and land area (36,200 sq. km) is almost half of Sri Lanka’s (65,610 sq. km). Taiwan’s installed capacity in 2018 was a staggering 44,600 MW comprising 13,000 MW of coal power plants, 16,000 MW of natural gas power plants and 4,500 MW of nuclear power plants, generating 275,500 GWh of electricity in 2018 giving a per capita consumption of 11,585 kWh compared to 650 kWh for Sri Lanka (Wikipedia). The rapid growth of industrialization has been the main driver of the power sector, with a GDP (nominal) per capita of USD 24,800 in 2018 compared to USD 4,100 for Sri Lanka. It will be interesting to find out how Taiwan was able to achieve such high performance in the power sector – whether superior competency and dedication of professionals or correct policies in place or strong political leadership.
LACK OF TRANSPARENCY IN SELECTING MAJOR PROJECTS
Unlike in many Asian countries, Sri Lanka has been able to provide electricity to almost 100% of households, which was made possible through funding made available through decentralized budgeting in which provision of electricity to rural villages has been given priority. While the national grid was extended to cover almost the entire island to meet the power demands of every industry, commercial establishment and household, the CEB has not been able to expand its generation capacity correspondingly.
Efforts to build a coal power plant kept dragging for over 20 years at the beginning of the mid-eighties due to the CEB’s failure to initiate a dialogue with the public and concerned parties and vacillating policies of the government. Instead of inviting bids for building a power plant meeting performance and emission specifications from reputed manufacturers internationally and selecting a plant in a transparent manner, the CEB accepted a plant based on outdated technology offered by China on credit. The plant is known to breakdown repeatedly and the CEB is compelled to retain Chinese technicians even today to attend to its maintenance. Though the CEB claims that the coal power plant generates at the lowest cost, when the cost of financing is added, the cost gets more than doubled as revealed by a study undertaken by World Bank team.
On three occasions between 2000 and 2010, Sri Lanka government announced calls for expressions of interest for building thermal power plants on BOOT basis with capacity 1,000 – 1,200 MW, but pursued none. This gives a poor image of Sri Lanka within the international power industry, as the investors have to incur heavy expenditure on site visits and making bid bonds. In one announcement, the fuel option was kept open to solid or liquid or gas and the site to be selected by the investor while in another, the fuel option was specified as coal with the site to be near Hambantota.
In 2005, India offered to build a 500 MW coal power plant at Sampur, near Trincomalee on cost-sharing basis. Negotiations between the Indian party and the CEB kept dragging for five years before the final agreement was entered into and another five years to get feasibility studies and environment impact studies completed as well as other clearances obtained. By that time, the new government had changed its policy to adopt gas power rather than coal power on environmental grounds and the project was aborted. Had the CEB not taken such a long time to finalize the terms and commenced work sooner, the plant would have been built by now. It needs to be stressed that the proposed coal power plant at Sampur was abandoned because the CEB was dragging the project for nearly 10 years. The project took so long to commence work, obviously because it had problems both technical and operational which the CEB was unable to resolve. Hence, it was best to cancel the project and consider a new project afresh.
The latest attempt to build a 300 MW gas power plant at Kerawalapitiya on BOOT basis also got dragging for nearly four years mainly because of the manner in which the project selection process was handled by the CEB. A 500-page request for proposal (RFP) was announced in November 2016 seeking unnecessary details while the more important information essential for making a decision was left out. Such detailed information would have been in order had CEB was paying for the capital expenditure. With a BOOT project, the investor will ensure that a plant worth the money would have been purchased. The CEB will only have to know the price at which energy be sold to CEB and whether the plant satisfies performance and emission specifications laid down by the CEB.
The lack of clarity in the RFP resulted in the matter taken to the courts for a ruling. Though the approval of the Cabinet has already been granted for the project and the new President has directed this project be given priority soon after he was elected, the CEB has still not finalized its acceptance. Instead, the CEB is pursuing building a 300 MW coal power plant at Norochcholai against President’s policy. Incidentally, China was allowed to build a 400 MW gas power plant along with an LNG terminal at Hambantota with no such detailed RFPs announced.
According to a SLSEA Report dated 27.03.2019, several RE projects submitted by investors that have received the approval of the SLSEA since 2016 have been held up as CEB has not agreed to sign power purchase agreements with them, citing a section of the Electricity Act. This includes 101 RE projects with total installed capacity of 3,052 MW comprising 264 MW of mini-hydro plants, 2,028 MW of solar plants, 673 MW of wind plants and 87 MW of other plants, which could generate over 7000 GWh of energy annually. This situation is shown in Fig. 2 in 2018 Annual Report where the growth of energy added from RE projects to the system shows a stagnation between 2015 and 2018, with the value for 2016 showing a drop of 200 GWh compared to other years. It appears that there was no coordination between the CEB and the SLSEA.
FLAWED LONG TERM GENERATION EXPANSION PLAN
The CEB during the last few decades has been preparing biennially a long-term generation expansion (LTGE) Plan and the mandate of the Power Ministry specifies that the sector should be developed to comply with the CEB Plan. It is supposed to determine which power technology will be the cheapest in 20 years hence based on current prices. With the cost of generation depending on plant capital cost and fuel prices both of which could vary widely within a span of 20 years, it is futile to make forecasts now as to which technology is the cheapest in 20 years hence and to adopt it. Therefore, to give a mandate to follow the CEB’s LTGE Plan which is highly flawed for the development of the sector, does not make sense. The CEB Plan for 2018-2037 recommends adding 2,700 MW of coal power plants between 2023 and 2037 under Base Case scenario saying it is the cheapest option. However, the 2019 World Bank report cited above says in p. 18 that “coal ceases to be the least cost source of power generation, as cost of power from LNG and NCRE could potentially be lower than US cents 9 / kWh” which is the estimated coal power price.
When the CEB submitted its LTGE Plan for 2018-37 to the Public Utilities Commission of Sri Lanka (PUCSL) for approval as required by the Sri Lanka Electricity Act No. 31 of 2013, PUCSL did not approve it but proposed an alternative plan incorporating natural gas power plants in place of coal power plants included in the CEB Plan. The CEB refused to accept this recommendation and the dispute between the PUCSL and the CEB kept dragging for over a year, and the matter was finally referred to the President who gave a directive to the PUCSL to approve the CEB Plan, fearing disruption to the power supply in the country after the CEB Engineers’ Union threatened to resort to industrial action if their demand for coal power plants is not acceded to. This is a clear indication that Sri Lanka’s power sector is being governed not by the PUCSL nor the Ministry nor the Governing Board of the CEB, but by its trade unions. This justifies Prof. Wijayatunga’s statement that “Sri Lanka still needs to go a long way in relation to sector governance”.
CONCLUSION
The CEB ha a staff strength about 23,000 with over 1,400 professionals. It is the opinion of several international agencies that this organization be split into several organizations each responsible for different functions undertaken by the CEB, including generation, transmission and distribution. It is expected that such an unbundling process will improve the efficiency, transparency, autonomy, accountability, competition, and financial viability. The CEB has failed miserably in the recent past to increase the generation capacity to meet the growing demand with due consideration for environmental concerns even after granting Cabinet approval for many of them. It has also failed to initiate work on large renewable energy projects for several years, particularly during the last seven months even after the President’s policy of pursuing renewable energy and gas power projects was announced.
Possibly the high inertia of the CEB with its large staff prevents it from being flexible to undertake new projects in keeping with international trends and hence continues to insist on outdated technologies. Hence, it is desirable if the government initiates unbundling of the CEB urgently as recommended by reputed energy experts to make it more flexible. The unbundling will also give an opportunity for the government to get rid of dead wood after giving them a golden hand shake.
Features
The Paradox of Coercion: US strategy and the global re-emergence of Iran
(A sequel to the two-part article, War with Iran and unravelling of the global order, published in The Island on April 8 and 9.)
The unfolding developments in the US-Israeli coordinated military attack against Iran reveal a striking paradox at contemporary geopolitics: efforts to weaken a state through coercion may, under certain conditions, contribute to its structural elevation within the international system. What appears as short-term tactical success can generate long-term strategic consequences that are neither anticipated nor easily reversible. In this context, the policies associated with Donald Trump and Benjamin Netanyahu, marked by unilateralism and the willingness to use force, risk producing precisely such an unintended outcome. Rather than marginalising Iran, their actions may be accelerating its re-emergence, not merely as a regional actor in the Middle East, but as a consequential player in the global geopolitics and the wider architecture of international supply chains of energy economy.
Iran not merely a state
Iran is not merely a state, but a civilisation with a distinctive political trajectory. At the heart of the present transformation lies its asymmetric strategy, rooted in the strategic exploitation of geography. Few states possess the capacity to shape the global system through geography alone. Iran’s proximity to the Strait of Hormuz, a narrow maritime passage through which a substantial share of the world’s oil and liquefied natural gas flows, endows it with a latent structural power that transcends conventional measures of national capability.
In periods of stability, this position translates into economic opportunity; in moments of crisis, it becomes a lever of systemic disruption. Recent tensions have demonstrated that even limited instability in this corridor can reverberate across global markets, triggering sharp increases in energy prices, disrupting supply chains, and amplifying inflationary pressures worldwide. Should Iran consolidate its capacity to influence or control this chokepoint, whether through military deterrence, asymmetric instruments, or diplomatic maneuvering, it would shift from being a participant in global energy markets to a pivotal arbiter of their functioning.
Energy-embedded global economy
The contemporary global economy is not merely energy-dependent; it is deeply energy-embedded. Hydrocarbons underpin not only transportation and electricity generation but also the production of petrochemicals, fertilisers, and a wide range of industrial inputs essential to modern manufacturing and food systems. Disruptions linked to Iran have already illustrated how shocks in the energy sector cascade through interconnected supply chains, affecting everything from agricultural output to high-technology industries. In this sense, Iran’s leverage is no longer confined to the traditional realm of resource geopolitics. It increasingly operates within a networked global system in which control over a single critical node can generate disproportionate influence across multiple sectors. This form of power, diffuse, indirect, and systemic, marks a departure from the more linear dynamics of twentieth-century oil politics.
The implications of such a shift are profound for the structure of the international order. For decades, the global system has been underpinned by a set of institutions, norms, and economic arrangements often described as the so-called liberal international order. Sanctions, financial controls, and diplomatic isolation have been key instruments through which dominant powers have sought to discipline states that challenge this order. However, Iran’s prolonged exposure to sanctions has compelled it to develop adaptive strategies: alternative trade networks, informal financial channels, and closer ties with non-Western partners. A crisis-induced re-entry into global markets would therefore not signify reintegration into the existing order, but rather the expansion of parallel systems that operate alongside, and sometimes in opposition to, it. In this context, Iran’s rise would contribute to the gradual fragmentation of the global economy, accelerating trends toward decoupling, regionalization, and the erosion of established institutional authority.
Decline of global order based on US hegemony
This process of fragmentation is closely linked to declining global order based on U.S. hegemony. A more globally consequential Iran would inevitably become a focal point in the strategic player in emerging multipolar world. For China, whose economic growth remains heavily dependent on secure energy supplies, deeper engagement with Iran would serve both economic and geopolitical objectives, reinforcing its presence in the broader Middle East and insulating it from vulnerabilities associated with maritime chokepoints. Russia, already positioned as a major energy exporter and a challenger to Western dominance, may find in Iran a complementary partner in reshaping global energy markets and contesting sanctions regimes. Meanwhile, countries across the Global South, including major importers such as India, would face a more complex strategic environment, characterized by heightened exposure to supply disruptions and increased pressure to navigate between competing power centers. In this emerging landscape, Iran would function less as an isolated actor and more as a pivotal node within a reconfigured network of global alignments.
Dynamics enhancing Iran’s strategic importance
Paradoxically, the very dynamics that enhance Iran’s strategic importance may also accelerate efforts to reduce dependence on the conditions that enable its influence. Recurrent energy shocks tend to catalyze policy responses aimed at diversification and resilience. States are likely to expand strategic reserves, invest in alternative supply routes, and accelerate transitions toward renewable energy and nuclear power. Over the longer term, such measures could diminish the centrality of fossil fuel chokepoints, thereby constraining Iran’s leverage. However, this transition will be uneven and contested. Advanced economies may possess the resources to adapt more rapidly, while developing countries remain structurally dependent on affordable hydrocarbons. In the interim, the global system may experience a prolonged period in which dependence on Iranian-linked energy flows coexists with attempts to transcend it—a duality that adds further complexity to the evolving geopolitical landscape.
Beyond material considerations, Iran’s potential re-emergence also signals a deeper transformation of the existing global order. Traditional metrics—military strength, economic size, technological capacity—remain somewhat important, but they are increasingly complemented by the ability to influence critical nodes within global networks. The capacity to disrupt, delay, or redirect flows of energy, goods, and capital can generate strategic effects that rival, or even surpass, those achieved through direct military confrontation. In this sense, Iran exemplifies a broader shift from territorial geopolitics to what might be termed network geopolitics. Control over chokepoints, supply chains, and infrastructural linkages become a central determinant of influence, enabling states with relatively limited ‘conventional’ capabilities to exert outsized impact on the international system.
Iran’s trajectory may be understood as a transition through several distinct phases: from a regional challenger seeking to assert influence within the Middle East, to a strategic disruptor capable of unsettling global markets, and ultimately to a systemic actor whose decisions carry worldwide consequences. This evolution is neither inevitable nor linear; it depends on a complex interplay of domestic resilience, external pressures, and the responses of other global actors. Nevertheless, the possibility itself underscores the unintended consequences of policies that prioritize short-term coercion over long-term strategic foresight.
Transition shaped by paradoxes
In historical perspective, moments of systemic transition are often shaped by such paradoxes. Actions taken to preserve an existing order can, under certain conditions, accelerate its transformation. The current crisis involving Iran may represent one such moment. By elevating the strategic significance of energy chokepoints, exposing the vulnerabilities of interconnected supply chains, and encouraging the development of alternative economic networks, it contributes to a broader reconfiguration of global power. In this emerging context, Iran’s re-emergence as a global actor would not simply reflect its own capabilities or ambitions; it would also embody the structural shifts reshaping the international system itself. What began as an effort to constrain Iran may ultimately facilitate its transformation into a decisive player in the global energy economy and supply chain architecture. The implications of this shift extend far beyond the Middle East, touching upon the stability of markets, the cohesion of international institutions, and the evolving nature of power in the twenty-first century.
The war with Iran is best understood not as a discrete regional conflict, but as a structural moment in the transformation of the international system. It reveals a growing disjuncture between the continued reliance on coercive statecraft and the realities of an interdependent global order in which power increasingly derives from control over critical economic and infrastructural nodes. Rather than achieving strategic containment, the conflict has underscored the capacity of a relatively constrained actor to generate systemic effects through geoeconomic leverage. In doing so, it highlights a broader shift from military-centric conceptions of power toward forms of influence embedded in networks of energy, trade, and supply chains.
This is not merely a redistribution of power, but a redefinition of how power operates. At the systemic level, the war accelerates the erosion of the post-Cold War order, reinforcing tendencies toward fragmentation, parallel economic arrangements, and multipolar competition. Iran’s potential re-emergence as a global actor should therefore be seen less as an isolated outcome than as a manifestation of these deeper structural changes. In this sense, the strategic significance of the war lies in its unintended consequences: it exposes the limits of coercive hegemony while simultaneously amplifying the importance of those actors positioned to exploit the vulnerabilities of an interconnected world.
by Gamini Keerawella ✍️
Features
The dawn of smart help for little ones
How Artificial Intelligence is breaking barriers in Autism Diagnosis and Care
For any parent, the early years are a most valuable countdown of “firsts” of his or her precious child: the first step, the first clear word, the first beautiful smile, and quite a few other firsts as well. Yet for all that, for some families, that joy is overshadowed by a growing, quiet, but disturbing intuition that something is even a little bit different. Perhaps a child is not responding to his or her name, or the little one seems to be more interested in the spinning wheels of a toy than a game of peek-a-boo, or even avoids normal social responses.
In many countries, especially in the developing world, the road from that first “gut feeling” that there is something wrong, to a formal diagnosis of Autism Spectrum Disorder (ASD) is often a long and exhausting journey. While doctors can often identify autism in children as young as 12 to 18 months, the average age of diagnosis in our communities still hovers around four years. In these critical years, when a child’s brain is most like a machine ready to learn and adapt, time is of the essence and is the most valuable resource a family has.
Today, a new “algorithmic dawn” is offering a shortcut to really cut that delay. Artificial Intelligence (AI), the very same smart technology that helps us navigate traffic, suggest a new song, or help people with ChatGPT, is moving out of the lab and into the children’s nursery. By acting as a digital “magnifying glass”, specifically designed AI tools can now spot subtle patterns in a child’s gaze, some little quirks in the rhythm of their babbling, or the way they move, often much faster than the human eye can. Then the machine can issue a warning signal and indicate that further action and a proper evaluation are necessary. This is most certainly not about replacing the brain, the heart and the expertise of a paediatrician; it is about providing “Smart Help” that can be accessed from a smartphone in a family living room. For millions of “little ones on the spectrum”, most notably in the developing world, this technology is turning a journey once defined by waiting, uncertainty and even tears, into one of proactive care and even brighter horizons. The time gained is most certainly a very valuable window of opportunity.
What is the “Spectrum,” and Why Does Time Matter?
Autism is described as a “spectrum” because it affects many children somewhat differently and to varying degrees. Some children may have advanced technical skills but struggle to hold a conversation; others may be non-verbal or have intense sensory sensitivities. It can be very mild or very severe, and perhaps everywhere in between as well.
The common thread is that the brain develops differently in these affected children. This is why Early Intervention is the gold-standard goal. During the toddler years, a child’s brain is incredibly “plastic”, meaning that it is a highly adaptable and ready to learn type of organ. Starting therapy and management strategies during this valuable period of opportunity can fundamentally change a child’s future life path.
The problem, to a certain extent, is that traditional diagnosis of ASD is a slow, manual process. It requires intensively trained experts to watch a child play for hours and fill out complex checklists. In many countries, including Sri Lanka, where there is a massive shortage of these highly qualified specialists, the waiting list for a consultation alone can take months or even years. These doyens are rather thin on the ground and even when available, are heavily overworked.
Enter the AI Revolution: Seeing the Unseen
AI certainly does NOT replace doctors, but it acts like a high-powered magnifying glass. By using “Machine Learning”, computers can analyse massive amounts of data to find tiny patterns that the human eye might miss. Here is how it is changing the game:
1. Tracking Gaze and Smiles
One of the earliest signs of autism is how a child looks at the world. AI “Computer Vision” can analyse a simple video of a child playing. It can track exactly where the child is looking. Does the child look at a person’s eyes when they speak, or are they drawn to the spinning wheels of a toy in the corner? AI can quantify these “social attention” patterns in seconds and add them to a cache of things that ring warning bells.
2. The Sound of a Voice
Did you know that the “music” of a child’s speech can hold clues? AI can listen to the pitch and rhythm (called prosody) of a child’s voice. Children on the spectrum sometimes have a “flat” or monotonic way of speaking. AI algorithms can measure these vocal biomarkers with incredible precision, helping to flag concerns long before a child is old enough for a full conversation.
3. Movement and Play
Repetitive behaviour, like hand-flapping or rocking, are core traits of ASD. Sensors in smartphones or simple video analysis can now categorise these movements objectively. Instead of a parent trying to describe how often a behaviour happens, the application or ‘app’ provides a clear, data-driven report for the doctor.
Innovation at Home: India’s Digital Solutions
The most exciting part of this technology is that it does not require a million-dollar lab. In India, where smartphone use is booming, several “homegrown” apps are bringing specialist-level screening to rural and urban homes alike.
Apps like CogniAble, which give parents a step-by-step intervention plan based on the child’s specific needs, or START, a tablet-based tool used by local health workers in areas like Delhi slums to spot risks via simple games, or LEEZA.APP, which offers free AI screening to remove the “money barrier” that keeps many families from seeking help, or AutismBASICS, which provides thousands of activities and a milestone tracker to help parents manage daily therapy at home, are just a few of the programs in use at present. These tools are “democratising” healthcare. A mother in a remote village with a basic smartphone can now access the same level of screening logic that was once only available in a major city hospital.
Beyond the Diagnosis: A Robot Tutor?
The role of AI does not stop once a diagnosis is made. It is also becoming a tireless “co-therapist.”
For many children with autism, the human world can be unpredictable and overwhelming. AI-powered “Social Robots” or interactive apps provide a safe, predictable environment. These “Robo-Therapists” do not get tired, they do not get frustrated, and they can repeat a social lesson even 100 times until the child feels comfortable.
Furthermore, for children who are nonverbal, AI-powered communication apps serve as a “voice”. These apps use smart technology to predict what a child wants to say, allowing and facilitating them to express their needs and feelings to their parents, even for the very first time.
The Human Element: Proceed with Care
As bright as this dawn is, experts warn that we must move forward carefully and most intelligently.
= Privacy: Because these apps collect sensitive videos and data about children, keeping that information secure is a top priority.
= Cultural Differences: An AI trained on children in the US or Europe might not perfectly understand a child in Sri Lanka. We need “diverse local data” to ensure the algorithms understand our local languages, gestures, and social norms. Many of these programs need to be home-grown or baked at home in Sri Lanka.
= The Human Touch: Most importantly, we need to always remember that AI is a tool, not a replacement. A computer can spot a pattern, but it cannot give a hug, provide emotional support to a struggling parent, or celebrate a breakthrough with the same joy as a human therapist.
A Brighter Future
We are moving toward a world where “waiting and seeing” is no longer, and quite definitely, not the only option for parents. By combining the heart of a parent and the expertise of a doctor with the speed of an algorithm, we can ensure that no child is left behind because of where they live or how much money they have.
The “Algorithmic Dawn” is not just about code and data. It is about giving every child the best possible start in life. It is the main principle on which Hippocrates, the Father of Medicine, all those centuries ago, based all his postulations on how physicians should work.
The “Red Flag” Checklist: 18 to 24 Months
The American Academy of Pediatrics recommends screening all children at 18 and 24 months. If you notice several of these signs, it is time to use an AI screening app or consult your paediatrician.
Communication and Social Cues
= The Name Test: Does your child consistently fail to turn around or look at you when you call his or her name?
= The Pointing Test: By 18 months, most toddlers point at things they want (like a biscuit) or things they find interesting (like a dog). Is your child using your hand as a “tool” to get things instead of pointing?
= The Eye Contact Test: Does your child avoid looking at your face during social interactions or during play or when being fed?
= The Shared Smile: Does your child rarely smile back when you smile at him or her?
Behaviour and Play
= The Toy Test: Does your child play with toys in “unusual” ways? (e.g., instead of rolling a car, they spend 20 minutes just spinning one wheel or lining them up in a perfect, rigid line).
= The Routine Rule: Do they have an extreme “meltdown” over tiny changes, like taking a different route to the park or using a different coloured cup?
= Repetitive Motions: Do you notice frequent hand-flapping, rocking, or spinning in circles, especially when they are excited or upset?
The “Golden Rule” of Regression
Finally, an extremely important rule for concerned parents to follow.
If your little one had words (like “Mama” or “Dada” or “Amma” or “Thaththa” or Thaii/Amma or Appa) or social skills (like waving “Bye-Bye”) and a beautiful social smile etc, and then SUDDENLY STOPS USING THEM, that could be a most significant red flag. In such situations, the standard advice would be: Please consult a doctor immediately.
by Dr B. J. C. Perera
MBBS(Cey), DCH(Cey), DCH(Eng), MD(Paediatrics),
MRCP(UK), FRCP(Edin), FRCP(Lond), FRCPCH(UK),
FSLCPaed, FCCP, Hony. FRCPCH(UK), Hony. FCGP(SL)
Specialist Consultant Paediatrician and Honorary Senior Fellow,
Postgraduate Institute of Medicine, University of Colombo, Sri Lanka.
Features
Governance, growth and our regional moment:Why Sri Lanka must choose wisely
The recent disclosure of a substantial internal fraud at National Development Bank has understandably unsettled the financial community. What began as a relatively contained incident has since been revised upwards, revealing a scheme that operated over an extended period within a specific operational area. To their credit, both the bank and the Central Bank of Sri Lanka responded with speed. Staff were suspended, arrests followed, an independent forensic review was commissioned, and clear assurances were given that customer funds remained secure. The institution’s capital and liquidity positions continue to meet regulatory requirements, and day to day operations have not been disrupted.
Yet it would be a mistake to view this as an isolated operational error at a single respected institution. When a fraud of this magnitude, equivalent to more than a year’s profit for the bank, emerges within one of our most established listed companies, the implications extend well beyond the banking sector. It prompts a necessary and uncomfortable question. Are we truly strengthening the foundations of our economy so that every part of our society can operate with the integrity and confidence that sustainable progress demands?
Banking sits at the heart of any modern economy. It channels savings into investment, supports enterprise, and underpins household security. When even a leading institution reveals weaknesses in internal controls, risk oversight or governance culture, the signal to international observers is difficult to ignore. It suggests that the financial system upon which growth depends may not yet possess the resilience we aspire to project. If institutions that have undergone significant reform since 2022 can still experience such failures, what assurance can investors reasonably expect in other sectors of our economy? At a time when Sri Lanka needs to demonstrate strength and reliability, perceptions of fragility carry a heavy cost.
This matters profoundly because a genuine window of opportunity is now opening. Geopolitical shifts in the Middle East and beyond are prompting global investors and entrepreneurs to seek stable, well governed destinations for capital and talent. Sri Lanka possesses distinct advantages. Our geographical position offers natural connectivity. We have invested in critical infrastructure, including two major ports, international airports and strategic energy reserves. In an era where businesses prioritise rule of law, institutional predictability and sound fundamentals, our potential alignment with these criteria is significant. However, high profile governance failures at this precise moment risk undermining that narrative before it can gain meaningful traction.
The stakes are equally significant for initiatives such as the Port City Colombo. With substantial projects now approved, foreign investment commitments secured and early construction underway, this endeavour is moving from concept to delivery. Yet persistent concerns about governance standards in our established companies can act as a drag on investor sentiment. The confidence required to attract high value international tenants and long- term capital depends not only on physical infrastructure but on the perceived strength of our institutions and the consistency of our regulatory environment.
For decades, Sri Lanka has experienced growth averaging around four to five per cent per year. While this is not insignificant, it falls short of our potential, particularly when measured against the progress of our regional neighbours. India, for example, has sustained growth at roughly twice our rate for more than twenty years, driven by consistent policy execution and strengthening institutional credibility. Our own trajectory has been held back not by a lack of ideas or ambition, but by recurring shortcomings in how our major institutions are governed and held to account. The result is a cycle of unrealised potential, where promising openings are not fully converted into lasting advancement.
The current situation, though challenging, can serve as a catalyst for meaningful change. Boards of listed companies must move beyond procedural compliance to foster a genuine culture of ethical leadership, proactive risk management and zero tolerance for control failures. Regulators have an opportunity to undertake a comprehensive review of fraud prevention frameworks, whistle-blower protections and monitoring standards across the financial sector, with lessons applied to other key industries. Greater transparency in reporting material incidents and more timely forensic follow through will help rebuild trust with both domestic and international stakeholders.
Crucially, the government must tread carefully as it responds. Short term fixes or reactive measures may address immediate concerns but will not deliver the enduring stability that investors seek. What is required is a coherent long-term strategy that balances the imperative for rapid economic development with the equally vital need to conserve our natural environment and strengthen regional cooperation. Our neighbours in South Asia and Southeast Asia offer not only markets for trade and investment but also partners in shared challenges such as climate resilience, sustainable infrastructure and digital connectivity. By deepening these relationships through practical collaboration, Sri Lanka can position itself as a reliable and forward-looking partner in a dynamic region.
Sri Lanka stands at a pivotal moment. Global realignments are creating rare opportunities for capital inflows, technology transfer and new economic partnerships. Yet these opportunities will flow most readily to nations that demonstrate they can protect investor interests, uphold the rule of law and operate with predictability and transparency. If we allow governance weaknesses in our flagship institutions to persist, we risk once again watching potential pass us by.
This is a defining moment, and our response must be equally purposeful. We can treat the recent events as an unfortunate but isolated incident and return to established patterns. Or we can seize this moment as a timely reminder to strengthen every pillar of our economy, with particular attention to environmental stewardship and regional collaboration. Only by getting our house in order, with patience, consistency and a clear-eyed commitment to long term goals, can we convert today’s challenges into tomorrow’s competitive advantage. The path to sustained prosperity demands nothing less.
by Professor Chanaka Jayawardhena
Professor of Marketing
University of Surrey
Chanaka.j@gmail.com
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