Connect with us

Midweek Review

Some thoughts on green financing options for Sri Lanka

Published

on

By Prof. Nimal Gunatilleke

This is a sequel to my earlier article, titled ‘The Sri Lankan Debt Crisis: A Layman’s Review’, which appeared in two parts on the 01st and 02nd June in The Island Midweek Review and also in the Daily Financial Times on the 06th and 07th June 2022. In the second part of that article, I highlighted some of the emerging global investment opportunities, such as Green Bonds that are being made available for restructuring sovereign debts in this green economic era.

In this article, I would like to draw attention to the additional green financing options that are currently available for prospective investors, based on recent successful examples from other countries. These green financing opportunities will only be available once the debts have been brought to a sustainable level, as dictated by the IMF. However, Sri Lanka is currently wrestling desperately with the task of securing bridging finance, either as donations or loans to meet her day-to-day needs spilled over to the streets, day in, day out.

Among the loans received in the form of fuel, food, and medical supplies, the USD 500 million loan through the Indian Credit line (more credit under negotiation) and more recently pledged loan of USD 120 million (and perhaps, additional grants) from the US stand out prominently. It is a relief to learn that several other countries and international agencies too have come forward to help Sri Lanka in her critical stage of the balance of payment crisis. All these loans being given in the name of bridge financing during this interim period will also be added on to the existing debt burden during the restructuring process. In the meantime, Sri Lanka needs to restructure its foreign debt or make substantial progress towards that goal before the IMF agrees to lend money.

Still being categorized as a Middle-Income Country, Sri Lanka is not entitled to interventions focused on providing debt relief to the Low-Income Countries, usually given on greater concessionary terms. The IMF intervention in this instance, as it happened 16 occasions earlier, since our independence, may once again recommend, among other solutions, outright sale, lease, or pawn of our family silver – the valuable real estate assets – as a stopgap fix to the debt problem. Consequently, IMF intervention alone is least likely to be a sustainable solution for our chronic trade deficit problem because Sri Lanka has been consistently spending more forex than it earns over the past decades. In all probability, this trend may continue further since the economically sound options for bridging the trade deficit are socially more painful and therefore politically inauspicious. The current mayhem that the country is going through and led by deceitful political forces would only lead to worsening the situation, further.

As we all are now well aware, we had been borrowing forex from the international capital markets to meet the deficit to balance the national budget each year over the past several decades, which obviously cannot keep going forever. If we continue to have this ‘business as usual’ attitude, the country will simply pile up bigger and bigger debts to pay back in the future despite IMF interventions. This is where the selling of family silver stealthily sneaks in.

Fortunately, however, there are new green financing opportunities emerging as a unified global response to the climate change mitigation and adaptation in transforming International Sovereign Bonds into more climate-friendly investments such as green bonds, climate bonds, sustainability bonds, payment for ecosystem services, debt for climate swaps, etc., under Paris agreement on climate change.

Green bonds

Although Sri Lanka has been quite late to enter the globally booming green bond market, our nearest neighbour, India has been expanding its green bond market vigorously over the recent years. This includes several projects they have supported in Sri Lanka as well, under the green bond label since 2015. Amongst them, the EXIM Bank of India, the closest proxy to the Sovereign in International Debt Markets in India, had supported three projects in Sri Lanka for the purpose of laying railway tracks from i) Omanthai to Pallai, ii) Pallai to Kankasanturai, and iii) Madhu church -Talaimannar sectors under eligibility in the mass transportation sector, since 2015 ().

The recently inked Sampur Solar Energy project by the National Thermal Power Corporation of India, and even the proposed Mannar and Pooneryn wind and solar energy projects to be funded by the Indian investors may be coming under similar green or other such bond schemes. On the other hand, the only Sri Lankan green finance venture that I came across so far in literature is the one in which the Seylan Bank PLC has arranged a Green Bond for financing several renewable energy projects in Sri Lanka. The global and regional appetite for green bond issuance is on the increase and it is high time that Sri Lankan investors too, evoke greater attention towards it.

Sri Lanka Road Map for Green Financing

The Sri Lankan Road Map for sustainable/green financing has been prepared by the Central Bank of Sri Lanka with technical assistance from the International Finance Corporation through a consultative process for the purpose of promoting sustainable/green finance options in Sri Lanka. In addition, the Central Bank of Sri Lanka has already prepared a Biodiversity Finance Plan (BIOFIN 2018 – 2024) to move towards sustainable financing solutions with an aggregate resource mobilization target ranging from LKR 20 billion – 46.7 billion.

The BIOFIN Plan has prioritized 13 finance solutions and issuing Green Bonds is one amongst them. The generic description of Green Bonds in this plan states that issuing green bonds is a new source of financing that can mobilize a large amount of financial resources by the public sector as per the financial regulatory mechanism, subject to the country’s debt servicing capacity. Sri Lankan investors too, now have an enviable opportunity to join this lobby as partners during the restructuring process especially, in transforming the Sri Lankan Sovereign Bond debts.

Payment for Ecosystem Services (PES)

Payment for Ecosystem Services is yet another financial solution that the BIOFIN 2018-2022 Plan has put forward which it claims to be another new financing source for paying directly or indirectly for ecosystem services and negative externalities either with private or public involvement in Sri Lanka. The BIOFIN plan considers that an introduction of PES in the energy sector is important because the current modes of power generation have significant negative implications on the country’s biodiversity and ecosystem services whilst the condition of watersheds also influences power generation efficiencies, especially in hydropower. The BIOFIN plan details out the information needed for developing three different business models under the PES system (pages 28-37). They are (i) Payment for watershed management in lands above mini-hydro power plants, (ii) Payment for watershed management for hydropower generation at Moragahakanda, and, (iii) Payment for negative externalities of coal power generation.

PES for Watershed management in the Central Highlands

Management of watersheds has been recognized as a national priority for sustainable development in Sri Lanka in the most recent National Physical Planning Policy and the Plan for Sri Lanka 2017-2050 and its immediate predecessor – NPP – 2030. Both these plans have recognized the Central Highlands and the Coast Conservation Zone as fragile regions (see the figures) that need urgent conservation interventions for the sustainable development of practically the entire country.

The ‘Central Fragile Area’ is the geographic entity that consists of lands with sensitive natural ecosystems, highly vulnerable to landslides, and plays a crucial role in sustaining water resources. A major portion of these areas are located above 300 meters from mean sea level and cover the upper catchments of all major rivers on the island. Almost all major economic enterprises in Sri Lanka, including downstream irrigated agriculture and associated livelihood sustenance, hydro-power generation, and inland and coastal tourism are very much dependent upon the ecological health of this fragile region.

Therefore, the prioritization of watershed management in at least a few selected areas as a priority area under the Payment for Ecosystem Services by the BIOFIN project of the Central Bank of Sri Lanka as a start is praiseworthy. The National REDD+ Investment Framework and Action Plan (NRIFAP) 2017 and its subsequent updates including that of the Forestry Sector Master Plan for Sri Lanka 2021-2030 (still in draft) would be able to provide a strong foundation for developing investment models in this vital sphere of sustainable development.

Conversion of exotic monoculture plantations in critical watersheds into native and naturalized species mixes in these central highlands according to proven scientific guidelines would be yet another green financial proposition for both public and private sector engagement for which intriguing business models can be developed under PES schemes. We have developed two ecologically sustainable Pinus conversion models, one in the NW buffer zone of the Sinharaja World Heritage Site and the other in Peradeniya University Lower Hantana campus land. These can be scaled up into other Pinus plantations in critical watersheds of the island with public-private collaboration as Corporate Social Responsibility projects, especially in the plantation sector.

Similarly, the World Bank-funded Landscape Management Plan for Sinharaja Forest Range prepared recently is yet another superlative green financing option for such investors. (See maps)

PES for Coastal Zone Management

On the other hand, the ‘Coast Conservation Zone’, the second fragile region identified by the NPP includes the area for which boundaries have been delineated by the Coast Conservation Department under the provisions of the Coast Conservation Act No. 57 of 1981. Even though a large quantum of physical developments in Sri Lanka has been taking place in this zone, conservation of the lagoons, estuaries, swamps, riverine, and other sensitive environments, is important because of the eco-services that they provide, the attractions they have, and the ever-expanding economic activities associated with them.

The ‘Sri Lanka Coastal Zone and Coastal Resource Management Plan – 2018’ prepared by the Coast Conservation and Coastal Resource Management Department would be an ideal foundation document for developing investment and business models in this critical coastal belt that covers a circum-island coastline of 1,620 km. Due to its abundant natural resources and consequent social and economic benefits supporting millions of livelihoods, the coastal zone has experienced immense development and urbanization over the decades. This calls for the sustainable management of the coastal zone to ensure that resources are not exploited beyond their regeneration capacity and that the remaining habitats are not further degraded or destroyed.

Similar projects with appropriate business models have been developed in other regions/countries that Sri Lanka could take a cue from. They are the following:

i.) Mangrove Restoration in Senegal – The mangrove restoration project in Senegal, coordinated by the Livelihoods Carbon Fund (LCF) since 2011, aims at restoring an ecosystem that protects arable land from salinization and produces fish resources (fish, shellfish, crustaceans) and wood. With the support of the Livelihoods Carbon Fund, the mangrove restoration project in Casamance and Sine Saloum estuaries of Senegal has helped 450 local villages replant 10,415 out of the existing 185,000 hectares of mangrove, between 2009 and 2012. It stands like a rampart against climate change impacts and at the same time a nourishing ecosystem for the inhabitants. Carbon finance has enabled vulnerable communities to restore their mangroves through the commitment of private companies that have committed to investing in sustainable projects. In return for their investment in the Livelihoods-Senegal project, the companies that are supporting the Livelihoods Carbon Fund receive carbon credits with high social and environmental value to offset their CO2 emissions.

Investors in the Carbon Livelihoods Fund have provided Océanium – the local NGO with the necessary funding for replanting (population awareness, validation of scientific models, intervention logistics, etc.) and are going to continue to finance its monitoring and evaluation until 2029, for a total duration of 20 years.

The project was validated by the United Nations Framework Convention on Climate Change (UNFCCC) Board. The Project Detailed Document made by Carbon Decisions in December 2010 was audited by Ernst & Young and the Dept. of Environment in May 2011. The approval of the Senegalese authorities was obtained in March 2011 and was subject to a tripartite Memorandum of Understanding of 10 years between Livelihoods, OCEANIUM, and the Senegalese government (Ministry of Environment). The long-term impacts of the project is being measured using the ‘Sustainable Livelihoods Approach’ since 2017. ().

Lessons learned from this project would be beneficial for Sri Lanka to design her own mangrove restoration and coastal and marine conservation initiatives with a public-private partnership. These projects are already being done in an uncoordinated ad hoc manner, especially after the Tsunami event in 2004

. The Sri Lanka Coastal Zone and Coastal Resource Management Plan – 2018 prepared by the Coast Conservation and Coastal Resource Management Department would provide the necessary underpinning for the development of investment and business models for our fragile coastal zone extending over a circum-island coastline of 1,620 km.

ii.) Blue Bond Initiative of Seychelles: Seychelles is a Small Island Developing State dependent on its marine natural resources to derive its economic prosperity. In recent years there have been a decline in the fish stocks and marine resources linked to i) overexploitation of fisheries resources and subjected to environmental pollution. The benefits expected from the blue bond initiative. A blue bond was issued in 2018 for US$ 15 million over a maturity period of 10 years. Among the benefits expected were the development of a Blue Economy through sustainable use of marine resources securing private sector participation, raising awareness of the critical role of the ocean and marine resources, and the overall global need for environmental protection. (). The early indications are claimed to be very positive and there are several lessons that Sri Lanka can learn from this in designing her own blue bond initiatives.

iii.) Grain for Green Programme of China: China initiated its “Grain for Green” programme in 1999 as an ambitious conservation programme designed to mitigate and prevent flooding and soil erosion. It is an example of Payment for Ecosystem Services (PES) which is helping to solve Environmental issues in China. The programme is designed to retire farmland that is susceptible to soil erosion, although some farmers may go back to farming the land after the program ends. China started the Grain for Green program in the western parts of the country for example Shanxi Province. These areas were known for their rather poorly performing economy that was affiliated with an endangered ecological environment. The environment was being further damaged by soil erosion which was a result of cultivation on sloping land as people were changing forests into farmland. By 2010, around 15 million hectares of farmland and 17 million hectares of barren mountainous wasteland were converted back to natural vegetation (From Wikipedia, the free encyclopedia).

This project has a strong appeal for the restoration of the Central Fragile Area of Sri Lanka as recommended in the NPP 2017 – 2050. The unproductive tea lands, areas under unsustainable vegetable cultivation susceptible to excessive soil erosion and degradation, and monoculture exotic tree plantations in critical watersheds are prime candidates to be sustainably developed under appropriate PES-type business models. It is hoped that the Chinese experience and expertise in the above example would be taken on board in restructuring some of our outstanding Chinese debts.

iv.) Great Green Wall Initiative – An ambitious project partnered by the European Union and the UNCCD and implemented across 22 African countries in 2007 to restore 100 million ha of currently degraded land; sequester 250 million tons of carbon and create 10 million green jobs by 2030. More than USD 8 billion has been raised and pledged to support this game-changing initiative in the Sahel region in Africa to provide fertile land, food security, and economic opportunities for the millions and climate resilience in a region where temperatures are rising faster than anywhere else on earth ().

If the world renowned ‘ellanga’ irrigated agricultural systems (small tank cascade systems) spread across the dry zone of Sri Lanka, can be further enriched through a similar program, not only the sustainability of the agricultural heritage system but the chronic health issues currently afflicted with the farming communities could be successfully addressed. Prototype business models well supported by socio-ecological research are already available for these regions for rebuilding agricultural resilience in the Dry Zone of Sri Lanka.

Debt-for-Climate Swaps

Debt-for Climate Swaps are also emerging as yet another viable option that can generate the much-needed fiscal space for Middle-Income Countries like Sri Lanka to focus on climate ambitions and economic recovery while reducing their overall debt burdens.

A debt for climate swap is an agreement between a sovereign debtor and one or more of its international creditors by which the latter forgives all or a portion of the debtor’s external debt in exchange for a commitment by the debtor to invest, in domestic currency, in specific climate projects during a commonly agreed period. The rationale of debt swaps is that debt can be acquired at a discount. When creditors do not expect to recover the full nominal value of debts, they may be willing to accept less. In exchange for (partial) cancellation of the debt, the debtor government is prepared to mobilize the equivalent of the reduced amount in local currency for agreed purposes on agreed terms. The Debt for Climate swaps help countries struggling to service their debts to reduce the debt and free up fiscal space (cash flow) for climate-friendly investments.

Debt swaps provide opportunities for raising capital especially in low-income countries to address environmental and other policy challenges and support green growth. For the debt for climate swaps, the debtor government commits to invest the accrued savings from debt forgiveness in climate adaptation or mitigation. Debt-for-climate swaps have the potential to transform daunting debt into opportunities to reduce climate vulnerability and implement much-needed adaptation. These swaps would thus contribute to the Paris Agreement, which stipulates that developed countries should mobilize climate finance from a wide variety of sources through a variety of actions.

The potential for using debt-for-climate swaps as an innovative financial solution to the twin crises of climate change and debt distress is very high. Such debt swaps provide opportunities for raising capital in debt-stridden low-income countries to address environmental and other policy challenges and support green growth. However, only when the debt has been made sustainable, the swaps can transfer resources for climate purposes.

A number of developing countries are engaging in debt-for-climate swaps since Seychelles secured the world’s first debt-for-climate swap deal for protecting the world’s oceans with the Paris Club group of developed country creditors in 2016, aimed at ocean conservation and climate resiliency. Since then, several Small Island Developing States (SIDS), especially those in the Caribbean region too have joined this program. These countries are facing situations similar to those that we in Sri Lanka, are currently undergoing. They too are heavily indebted countries with tourism-dependent economies more recently worsened by COVID -19 pandemic and subjected to serious climate vulnerabilities.

Activities that can be funded through this debt structuring, include management of marine reserves, coral and mangrove restoration, improving marine, fisheries, and coastal policies, economic diversification, and climate resiliency of coastal communities.

Debt for Climate Swaps provide excellent opportunities for promoting climate change mitigation projects such as the accelerated phasing-out of coal power projects. Quite fortuitously, 40 countries including Sri Lanka pledged at the COP 26 meeting of the UNFCCC held in Glasgow in 2021 and also agreed not to build/fund any new coal power plants. In the light of these recent developments in relation to the UN Convention on Climate Change and the internationally binding Paris Agreement, the Long-term Generation Expansion Plan (LTGEP) for Sri Lanka may need to be reworked. This plan envisages the retirement of several thermal power plants that are likely to be taken off from operation due to their age-related mal-functioning and more importantly, the construction of two more coal-fired power plants totaling 1500MW in the late 2020s. Debt for Climate Swaps are strong candidates for facilitating the early retirement of coal/thermal power plants and investing in energy-efficient clean energy projects in Sri Lanka.

Debts for Climate Swaps are also eligible for climate change adaptation which include Nature- based Solutions that include conservation and enhancing diversity by restoration of degraded lands including wetlands. The rationale for undertaking such projects, which are often not commercially viable business models, is that their benefits, such as enhanced biodiversity, higher water tables, carbon capture, improved well-being of citizens, green jobs created, etc. far outweigh the costs involved. Their socio-economic benefits being intangible are often not captured or are externalized in standard benefit/cost analyses. However, in this Decade of Forest Restoration declared by the United Nations, such ventures partnered with developed countries are being used to reduce the debt burden of developing countries.

Conclusions

In summary, Sri Lanka has in place most of her key development strategies and plans for the next several years in conformity with major global conventions on biodiversity, climate change, and combating land degradation. They are the following:

 National Biodiversity Action plan (NBSAP 2016-2022),

 National REDD+ Investment Framework and Action Plan (NRIFAP 2018-2022),

 National Action Program for Combating Land Degradation in Sri Lanka (NAP-CLD 2015 -2024),

 National Adaptation Plan for Climate Change Impacts in Sri Lanka (2016 – 2025).

Using the information provided by these strategic action plans, the Central Bank of Sri Lanka together with Ministry of Environment has prepared a Biodiversity Finance Plan (BFP) for Sri Lanka (2018 – 2024) with 13 prioritized finance solutions some of which I have highlighted in this article. The donor agencies are also very much interested in entering into green financing partnerships with countries in need of investment capital. Therefore, every effort should be made to make this current adversity an opportunity of a lifetime.

The Prime Minister informed the parliament on 06th July 2022 that Sri Lanka is participating in the bailout negotiations with the IMF as a bankrupt country and is going into a deep recession this year and have to face current difficulties extending into 2023, as well. As such, the country needs to submit a plan on Sri Lanka’s debt sustainability separately to the IMF for which a strong political leadership to take visionary decisions is the order of the day.

At this critical juncture of our nation, it may be well worth reminding ourselves of the historic words of John F. Kennedy at his inaugural address as the 35th president of the United States in 1961‘My fellow Americans, ask not what your country can do for you – ask what you can do for your country’ which challenged every American to contribute some way to the public good. Also, what a one-time prime minister of Sri Lanka SWRD Bandaranaika wrote in his son -Anura’s album which later became a more public proclamation ‘the main duty of man is to serve man’ are words that we need to convert to deeds at this moment of despair.

This is in stark contrast to protesting with the stereotypic slogans ‘Diyaw, diyaw, diyaw’ by the politically indoctrinated trade unions and the misguided young intelligentsia at every turn during this period of despondency with much inconvenience and annoyance, in particular, to the already suffering working class people. We are in need of a socially astute political leader with a vision who can stand tall and adapt the words of JFK as ‘My fellow Sri Lankans, ask not what your country can do for you – ask what you can do for your country’ in this hour of deep political and socio-economic crisis and turmoil to steady the ship and steer it safely to calmer waters. Finding a national figure with such qualities at this moment is the Quadrillion Rupee (inflation accounted for) problem!



Continue Reading
Click to comment

Leave a Reply

Your email address will not be published. Required fields are marked *

Midweek Review

How massive Akuregoda defence complex was built with proceeds from sale of Galle Face land to Shangri-La

Published

on

Defence Headquarters Complex (DHQC) at Akuregoda

The Navy ceremonially occupied its new Headquarters (Block No. 3) at the Defence Headquarters Complex (DHQC) at Akuregoda, Battaramulla, on 09 December, 2025. On the invitation of the Commander of the Navy, Vice Admiral Kanchana Banagoda, the Deputy Minister of Defence, Major General Aruna Jayasekara (Retd) attended the event as the Chief Guest.

Among those present were Admiral of the Fleet Wasantha Karannagoda, the Defence Secretary, Air Vice Marshal Sampath Thuyacontha (Retd), Commander of the Army, Lieutenant General Lasantha Rodrigo, Commander of the Air Force, Air Marshal Bandu Edirisinghe, Inspector General of Police, Attorney-at-Law Priyantha Weerasooriya and former Navy Commanders.

With the relocation of the Navy at DHQC, the much-valued project to shift the Ministry of Defence (MoD) and Headquarters of the war-winning armed forces has been brought to a successful conclusion. The Army was the first to move in (November 2019), the MoD (May 2021), the Air Force (January 2024) and finally the Navy (in December 2025).

It would be pertinent to mention that the shifting of MoD to DHQC coincided with the 12th anniversary of bringing back the entire Northern and Eastern Provinces under the government, on 18 May, 2009. LTTE leader Velupillai Prabhakaran was killed on the following day.

The project that was launched in March 2011, two years after the eradication of the Liberation Tigers of Tamil Eelam (LTTE), suffered a severe setback, following the change of government in 2015. The utterly irresponsible and treacherous Yahapalana government halted the project. That administration transferred funds, allocated for it, to the Treasury, in the wake of massive Treasury bond scams perpetrated in February and March 2015, within weeks after the presidential election.

Maithripala Sirisena, in his capacity as the President, as well as the Minister of Defence, declared open the new Army Headquarters, at DHQC, a week before the 2019 presidential election. Built at a cost of Rs 53.3 bn, DHQC is widely believed to be the largest single construction project in the country. At the time of the relocation of the Army, the then Lt. Gen. Shavendra Silva, the former Commanding Officer of the celebrated Task Force I/58 Division, served as the Commander.

Who made the DHQC a reality? Although most government departments, ministries and armed forces headquarters, were located in Colombo, under the Colombo Master Plan of 1979, all were required to be moved to Sri Jayewardenepura, Kotte. However successive administrations couldn’t go ahead with the massive task primarily due to the conflict. DHQC would never have been a reality if not for wartime Defence Secretary Gotabaya Rajapaksa who determinedly pursued the high-profile project.

The absence of any reference to the origins of the project, as well as the significant role played by Gotabaya Rajapaksa at the just relocated Navy headquarters, prompted the writer to examine the developments related to the DHQC. The shifting of MoD, along with the Armed Forces Headquarters, was a monumental decision taken by Mahinda Rajapaksas’s government. But, all along it had been Gotabaya Rajapaksa’s determination to achieve that monumental task that displeased some within the administration, but the then Defence Secretary, a former frontline combat officer of the battle proved Gajaba Regiment, was not the type to back down or alter his strategy.

GR’s maiden official visit to DHQC

Gotabaya Rajapaksa, who made DHQC a reality, visited the sprawling building in his capacity as the President, Defence Minister and the Commander-in-Chief of the Armed Forces on the morning of 03 August, 2021. It was Gotabaya Rajapaksa’s maiden official visit to the Army Headquarters, located within the then partially completed DHQC, eight months before the eruption of the externally backed ‘Aragalaya.’ The US-Indian joint project has been exposed and post-Aragalaya developments cannot be examined without taking into consideration the role played by political parties, the Bar Association of Sri Lanka, media, as well as the weak response of the political leadership and the armed forces. Let me stress that a comprehensive probe should cover the period beginning with the Swiss project to humiliate President Gotabaya Rajapaka in November, 2019, by staging a fake abduction, and the storming of the President’s House in July 2022. How could Sri Lanka forget the despicable Swiss allegation of sexual harassment of a female local employee by government personnel, a claim proved to be a blatant lie meant to cause embarrassment to the newly elected administration..

Let me get back to the DHQC project. The war-winning Mahinda Rajapaksa government laid the foundation for the building project on 11 May, 2011, two years after Sri Lanka’s triumph over the separatist Tamil terrorist movement. The high-profile project, on a 77-acre land, at Akuregoda, Pelawatta, was meant to bring the Army, Navy, and the Air Force headquarters, and the Defence Ministry, to one location.

President Gotabaya Rajapaksa’s visit to Akuregoda would have definitely taken place much earlier, under a very different environment, if not for the eruption of the Covid-19 pandemic, just a few months after his victory at the November 2019 election. The worst post-World War II crisis that had caused devastating losses to national economies, the world over, and delivered a staggering blow to Sri Lanka, heavily dependent on tourism, garment exports and remittances by its expatriate workers.

On his arrival at the new Army headquarters, President Gotabaya Rajapaksa was welcomed by General Shavendra Silva, who also served as the Chief of Defence Staff. Thanks to the President’s predecessor, Maithripala Sirisena, the then Maj. Gen Shavendra Silva was promoted to the rank of Lt. Gen and appointed the Commander of the Army on 18 August, 2019, just three months before the presidential poll. The appointment was made in spite of strong opposition from the UNP leadership and US criticism.

President Gotabaya Rajapaksa hadn’t minced his words when he publicly acknowledged the catastrophe caused by the plunging of the national income and the daunting challenge in debt repayment, amounting to as much as USD 4 bn annually.

The decision to shift the tri-forces headquarters and the Defence Ministry (The Defence Ministry situated within the Army Headquarters premises) caused a media furor with the then Opposition UNP alleging a massive rip-off. Defence Secretary Gotabaya Rajapaksa reiterated his commitment to the project. If not for the change of government in 2015, the DHQC would have been completed during Mahinda Rajapaksa’s third term if he was allowed to contest for a third term successfully. Had that happened, Gotabaya Rajapaksa wouldn’t have emerged as the then Opposition presidential candidate at the 2019 poll. The disastrous Yahapalana administration and the overall deterioration of all political parties, represented in Parliament, and the 19th A that barred Mahinda Rajapaksa from contesting the presidential election, beyond his two terms, created an environment conducive for Gotabaya Rajapaksa’s emergence as the newly registered SLPP’s candidate.

Shangri-La move

During the 2019 presidential election campaign, SLPP candidate Gotabaya Rajapaksa strongly defended his decision to vacate the Army Headquarters, during Mahinda Rajapaksa presidency, to pave the way for the Shangri-La Hotel in Colombo. Shangri-La was among the hotels targeted by the Easter Sunday bombers – the only location targeted by two of them, including mastermind Zahran Hashim.

President Gotabaya Rajapaksa is on record as having said that vacation of the site had been in accordance with first executive President J.R. Jayewardene’s decision to move key government buildings away from Colombo to the new Capital of the country at Sri Jaywardenepura. Gotabaya Rajapaksa said so in response to the writer’s queries years ago.

Gotabaya Rajapaksa said that a despicable attempt was being made to blame him for the Army Headquarters land transaction. “I have been accused of selling the Army Headquarters land to the Chinese.”

Rajapaksa explained that Taj Samudra, too, had been built on a section of the former Army Headquarters land, previously used to accommodate officers’ quarters and the Army rugger grounds. Although President Jayewardene had wanted the Army Headquarters shifted, successive governments couldn’t do that due to the war and lack of funds, he said.

President Maithripala Sirisena and Prime Minister Ranil Wickremesinghe declared open Shangri-La Colombo on 16 November, 2017. The Hong Kong-based Shangri-La Asia invited Gotabaya Rajapaksa for dinner, the following day, after the opening of its Colombo hotel. Shangri-La Chairperson, Kuok Hui Kwong, the daughter of Robert Kuok Khoon Ean, was there to welcome Gotabaya Rajapaksa, who had cleared the way for the post-war mega tourism investment project. Among those who had been invited were former President Mahinda Rajapaksa, former External Affairs Minister Prof. G.L. Peiris, former Presidential Secretary Lalith Weeratunga, and President’s Counsel Gamini Marapana, PC.

The Cabinet granted approval for the high-profile Shangri-La project in October 2010 and the ground-breaking ceremony was held in late February 2012.

Rajapaksa said that the Shangri-La proprietor, a Chinese, ran a big operation, based in Hong Kong, Malaysia and Singapore. Another parcel of land was given to the mega ITC hotel project, also during the previous Rajapaksa administration. ITC Ratnadipa, a super-luxury hotel by India’s ITC Hotels, officially opened in Colombo on April 25, 2024

Following the change of government in January 2015, the remaining section of the Army headquarters land, too, was handed over to Shangri-La.

Gotabaya Rajapaksa emphasised that the relocation of the headquarters of the Army, Navy, and Air Force, as well as the Defence Ministry, had been part of JRJ’s overall plan. The change of government, in January 2015, had caused a serious delay in completing the project and it was proceeding at a snail’s pace, Rajapaksa said. Even Parliament was shifted to Kotte in accordance with JRJ’s overall plan, Gotabaya Rajapaksa said, explaining his move to relocate all security forces’ headquarters and Defence Ministry into one complex at Akuregoda.

Acknowledging that the Army Headquarters had been there at Galle Face for six decades, Rajapaksa asserted that the Colombo headquarters wasn’t tactically positioned.

Rajapaksa blamed the inordinate delay in the completion of the Akuregoda complex on the Treasury taking hold of specific funds allocated for the project.

Over 5,000 military workforce

Gotabaya Rajapaksa’s maiden visit to DHQC on 3 August, 2021. General
Shavendra Silva is beside him

Major General Udaya Nanayakkara had been the first Director, Project Management Unit, with overall command of approximately 5,000 tri-forces personnel assigned to carry it out. The Shangri-La transaction provided the wherewithal to implement the DHQC project though the change of government caused a major setback. Nanayakkara, who had served as the Military Spokesman, during Eelam War IV, oversaw the military deployment, whereas private contractors handled specialised work such as piling, AC, fire protection and fire detection et al. The then MLO (Military Liaison Officer) at the Defence Ministry, Maj. Gen Palitha Fernando, had laid the foundation for the project and the work was going on smoothly when the Yahapalana administration withheld funds. Political intervention delayed the project and by September 2015, Nanayakkara was replaced by Maj Gen Mahinda Ambanpola, of the Engineer Service.

In spite of President Sirisena holding the Defence portfolio, he couldn’t prevent the top UNP leadership from interfering in the DHQC project. However, the Shangri-La project had the backing of A.J.M. Muzammil, the then UNP Mayor and one of the close confidants of UNP leader Ranil Wickremesinghe. Muzammil was among those present at the ground breaking ceremony for Shangri-La held on 24th February, 2012 ,with the participation of Minister Basil Rajapaksa.

Having identified the invaluable land, where the Army Headquarters and Defence Ministry were situated, for its project, Shangri-La made its move. Those who had been aware of Shangri-La’s plans were hesitant and certainly not confident of their success. They felt fearful of Defence Secretary Rajapaksa’s reaction.

But, following swift negotiations, they finalised the agreement on 28 December, 2010. Lt. Gen. Jagath Jayasuriya was the then Commander of the Army, with his predecessor General Fonseka in government custody after having been arrested within two weeks after the conclusion of the 2010 26 January Presidential poll.

Addressing the annual Viyathmaga Convention at Golden Rose Hotel, Boralesgamuwa, on 04 March, 2017, Gotabaya Rajapaksa, perhaps for the first time publicly discussed his role in the Shangri-La project. Declaring that Sri Lanka suffered for want of, what he called, a workable formula to achieve post-war development objectives, the war veteran stressed the pivotal importance of swift and bold decision-making.

Gotabaya Rajapaksa explained how the government had acted swiftly, and decisively, to attract foreign investments though some such efforts were not successful. There couldn’t be a better example than the government finalising an agreement with Shangri-La Hotels, he declared.

Declaring that the bureaucratic red tape shouldn’t in any way be allowed to undermine investments, Rajapaksa recalled the Chairman/CEO of Shangri-La Hotels and Resorts, Robert Kuok Khoon Ean, wanting the Army Headquarters land for his Colombo project. In fact, the hotels chain, at the time, had proposed to build hotels in Colombo, Hambantota and Batticaloa, and was one of the key investors wanting to exploit Sri Lanka’s success in defeating terrorism.

“Khoon-Ean’s request for the Army Headquarters land caused a serious problem for me. It was a serious challenge. How could I shift the headquarters of the war-winning Army? The Army had been there for six decades. It had been the nerve centre of the war effort for 30 years,” said Rajapaksa, who once commanded the First Battalion of the Gajaba Regiment (1GR)

Rajapaksa went on to explain how he exploited a decision taken by the first executive president J.R. Jayewardene to shift the Army Headquarters to Battaramulla, many years back. “Within two weeks, in consultation with the Secretary to the Finance Ministry, Dr. P.B. Jayasundera, and the Board of Investment, measures were taken to finalise the transaction. The project was launched to shift the Army, Navy and Air Force headquarters to Akuregoda, Pelawatte, in accordance with JRJ’s plan.”

The Hong Kong-based group announced the purchase of 10 acres of state land, in January 2011. Shangri-La Asia Limited announced plans to invest over USD 400 mn on the 30-storeyed star class hotel with 661 rooms.

The hotel is the second property in Sri Lanka for the leading Asian hospitality group, joining Shangri-La’s Hambantota Resort & Spa, which opened in June 2016.

Rajapaksa said that the top Shangri-La executive had referred to the finalisation of their Colombo agreement to highlight the friendly way the then administration handled the investment. Shangri-La had no qualms about recommending Sri Lanka as a place for investment, Rajapaksa said.

The writer explained the move to shift the Army Headquarters and the Defence Ministry from Colombo in a lead story headlined ‘Shangri-La to push MoD, Army Hq. out of Colombo city: Army Hospital expected to be converted into a museum’ (The Island, 04 January, 2011).

Yahapalana chaos

In the wake of the January 2015 change of government, the new leadership caused chaos with the suspension of the China-funded Port City Project, a little distance away from the Shangri-La venture. Many an eyebrow was raised when the then Finance Minister Ravi Karunanayake declared, in March, 2015, that funds wouldn’t be made available to the DHQC project until the exact cost estimation of the project could be clarified.

Media quoted Karunanayake as having said “Presently, this project seems like a bottomless pit and we need to know the depth of what we are getting into. From the current state of finances, allocated for this project, it seems as if they are building a complex that’s even bigger than the Pentagon!”

The insinuating declaration was made despite them having committed the blatant first Treasury bond scam in February 2015 that shook the Sirisena-Wickremesinghe administration to its core.

In June 2016, Cabinet spokesperson, Dr. Rajitha Senaratne, announced the suspension of the Akuregoda project. Citing financial irregularities and mismanagement of funds, Dr. Senaratne alleged that all Cabinet papers on the project had been prepared according to the whims and fancies of Gotabaya Rajapaksa.

The then Minister Karunanayake spearheaded the campaign against the DHQC project alleging, in the third week of January, 2015, that Rs 13.2 billion, in an account maintained at the Taprobane branch of the Bank of Ceylon had been transferred to the Consolidated Fund of the Treasury. The matter was being investigated as the account belonged to the Ministry of Defence, he added. The Finance Minister stressed that the MoD had no right to maintain such an account in violation of regulations and, therefore, the opening of the account was being investigated. The Minister alleged that several illegal transactions, including one involving Samurdhi, had come to light. He estimated the Samurdhi transaction (now under investigation) at Rs. 4 billion.

Having undermined Shangri-La and the DHQC projects, the UNP facilitated the expansion of the hotel project by releasing additional three and half acres on a 99-year lease. During the Yahapalana administration, Dayasiri Jayasekera disclosed at a post-Cabinet press briefing how the government leased three and a half acres of land at a rate of Rs. 13.1 mn per perch whereas the previous administration agreed to Rs 6.5 mn per perch. According to Jayasekera the previous government had leased 10 acres at a rate of Rs 9.5 mn (with taxes) per perch.

The bottom line is that DHQC was built with Shangri-La funds and the initiative was Gotabaya Rajapaksa’s whose role as rock solid wartime Secretary of Defence to keep security forces supplied with whatever their requirements could never be compared with any other official during the conflict.

By Shamindra Ferdinando

Continue Reading

Midweek Review

The Hour of the Invisible

Published

on

Picking-up the pieces in the bashed Isle,

Is going to take quite a long while,

And all hands need to be united as one,

To give it even a semblance of its former self,

But the more calloused and hardy the hands,

The more suitable are they for the task,

And the hour is upon us you could say,

When those vast legions of invisible folk,

Those wasting away in humble silent toil,

Could stand up and be saluted by all,

As being the most needed persons of the land

By Lynn Ockersz

Continue Reading

Features

Handunnetti and Colonial Shackles of English in Sri Lanka

Published

on

Handunetti at the World Economic Forum

“My tongue in English chains.
I return, after a generation, to you.
I am at the end
of my Dravidic tether
hunger for you unassuaged
I falter, stumble.”
– Indian poet R. Parthasarathy

When Minister Sunil Handunnetti addressed the World Economic Forum’s ‘Is Asia’s Century at Risk?’ discussion as part of the Annual Meeting of the New Champions 2025 in June 2025, I listened carefully both to him and the questions that were posed to him by the moderator. The subsequent trolling and extremely negative reactions to his use of English were so distasteful that I opted not to comment on it at the time. The noise that followed also meant that a meaningful conversation based on that event on the utility of learning a powerful global language and how our politics on the global stage might be carried out more successfully in that language was lost on our people and pundits, barring a few commentaries.

Now Handunnetti has reopened the conversation, this time in Sri Lanka’s parliament in November 2025, on the utility of mastering English particularly for young entrepreneurs. In his intervention, he also makes a plea not to mock his struggle at learning English given that he comes from a background which lacked the privilege to master the language in his youth. His clear intervention makes much sense.

The same ilk that ridiculed him when he spoke at WEF is laughing at him yet again on his pronunciation, incomplete sentences, claiming that he is bringing shame to the country and so on and so forth. As usual, such loud, politically motivated and retrograde critics miss the larger picture. Many of these people are also among those who cannot hold a conversation in any of the globally accepted versions of English. Moreover, their conceit about the so-called ‘correct’ use of English seems to suggest the existence of an ideal English type when it comes to pronunciation and basic articulation. I thought of writing this commentary now in a situation when the minister himself is asking for help ‘in finding a solution’ in his parliamentary speech even though his government is not known to be amenable to critical reflection from anyone who is not a party member.

The remarks at the WEF and in Sri Lanka’s parliament are very different at a fundamental level, although both are worthy of consideration – within the realm of rationality, not in the depths of vulgar emotion and political mudslinging.

The problem with Handunnetti’s remarks at WEF was not his accent or pronunciation. After all, whatever he said could be clearly understood if listened to carefully. In that sense, his use of English fulfilled one of the most fundamental roles of language – that of communication. Its lack of finesse, as a result of the speaker being someone who does not use the language professionally or personally on a regular basis, is only natural and cannot be held against him. This said, there are many issues that his remarks flagged that were mostly drowned out by the noise of his critics.

Given that Handunnetti’s communication was clear, it also showed much that was not meant to be exposed. He simply did not respond to the questions that were posed to him. More bluntly, a Sinhala speaker can describe the intervention as yanne koheda, malle pol , which literally means, when asked ‘Where are you going?’, the answer is ‘There are coconuts in the bag’.

He spoke from a prepared text which his staff must have put together for him. However, it was far off the mark from the questions that were being directly posed to him. The issue here is that his staff appears to have not had any coordination with the forum organisers to ascertain and decide on the nature of questions that would be posed to the Minister for which answers could have been provided based on both global conditions, local situations and government policy. After all, this is a senior minister of an independent country and he has the right to know and control, when possible, what he is dealing with in an international forum.

This manner of working is fairly routine in such international fora. On the one hand, it is extremely unfortunate that his staff did not do the required homework and obviously the minister himself did not follow up, demonstrating negligence, a want for common sense, preparedness and experience among all concerned. On the other hand, the government needs to have a policy on who it sends to such events. For instance, should a minister attend a certain event, or should the government be represented by an official or consultant who can speak not only fluently, but also with authority on the subject matter. That is, such speakers need to be very familiar with the global issues concerned and not mere political rhetoric aimed at local audiences.

Other than Handunnetti, I have seen, heard and also heard of how poorly our politicians, political appointees and even officials perform at international meetings (some of which are closed door) bringing ridicule and disastrous consequences to the country. None of them are, however, held responsible.

Such reflective considerations are simple yet essential and pragmatic policy matters on how the government should work in these conditions. If this had been undertaken, the WEF event might have been better handled with better global press for the government. Nevertheless, this was not only a matter of English. For one thing, Handunnetti and his staff could have requested for the availability of simultaneous translation from Sinhala to English for which pre-knowledge of questions would have been useful. This is all too common too. At the UN General Assembly in September, President Dissanayake spoke in Sinhala and made a decent presentation.

The pertinent question is this; had Handunetti had the option of talking in Sinhala, would the interaction have been any better? That is extremely doubtful, barring the fluency of language use. This is because Handunnetti, like most other politicians past and present, are good at rhetoric but not convincing where substance is concerned, particularly when it comes to global issues. It is for this reason that such leaders need competent staff and consultants, and not mere party loyalists and yes men, which is an unfortunate situation that has engulfed the whole government.

What about the speech in parliament? Again, as in the WEF event, his presentation was crystal clear and, in this instance, contextually sensible. But he did not have to make that speech in English at all when decent simultaneous translation services were available. In so far as content was concerned, he made a sound argument considering local conditions which he knows well. The minister’s argument is about the need to ensure that young entrepreneurs be taught English so that they can deal with the world and bring investments into the country, among other things. This should actually be the norm, not only for young entrepreneurs, but for all who are interested in widening their employment and investment opportunities beyond this country and in accessing knowledge for which Sinhala and Tamil alone do not suffice.

As far as I am concerned, Handunetti’s argument is important because in parliament, it can be construed as a policy prerogative. Significantly, he asked the Minister of Education to make this possible in the educational reforms that the government is contemplating.

He went further, appealing to his detractors not to mock his struggle in learning English, and instead to become part of the solution. However, in my opinion, there is no need for the Minister to carry this chip on his shoulder. Why should the minister concern himself with being mocked for poor use of English? But there is a gap that his plea should have also addressed. What prevented him from mastering English in his youth goes far deeper than the lack of a privileged upbringing.

The fact of the matter is, the facilities that were available in schools and universities to learn English were not taken seriously and were often looked down upon as kaduwa by the political spectrum he represents and nationalist elements for whom the utilitarian value of English was not self-evident. I say this with responsibility because this was a considerable part of the reality in my time as an undergraduate and also throughout the time I taught in Sri Lanka.

Much earlier in my youth, swayed by the rhetoric of Sinhala language nationalism, my own mastery of English was also delayed even though my background is vastly different from the minister. I too was mocked, when two important schools in Kandy – Trinity College and St. Anthony’s College – refused to accept me to Grade 1 as my English was wanting. This was nearly 20 years after independence. I, however, opted to move on from the blatant discrimination, and mastered the language, although I probably had better opportunities and saw the world through a vastly different lens than the minister. If the minister’s commitment was also based on these social and political realities and the role people like him had played in negating our English language training particularly in universities, his plea would have sounded far more genuine.

If both these remarks and the contexts in which they were made say something about the way we can use English in our country, it is this: On one hand, the government needs to make sure it has a pragmatic policy in place when it sends representatives to international events which takes into account both a person’s language skills and his breadth of knowledge of the subject matter. On the other hand, it needs to find a way to ensure that English is taught to everyone successfully from kindergarten to university as a tool for inclusion, knowledge and communication and not a weapon of exclusion as is often the case.

This can only bear fruit if the failures, lapses and strengths of the country’s English language teaching efforts are taken into cognizance. Lamentably, division and discrimination are still the main emotional considerations on which English is being popularly used as the trolls of the minister’s English usage have shown. It is indeed regrettable that their small-mindedness prevents them from realizing that the Brits have long lost their long undisputed ownership over the English language along with the Empire itself. It is no longer in the hands of the colonial masters. So why allow it to be wielded by a privileged few mired in misplaced notions of elitism?

Continue Reading

Trending