Mike Pence escorted out of the Chamber to safety Trump instigated mobs attacked the Capitol building
by Kumar David
Indications are that the Biden Presidency does not resemble any other post-war American presidency. Though he was Obama’s Vice President, thankfully he is not imitating that failed model. Post-war Democratic presidents (Truman, Kennedy, Johnson, Carter, Clinton and Obama) followed a different agenda. FDR however comes to mind when searching for something similar; maybe because the crises now and during the Great Depression were both so daunting. Look at the parlous predicament now – a covid catastrophe, an economic slump, decline in global power, foreign policy setbacks, and Trump incited domestic terrorism. Except for the Great Depression there is no other period since the Civil War when conditions were so perilous. Maybe this is the reason why Biden’s actions so far are reminiscent of the FDR model.
At the same time duplicity is apparent; on Iran he refuses to lift sanctions until the latter comes into full compliance with a treaty that his predecessor Trump ripped up. The US as a superpower thinks it can eat its words and have them. Foreign policy hawks may be regaining ground they lost during the election campaign. When China, as expected, blocked a Security Council resolution to condemn the Burmese coup calling it “an internal affair” (no doubt akin to the incarceration of hundreds of thousands of Uyghur Muslims in Xinjiang!), US condemnation of Chinese duplicity was muted. But with protests spreading across Burma and against the backdrop of a US decision to renew links with the UN Human Rights Council, Biden finally made the right call and imposed tough sanctions on Burma’s military. This will hearten local and international observers of the upcoming UNHRC debate on Sri Lanka. Fifteen months ago I explicitly told my readers that the road to dictatorship in this country will be through the transformation of institutions (courts, constitution, state administration and the military).The Gotabaya Executive, now snarled in internal disarray and a Sino-Quad logjam is uncertain which way to turn. Weeks ago I said in this column (everyone says it now) that tension was rising between the Executive and the Parliamentary arms of government. The Wimal-Kariyawasam clash is symptomatic.
To return to my topic, what is distinctive about the Biden Administration so far is that it is not treading the beholden-to-Wall-Street path that the Obama Administration did from day one. He is also holding firm to a climate-change, racial equality and poor relief agenda despite hostility of powerful lobbies. There is a tussle right now about Biden’s refusal to back-down on his $1.9 trillion covid control, cum economic stimulus, cum income relief for low and middle earner, package, which has run into determined Republican opposition. In FDR style, Team Biden is using stimulus not to shower handouts to big business, as Obama did, but to target infrastructure development and job creation. I am in no hurry to hand out a good-conduct certificate yet, it’s too early for that, but it is necessary to take note of trends. This huge $1.9 trillion package scripts his presidency as an FDR-style New Deal initiative. He seems to be exploring new ground, but caution for a while more before any hagiography is wise.
The $15 per hour minimum wage is a contentious issue. Is it too expensive? Even its most vociferous champion curmudgeonly Bernie Sanders admits “It was never my intention to increase the minimum wage to $15 immediately and during the pandemic. My legislation gradually increases it to $15 an hour over a five-year period; that is what we have got to do.” This minimum wage would reduce poverty but cost jobs, the non-partisan Congressional Budget Office says. Doing so by 2025 would boost pay for 17 million people but cut 1.4 million jobs. Biden cannot backtrack on his oath to implement minimum wage legislation and Democrats will be able include the wage hike in a bill to be passed by Reconciliation (a complicated short-cut process in the Senate that can be used a few times a year without a super-majority, 60 votes). It would have a positive effect of $64.5 billion per year on the federal budget, the boost coming in part from increased payroll tax revenue.
Sri Lankan readers may find a few comments on some members of Biden’s Cabinet helpful – it is overall an able team. Some are known to be competent intellectuals, a few quite distinguished; Yellen (Treasury), Binken (State), Garland (AG, that is Justice) and Granholm (Energy). There are four other appointments which are interesting; Gen. Lloyd Austin the first black Defence Secretary, Alejandro Mayorkas a Hispanic in charge of sensitive Homeland Security, Deb Haaland (Interior) the first native American to hold cabinet position, and Pete Buttigieg (Transport) of unconventional sexual orientation. Biden has made good on his promise that his choices would reflect America’s diversity.
Biden’s seven person science team (Office of Science and Technology Policy – OSTP), which the media describes as “Among the brightest, most dedicated people not only in the country but the world” is headed by a world-renowned biologist Eric Lander (Princeton Bachelors, Rhodes Scholar and Oxford DPhil) and includes America’s first woman Nobel Laureate (Frances Arnold). The other five too are world-class scientists. Gina McCarthy of environmental fame has been named Presidential Climate Advisor (“Climate Tsar” they call her, an appellation she will have to share with John Kerry named Climate Ambassador). One thing for sure, people of this calibre speak out and speak their minds; no dumb-cluck politician can intimidate them because they aren’t obliged to anybody for anything. A very refreshing thought, my scientist and engineer friends are sure to agree.
Having said so many nice things about Biden I am sure you are expecting a few stings in the tail and I am loath to disappoint you. The obvious one is to repeat that it is early days and while voicing approval it is necessary to express caution as well – how many politicians started off as everyone’s darling and wound up failures and miscarriages. The principal challenges facing the new administration are also a hurdles at which it may stumble; the uncertainty of Covid, class conflict over the economy, the large disgruntled mass which opted for Trump and will remain knotty for years more, race which won’t change colour and the complexity of international relations. I will speak of each in future columns, but let me say something upfront now. Because America is a country of top technological (still the leader I guess), scientific (a bigger concentration of the world’s best), economic (soon to be overtaken by China) and social potential (I will explore this carefully some other time), what happens in America in the next few decades is one of the cardinal matters that will shape the Twenty-first Century.
Rome did not decline to nothing in a day; from the start of the decline to eventual fall many moons elapsed. Gibbon begins his account of decline from the accession of Commodus (180 AD) and the fall of the Western Roman Empire is conventionally dated to 476 AD, when Flavius Odoacer a “barbarian” deposed Emperor Romulus Augustulus and proclaimed himself ruler. Other historians prefer different chronologies and dating, but the point I am making is that when global powers metamorphose, it is a prolonged process. More important is that their influences persist long afterwards. The impact and influences of Rome persist to this day. Someone said that if you go on a journey in philosophy on any theme, soon you will meet an ancient Greek returning from the same voyage. Likewise with Roman physical infrastructure, Roman law and governance. This getting lyrical so let’s return to earth. What I am pointing to is that the impact of American mores and culture will persist for longer than its superpower status. The language, artifices and political practices of the blithering English are still around nearly a century after the blooming empire was laid to rest. The traditions of some empires persist for long others do not – where is Ozymandias king of kings? Persia’s eight-century Achaemenid Empire or the Mayas have evaporated without trace so far as latter-day cultures notice. Why some go one way and others the other is too long and complex to pursue here.
My case is that the influence of American society will persist for long after the American Empire. What will persist above all else is the robustness of its unique social comportment and its roughshod democracy. A socialist America will have to be a democratic America, nothing less can put down roots in this soil and clime. Last week I was glued to the Trump impeachment trial in the Senate. A lesson I took away is recognition of the boldness of its democracy – bourgeois liberal-democracy, if you want theoretical purity. Democracy survived but it was a close call; at certain moments the threat was deadly. One mishap in a court, one truant State refusing to certify results, one bunch of electoral officials cowed by Trump’s bullying, one bullet in Nancy Pelosi’s head, or one misstep by Mike Pence, and who knows, history may have had to be rewritten.
I am certain Trump’s trial will not gather the requisite majority in the Senate for conviction though the Constitution says he is commander-in-chief of the military but from the summer 2020 he has been commander-in-chief of mobs. He goaded the lawless to insurrection and prepared the way for rioters to storm the Capitol. In a desperate effort to cling to power he allowed his rowdies to go after his own Vice President Pence chanting “Hang Mike Pence”. It is an enigma that the citadel of American democracy was stormed by American neo-fascists, egged on by the nation’s sitting president. Yes, democracy prevailed this time, but is unrest just beginning? A surreal plague of illiberalism has infected a portion of the body politic? It can and must be defeated but how will future historians make sense of this bizarre episode? I have to leave that too for another time and sign off with a celebrated paradox: “It was the best of times, it was the worst of times, it was the age of wisdom, it was the age of foolishness”.
War: We are not children
By Gwynne Dyer
“We appear to be witnessing a dramatic and childlike scenario,” said Pope Francis, in Bahrain, recently. “In the garden of humanity, instead of cultivating our surroundings, we are playing, instead, with fire, missiles and bombs, weapons that bring sorrow and death, covering our common home with ashes and hatred.”
It’s Pope Francis’s job to say things like that, and he does it with sincerity and grace. He condemned the “childlike” whims of “a few potentates” to make war, and everybody thought that sounded fine, although nobody mentioned any names. (Hint: the name of the chief offending ‘potentate’ of the moment starts with ‘P’.)
But here’s the question. Are you a child? Well, do you at least think like a child? Are you ignorant and powerless? Three times ‘no’?
Well, then, if you are a responsible adult, what did you do the last time your country went to war? (If you belong to the minority whose country hasn’t gone to war since you have been alive, you may skip this question – or just use your imagination.)
The reason war is always with us is not an endless supply of evil potentates with childlike whims. It is an endless supply of human beings, most of whom don’t even have evil in their hearts.What they do have, in full measure, is a basic culture, older than our species itself, that sees war as natural and necessary (at least when our side does it). There are sometimes clear aggressors and defenders, of course, but the roles swap around regularly and the game never stops.
Jean-Jacques Rousseau wouldn’t agree with me, but he only knew the most recent three thousand years of human history. We know about our distant pre-history, and we also know about our primate relatives (especially the chimpanzees), and that has taught us something very important. Human beings didn’t invent war. They inherited it.
In the mid-20th century, the belief that human beings lived in peace before the advent of civilisation began to crumble before the anthropologists’ evidence that warfare was chronic and almost universal among hunter-gatherers. We are all descended from hunter-gatherers.
Then, in the 1970s, primatologist Jane Goodall, studying chimpanzees in Tanzania, discovered that neighbouring chimp bands fought wars with each other. It was low-level war, conducted entirely by many-on-one ambushes, but later research revealed that the male death toll from war averaged 30% per generation, and sometimes entire bands were wiped out.
The reason for this may lie in evolutionary biology. The world has always been pretty full up, and when a given region’s food sources grow scarcer – a drought, a flood, a change in animal migration routes – some of the local inhabitants are going to starve.If you’re a territorial animal that lives in groups, then it pays off in the long run to whittle way at the population of the neighbouring groups. When a crunch time arrives, your more numerous group will be able to drive away, or kill off, the neighbouring band and use its resources as well as your own.
Chimps did not think this strategy up, or choose it. Neither did human beings. Many other group-living predators have the same strategy: lions, hyenas, wolves. Traits like aggressiveness will vary between individuals, but if aggression brings advantages, evolution will work in favour of it.
So here we are, a very long time later, stuck with a deeply embedded traditional behaviour that no longer serves our purposes well. In fact, it might even wipe us out. What can we do about it?
There’s no point in yearning for some universal Gandhi who will change the human heart. He doesn’t exist, and anyway it’s not hearts that need to change. It’s human institutions.
Actually, almost all the military and diplomatic professionals already know that. Even a lot of the politicians understand it, and in the past century – say, since about the middle of the First World War – a great deal of effort has gone into taming war and building institutions that can replace it.
That was what the League of Nations was about. It’s what the United Nations is about, and arms control measures, and international criminal courts to try people who start an aggressive war, starting with the Nuremberg trials in 1945. It’s a work in progress, but there has been a steep and steady decline in the scale and frequency of wars in the last 50 years.
The work is far from finished, and the return of great-power war – with nuclear weapons this time – is an ever-present risk. But nuclear war is not just a threat. It’s also a huge incentive to bring this ancient institution under control, and ultimately to abolish it.And a little prayer along the way probably wouldn’t do any harm.
IMF-led privatisation, land and resource grab in Sri Lanka
BY DR. Asoka Bandarage
On September 1, 2022, debt-trapped Sri Lanka reached a preliminary agreement with the International Monetary Fund (IMF) for a 48-month Extended Fund Facility of $2.9 billion, which hardly covers the country’s outstanding debt, nor its immediate survival needs. Nevertheless, IMF structural adjustment requires the country to meet its familiar debt restructuring conditions: privatisation of state-owned enterprises, cutbacks of social safety nets and alignment of local economic policy with US and other Western interests. There are already signs that these policies would be detrimental to the well-being of ordinary Sri Lankans and the sovereignty of the country and will inevitably lead to more wealth disparity and repeat debt crises.
The most important source of generating state revenue identified in the 2023 Sri Lanka budget is the privatisation of SOEs (State Owned Enterprises), a primary strategy of IMF structural adjustment and neoliberal economics. The 2023 Sri Lankan budget states:
“The government is currently maintaining 420 State-owned enterprises. 52 of these generate over Rs. 86 Billion in losses… A Unit has now been established at the Ministry of Finance with the specific task of restructuring SOEs. Initially, measures will be taken to restructure Sri Lankan Airlines, Sri Lanka Telecom, Colombo Hilton, Waters Edge, and Sri Lanka Insurance Corporation (SLIC) along with its subsidiaries, the proceeds of which will be used to strengthen foreign exchange reserves of the country, and strengthening the Rupee.”
The left-wing and nationalist Bandaranaike governments established many SOEs between the mid-1950s and the mid-1970s, many of them import substitution industries to replace foreign imports with domestic production. Many SOEs were privatised after the introduction of the Open Economy in 1977, and privatisation (or commercialisation) has continued steadily since then, with successive governments selling SOEs outright or turning them into Public Private Partnerships (PPP).
There are 55 strategic SOEs, 287 SOEs with commercial interests and 185 SOEs with non-commercial interests in Sri Lanka. The 55 strategically important SOEs are estimated to employ around 1.9 percent of the country’s labor force. The total state sector workforce is estimated to be about 1.4 million people, which accounts for over one in six of the country’s total workforce. Many Sri Lankans prefer to work for the government sector given job security, retirement and other benefits. There are concerns that “…privatisation can result in lower salaries and benefits as well as retrenchment and high employee turnover,” and that privatising SOEs that enjoy monopolies can result in “corporations making decisions based on profits rather than on public benefit.”
Unlike the private sector, many of the SOEs in Sri Lanka have powerful trade unions, with workers of different skills and professional levels, which have fought for workers’ rights and the country’s sovereignty for decades. Privatisation is likely to lead to the elimination of many trade unions, strikes and other forms of labor resistance. In October 2022, Ceylon Petroleum Corporation (CPC) workers held a protest strike against the proposed privatisation of the CPC. Similarly, 1200 union workers of the Government Press plant – also targeted for privatisation and cutbacks in wages, work conditions and jobs – went on strike in November 2022.
The CPC, a vital enterprise in the island’s oil supply and energy security, has been targeted for privatization under the IMF restructuring programme. Lanka India Oil Company (LIOC), China’s Sinopec, Petroleum Development Oman and Shell have expressed interest in this deal. It is important to note that, in the name of privatisation, the CPC is being handed over to state owned enterprises of powerful foreign countries. The parent company of LIOC is the Indian Oil Corporation Limited (IOC) which is owned by the Ministry of Petroleum and Natural Gas of India. Similarly, Sinopec Group is the world’s largest oil refining, gas and petrochemical conglomerate and is wholly owned by the Chinese state; and Petroleum Development Oman is owned by the Government of Oman, Royal Dutch Shell, Total Energies and Partex.
Parasites and Vultures of Privatization
Sri Lanka must take lessons from privatisation episodes in other parts of the world. According to a 2016 study, ‘The Privatising Industry in Europe’ by the Transnational Institute in Amsterdam, privatisation in Europe has failed to produce the expected revenue as only “profitable firms are being sold and consistently at undervalued prices.” The study notes that privatised firms are no more efficient than state-owned firms and that, under the rubric of privatisation, many European energy companies in Portugal, Greece and Italy, have been sold off to state-owned corporations from China. The Study also states that privatisation in Europe has “encouraged a growth in corruption, with frequent cases of nepotism and conflicts of interest” in Greece, Italy, Spain, Portugal and the UK.
We must also be vigilant for conflicts of interest in such large deals involving public money and wellbeing. For example, the financial and legal advisory firms Clifford Chance and Lazard have been hired by the Sri Lankan government to assist with IMF debt restructuring. The Transnational Institute Study lists Clifford Chance as part of a small group of privatisation advisory law firms, with annual revenues of more than a billion Euros, “reaping huge profits from the new wave of crisis-prompted privatisations.”
Lazard is reputed to be both “the number one sovereign advisory firm” and “the world’s largest privatisation advisory player.” Lazard’s operational global headquarters are in New York City, but the company is officially incorporated in Bermuda – always a warning sign when it comes to (lack of) financial ethics. In previous government advisory contracts, Lazard has taken advantage of its prominent position by involving itself not only its advisory services branch, but also its asset management branch. According to the Study, “Upon the Initial Public Offering (IPO) of important state companies, Lazard has on a number of occasions undervalued the price of a company, which has allowed its asset management branch to buy up the stock at low prices which have then been sold for considerable profit when stock prices soared.”
The practice of both advising on processes of privatisation and then profiting from that advice, raises ethical questions about Lazard. Questions are also raised about the entire global financial industry responsible for creating debt crises in the first place, and then finding devious ways to benefit from them, at the expense of debt-trapped countries.
Despite such serious concerns over privatisation, there is now an enormous push by local and international actors that the solution to Sri Lanka’s debt and economic crises is to privatise the remaining SOEs, and no doubt a select few profit greatly in the process.
A key local player in this is the Sri Lankan NGO, the Advocata Institute in Colombo, which is associated with the Mont Pelerin Society and the Atlas Network and their neoliberal agenda. Advocata is spearheading a major campaign to convince the public that privatisation of SOEs is the path to ‘reset Sri Lanka’ for solvency and prosperity. The ‘Great Sri Lanka Fire Sale’ of state owned enterprises and strategic assets is now on, with huge returns expected for colluding local and global financial and corporate elites and pauperisation for ordinary people.
One key state-owned resource at risk is land, such that commoditising state-owned land is a major aspect of privatisation in Sri Lanka. Not only the land, but water – indispensable for survival of life on Earth – is threatened by privatisation and commoditisation in Sri Lanka and around the world.
This is not new; privatising and commoditising state land for export production has been going on in Sri Lanka since the British colonial era. Although the more recent neoimperial US Millennium Corporation Compact agenda, initiated under George W. Bush in 2002, has not been officially signed by Sri Lanka, contemporary Sri Lankan governments have been advancing its agenda of privatising state land to prioritise export production over local food production, despite rising prices of imported food and the food crisis facing the country.
Two very important proposals in this regard have been slipped into the 2023 budget proposals without public discussion. Firstly, Clause 12.1 on ‘Lands for Agricultural Exports’ states:
“A vast amount of land belonging to Janatha Estate Development Board [EDB), Sri Lanka State Plantation Corporation (SPC), and Land Reform Commission (LRC) remains without being cultivated or productively utilized for a long time, ….. Accordingly, a programme will be devised to allow investors to productively utilise them in a manner to increase both the production and exports. Hence, it is expected that large parcels of unutilised/unproductively used lands will be leased out on long-term basis to grow exportable crops…”
Secondly, Clause 13.1 of the 2023 Budget on ‘Disposal of Government Lands’ states:
“…activities related to the disposal of government lands are carried out by District Secretaries/Government Agents through Divisional Secretaries/ Additional Government Agents…, , such duties were also allocated to Sri Lanka Mahaweli Authority and Land Reform Commission which were established for special requirements at a later stage…there are occurrences of discrimination and malpractice as …activities related to disposal of lands … Therefore…, a programme will be prepared during the next year to enable preliminary activities in relation to disposal of all government lands including the disposal of lands under the above two institutes only by the Divisional Secretaries.”
Nationalist members of Parliament and the Federation of National Organizations have criticised the move to place state land under Divisional Secretaries as a ploy for land grabbing, and that the move to deliberately privatise state land may have ‘irrevocable consequences.’ While recognising the need to reform the existing Land Reform Commission, they point out that solely empowering Divisional Secretaries would encourage partisan land distribution. The 2023 Budget seems to put the MCC Compact into effect although activists challenging the Compact have warned of a neocolonial agenda for a massive modern-day land grab, displacement and peasant pauperization.
There is great concern over the legitimacy of crucial land and other privatisation decisions taken by President Wickremesinghe as neither he nor his United National (UNP) Party have a mandate to do so from the people. The land, the ports and the state enterprises do not belong to politicians but to the people and to future generations of Sri Lankans. Clearly, there needs to be careful deliberation of alternatives before the IMF dictated ‘Great Sri Lanka Fire Sale’ is allowed to proceed.
(COURTESY ASIA TIMES)
A simple lesson in arithmetic on electricity sector
By Eng. Parakrama Jayasinghe
In February this year, I published an article titled, Sri Lankan Electricity Sector – The Headless Chicken (https://www.ft.lk/columns/Sri-Lankan-electricity-sector-The-headless-chicken/4-730564), and that was before Sri Lanka faced an unprecedented shortage of transport fuels, and long queues. The damage caused to the economy by diverting some 75% of the oil supplies to electricity generation is yet to be properly assessed. Therefore any observer including the smallest electricity consumer would agree with the above assessment, considering the sorry state that the once proud electricity sector has deteriorated to. This is by no means a sudden problem, but a repetition year after year even giving a new interpretation to what is meant by “Emergency Power”.
That Sri Lanka is subject to a dry spell every year from January to April does not require elaboration. However, the Ceylon Electricity Board (CEB) has chosen to ignore this reality and continues to do nothing to anticipate or mitigate the recurring problem year after year. Its solution has been to deploy costly emergency power generation, using imported oil. ignoring the very high cost of generation and as happened this year and the grave impact on the transport sector.
With the good fortune of more than usual rainfall, lasting beyond the southwest monsoon, the use of oil for power generation has been minimal over the past several months and the power cuts, too, have been limited to two hours per day. But, how long will that euphoria of ample hydro power last? Is there any possibility at all of the January to April dry spell not materialising?
The abyss facing us in a few short months
Maybe, Sri Lankans have already forgotten the miles long fuel queues. This story is set to be repeated in early 2023, too, with the Chairman of CEB, having already approved 100 MW of emergency power. In the meanwhile, the new long-term electricity generation plan (LTEGP 2023-2042 ) recently discussed at a public stake holder meeting proposes addition of 320 MW of emergency power now given a new name of “Short Term Supplementary Power”, nevertheless operated using expensive oil imported using the meager dollars resources, borrowed from increasingly reluctant lenders.
Sri Lanka paid a hefty sum in demurrages for the shipment of crude oil recently, which was lying in the out harbour for 56 days due to lack of dollars to pay for it. Where are the dollars coming from to pay for the proposed emergency power once the rains cease? The grave question of adequate supplies of coal to keep Norochcholai operational is hanging above us which will make the situation unbearable.These are the circumstances which prompted the tittle of this article.
The numbers game
The CEB is fond of pinning the blame on the government for the continual losses they make year after year, claiming that its income is based on tariffs determined by others, and they are inadequate to cover the costs. This is only part of the story. The average income to the CEB thereby was about Rs 16.50 per unit whereas the average cost of generation continued to increase and was of the order of Rs 23.00 per unit before Covid-19 and the subsequent economic meltdown. As such the CEB losses kept mounting, as shown in Tables 1 and 2.
The annual losses per unit borne by the consumers
The Accumulated loss over this 10 year period is Rs. 484 Billion, with the rare instance of marginal profit in the year 2015.All of these losses were covered by the Treasury or are accumulated as bad debts in the two state banks and the CPC. This in other words means that the consumers at all levels have in reality paid an additional amount for every unit consumed.
However, why didn’t the CEB, or the Ministry of Power and Energy, or even the Treasury ask why the cost of generation cannot be lowered?So, my first lesson in Arithmetic is this; if ‘A’ is the cost of generation and ‘B’ the income, and if A >> B resulting in a negative value for C being the loss, and if A cannot be increased at will, why not lower B?
The CEB’s answer would be to say that its proposals for adding more coal power which in their books is the cheapest source of electricity was not permitted. The fact that coal is to be imported with dollars and the rupee continued to be depreciated and we have no control on the price of coal, does not enter into their reasoning. This is to be expected as their long term generation plans are based on the assumption that the price of coal does not change and the rupee does not depreciate. With that kind of mindset it is futile to continue this discussion with the CEB. Obviously they are also blind to the vast strides made the world over, where by many cheaper options for power generation have now been commercialized. Is this driven by pure ignorance, or willful misinterpretation of the realities of the sector or just lack of competence of the CEB engineers making decisions, are the unanswered questions, but with the net result of the present calamity faced by the nation.
The role of the Ministry of Power and Energy and the Treasury
But what about their superiors in the Ministry of Power and the custodians of the public purse in the Treasury? Do they, too, lack the simple knowledge in evaluating this equation and asking the obvious questions? In fact, I would lay the greater blame on the Ministry and the Treasury, for permitting the CEB to perpetrate this deception year after year, with total disregard for the interest of the country and its people. This blame is not limited to the present admiration, but must be laid at the feet of all previous regimes who also turned a blind eye on this problem for whatever reason.
The net result of this collective lack of accountability and blatant violation of responsibilities has been the current disaster and the even greater disaster waiting to unfold shortly. The disaster that would occur in early 2023, as the price of coal has sky rocketed and the best price quoted in the recent tender was $ 325 per ton. As such the line on coal has now got to be removed from the category of low cost generation in the CEB projection. (See Tables 03 and 04)
The Relative Costs prevailing prior to 2020 shown above clearly shows that even then the cheapest option was RE. This is the historical data before Sri Lanka faced the current crisis. However, it is interesting to see below the analysis of actual cost of coal power issued by the PUCSL in 2020. The myth of cheap electricity has been clearly debunked. Matters have worsened since then. The estimates revealed at the recent TV programme are shown below. The recent news items in Economy Next (22nd Nov 2022) tells the true story
” CEB loses Rs 108 bn up to August 22″
(See Table 05) With both escalated purchase prices of oil and coal the true cost of coal power would now reach over Rs 65 /kWh and that of oil over Rs 120/kWh, the prognosis for the next year is indeed alarming. Of the many NCRE options, which averaged only Rs 14.81 , well below the average income of the CEB, the true cause of this alarming loss is clear from the above chart.
It is time for the next lesson.
It is quite on the cards that the CEB loss will exceed Rs. 150 Billion for the year 2022. Thus based on the expected generation less than 15,000 GWhThe loss per kWh = 150,000,000,000/ 15,000,000,000 = Rs 10.00
This is not included in the monthly electricity bill even after the increased consumer tariff.So who bears this cost? You guessed it. The consumers including those consuming a mere 30 units a month and up to those consuming 3000 units a month in equal measure.
What awaits us round the corner?
In this light it was a breath of fresh air to note that Sri Lanka managed even for a few days with very little oil based generation in the past months, courtesy of the weather gods. However, this euphoria will be short lived and the rains are already dwindling. The damage is worsened by the fact that the cost of generation using oil and coal has reached such levels , so that any right minded admiration would shut down such plants immediately and seek whatever sustainable means of bridging the gap. (See Table 06)
Estimated generation cost for year 2023
These numbers are generally in line with those presented in the TV programme where the cost was predicted as Rs 900 Billion.So I dare not perform the next calculation of the loss per kWh which the consumers will have to bear albeit indirectly. That is unless something rational is done without any further delay.
The options available
Fortunately for Sri Lanka we have ample means of doing so, which does not result in continuous drain of Dollars and has the benefit of many other economic advantages. More details of these options have been submitted to the officials who hopefully would advise their political masters of the lack of any other alternative. This is where the third lesson in arithmetic becomes important. It was revealed that based on the current projections the total cost for the CEB in year 2023 is estimated as Rs 900 Billion. They cannot hope to get even 50% of that even with the recent 75% increase in consumer tariff resulting in a projected loss of over Rs. 450 Billion.
Who will bear this cost? What will that do to our balance of payments and the parity rate if it is also to be funded by the treasury? We will be entering a positive feed back loop in financial terms, the result of which the CEB engineers talking about stability of systems should understand.But what are those who are expected to mange the energy sector and more importantly the treasury which has blindly covered all the massive losses incurred by the CEB in past will at least now take some decisive actions.
Having wasted many years by obstructing the development of the Renewable Energy Sector, the options for any short term interventions are now limited to the Roof Top Solar systems. It is on record that with the help of the Surya Bala Sangraamaya which provided some degree of safety against those hellbent on disrupting it, some 650 MW of roof top solar has been now grid connected. Even now adding a further 100 MW at least in the next six months is technically possible if the authorities can do another simple sum in Arithmetic. (See Table 07)
It is seen that the average cost of generation would now be around Rs 62.00 per unit, if the present price of coal and oil stays and the rupee does not deteriorate any further. Also considering that what is even more important to consider is the availability of FOREX for the import of coal and oil, the decision on the tariff payable for the Roof Top solar, being the only short term solution should be against the cost of generation using coal and oil.
In this regard the industry experts have made detailed submissions that, under prevailing financial and economic considering the viable tariff to attract any investor to this sector would be Rs 50.00 – Rs 60.00 per unit based on size of installation. Naturally this could come down as hopefully the Sri Lankan economy improves in the coming years. But can we afford to wait till then. The alternative is to use emergency power costing more than double. So the simple question to be asked is , which number is higher?
Cost of Solar RT of Rs 50.00 per kWh or Cost of Coal of Rs 65.00 per kWh, (If we manage to buy some coal, which too is in doubt), and Cost of Solar RT of Rs 50.00 per kWh or Cost of Oil of Rs 120.00 per kWh Isn’t there any one at the CEB, PUCSL, or the Ministry of Power or The Ministry of Finance who can do these simple sums?
Unless there is some sanity even at this late hour to realize that the CEB must secure it energy by focusing on the facilitation of the indigenous, renewable sources of energy, which does not depend on imported fuels of any kind, Sri Lanka is rushing towards a disaster on unimaginable proportions in a few short months. Don’t be surprised if a further consumer tariff increase is round the corner and worse still the possible resumption of the petrol and diesel queues before long.
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