Editorial
Booze, hooch and taxes
Writing his chairman’s review in the latest annual report of the Distilleries Company of Sri Lanka PLC (DCSL), the country’s biggest liquor manufacturer, Mr. Harry Jayawardena warned that pure coconut arrack may soon be history. This prediction was based on the price of this super-taxed product, which has made it totally unaffordable to the consumer. Obviously Jayawardena is talking from the perspective of the manufacturer, but nobody would or could dispute his logic. People don’t drink kasippu out of choice. The price stick, freely used by all governments, has driven imbibers into the arms of the illicit hooch mudalalis. Gone are the days when ‘Pol’ and ‘Gal’ arrack was priced at ten and eight rupees a bottle respectively. Today a bottle of ‘Gal’ costs Rs. 1,600, ‘Pol’ Rs. 1,750 and if you want it double distilled, a bottle would set you back a cool 2,000 bucks.
‘Pol’ of course refers to coconut arrack while ‘Gal’ stood for what was produced out of potable alcohol obtained as a byproduct of the Gal Oya sugar industry. The word “byproduct” was a clear misnomer; the sugar industry, whether at Gal Oya, Pelwatte or wherever, has long been making more money out of the alcohol distilled from the sugar cane molasses than from the sugar itself. This was probably why a previous government took over the listed Pelwatte Sugar Manufacturing Company established to help the country to be self-sufficient in sugar. While a private sector chairman of Pelwatte pre-takeover freely admitted that the company made more money from its alcohol byproduct that from its sugar, where the alcohol Pelwatte produces goes now is anybody’s guess. The budget debate would have been an opportunity to ask that question and get a very useful answer; but that did not happen.
We are writing this in the context of what emerged during the budget debate which ended on Thursday after 20 days of sound and fury with the predictably comfortable passage of Budget 2021. There was a lot discussion there about “artificial toddy,” something that Harry Jayawardena too has been talking about for many years. Matara District MP Buddhika Pathirana (SJB) estimated state coffers were being robbed of as much as Rs. 80 billion in excise revenue by artificial toddy manufacturers exploiting loopholes in the law. Pathirana says that the artificial toddy industry is rooted in the southern coastal area where a cocktail of urea, ammonia, nickel-cadmium from old cell phone batteries and sugar is used in a lethal brew.
He explained that the extent of the problem can be gauged with some simple arithmetic. Apparently only about one and a half liters or toddy can be had from a single coconut palm. Adding up the number of trees tapped and the volumes offered to distilleries, Pathirana estimates a discrepancy of 60-70,000 liters. Dangerously, it’s not only imbibers choosing to down rotgut with the attendant health implications, but also ordinary householders buying what they think is coconut vinegar who are at risk, he has pointed out. The Excise Department is well aware of the existence of this artificial toddy racket, which is a continuing one, although it does not agree that the Rs. 80 billion revenue loss that is alleged is accurate.
DCSL which took over the assets of its state-owned predecessor, the Distilleries Corporation during the Premadasa administration, when the government arrack monopoly (or near monopoly) was ended has long been conscious of the fact that it is a player in a so-called ‘sin industry.’ It has from the time of its first chairman, former Civil Servant V.P. (Totsy) Vittachi, been diversifying into various other businesses. Given that over 90% of what you pay for a bottle of arrack (or a single cigarette for that matter) are taxes the manufacturers are collecting for the government, and the payments to the state are not instantly made, a massive cash tranche is available to them to make other investments. This DCSL has cleverly done over the years, and its holding company, Melstar, is a highly diversified conglomerate into a variety of businesses. Ceylon Tobacco Company (CTC) has not done likewise to the extent of DCSL although it once diversified into insurance like its parent, British American Tobacco. However CTC pays its tax collection to the Treasury on a weekly basis. We do not know how it works where DCSL is concerned.
State Minister Nivard Cabraal who is the virtual Deputy Minister if Finance (the Prime Minister holds the finance portfolio) has called for a report from the Excise Department and the Secretary to the Treasury on matters that emerged in Parliament during the discussion. He acknowledged Pathirana’s useful contribution to the debate and assured follow-up on matters raised. The hard liquor industry has not only been a substantial source of government revenue, but had also produced many millionaires in this country. Arrack has made fortunes for different entrepreneurs from the Dutch and British colonial era when so-called arrack renting was a lucrative business. There has been generous philanthropy arising from such fortunes with, for example, the founding of Visakha Vidyalaya by Mrs. Jeramias Dias (Selestina Rodrigo) of Panadura. Ironically, Arthur V. Dias (popularly known as Kos Mama because of his campaign to plant jak trees), the son of Jeramias Dias, became a leader of the temperance movement at a later time.
It is common knowledge that the illicit liquor industry rampant in the country not only costs the government desperately needed revenue but also is at the root of corruption in the various enforcement agencies. Political patronage to this menace has been freely alleged over the years as have similar allegations with regard to narcotics. Prohibition has not proved a success wherever it was attempted. Government must necessarily balance competing interests including revenue, the cost of alcohol related disease to the healthcare system, the damage drunkenness causes innumerable families and many more in designing its alcohol policies. There’s a lot wrong with what prevails – artificial toddy is just one aspect.
Editorial
Emergency without emergency
It is said that when the people fear the government, there is tyranny, and when the government fears the people there is liberty. However, in a bid to retain its hold on power, a government that fears the people, tends to resort to draconian measures that are deleterious to civil liberties and democracy and could lead to tyranny. Among them is the misuse of Emergency regulations on some pretext or another. Sri Lanka has spent most of its post-Independence years under a state of Emergency.
The JVP-NPP government keeps on extending emergency regulations even though several months have passed since the landfall of Cyclone Ditwah, which warranted their imposition. It drew severe criticism for an initial delay in declaring a state of Emergency, which it now cannot do without for all intents and purposes. A staunch critic of Emergency and the Prevention of Terrorism Act (PTA), the JVP/NPP came to power, promising to abolish the PTA and use the Emergency regulations responsibly, but it has reneged on that pledge.
On Thursday, Parliament voted to extend the State of Emergency under the Public Security Ordinance. There were 137 ayes and 27 nays. Members of the SJB, the ITAK, the NDF, the SLPP and Jaffna District Independent MP Dr. Ramanathan Archchuna opposed the government motion seeking the extension of Emergency. A vote was held after ITAK MP Shanakiyan Rasamanickam called for division. Worryingly, only 165 MPs, including the Speaker, were present in the 225-member House at the time of voting. Where were the other 60 MPs? Among the absentees were 21 government MPs and 33 Opposition members, according to media reports. At least the Opposition, which called for a division on the motion, should have ensured that all its MPs were present in the House. So much for the commitment of the MPs to their legislative duties and functions. They often haul state employees over the coals for dereliction of duty. First of all, they should put their own house in order.
A state of Emergency is no doubt a legitimate constitutional tool, but it must be used responsibly and sparingly strictly in response to genuine crises. Its extension for political reasons risks undermining democratic institutions, civil liberties and, most of all, public trust in democratic governance.
The deplorable practice of keeping a country under Emergency regulations for extended periods leads to the weakening of democratic culture, public distrust in government, corruption, lack of transparency, the debilitation of civil society and media freedom, an authoritarian drift, and economic and social uncertainty. The misuse of Emergency regulations could create a climate of instability, driving investors away at a time when Sri Lanka is emerging from its worst-ever economic crisis and desperately seeking foreign direct investment to build its forex reserves.
Political leaders currently in the Opposition wax eloquent in Parliament on the ill-effects of a prolonged state of Emergency. But their parties cannot absolve themselves of the blame for the culture of Emergency; the UNP, the SLFP and the JVP are prominent among them. There have been numerous instances where Emergency regulations were invoked in this country. In 1953, a UNP government imposed an emergency rule to restore order during a countrywide hartal. The SLFP did so in 1958 to suppress communal riots. Thereafter, the UNP used Emergency regulations to suppress a Tamil civil disobedience campaign. The SLFP and its leftist allies started the practice of extending Emergency regulations to consolidate its power after crushing the JVP’s first uprising in 1971. The situation took a turn for the worse under the UNP governments after 1977, and the country was under a state of Emergency during the Eelam war, which ended in 2009. The main Tamil political parties backed the LTTE both in and outside Parliament. In the post-war period, an anti-Muslim riot, the Easter Sunday terror attacks, the beginning of the current economic crisis, a mass uprising and natural disasters also led to the imposition of Emergency regulations.
Emergency has been more abused than used in this country. The incumbent government is now emulating the SLFP, the UNP and the coalitions led by them where all bad practices are concerned, while pontificating on the virtues of good governance.
Editorial
Govt. drops fig leaf
Saturday 11th April, 2026
The JVP-NPP government has dropped the fig leaf of good governance and defended Energy Minister Kumara Jayakody allegedly involved in a coal procurement scam, which has cost the state coffers billions of rupees and caused a huge drop in the national power supply. It went so far as to defeat a no-faith motion against him in Parliament yesterday. In 2023, the JVP/NPP vehemently condemned the then SLPP-UNP government for defending Minister Keheliya Rambukwella allegedly involved in a pharmaceutical procurement scandal. It has just done what it vilified its predecessor for.
The SLPP-UNP government at least allowed legal action to be taken against Rambukwella, who was arrested, remanded and prosecuted, but the incumbent administration has ensured that Jayakody remains above the law.
The no-faith motion was a smart move by the Opposition. It caused the government to make a mockery of its commitment to upholding the rule of law and accountability. President Anura Kumara Dissanayake himself defended his friend, Jayakody, in Parliament on Tuesday, sending a clear signal to the NPP parliamentary group; they had to vote en bloc against the no-faith motion on Friday. It is now clear that the JVP-NPP government has no qualms about defending tainted politicians.
The coal scam will not go away simply because the no-faith motion against Jayakody has been defeated. Governments abuse their parliamentary majorities to defend their members and protect their interests. Now, the Opposition will take the coal issue to the streets and flog it hard to gain political mileage. It held a demonstration near Parliament yesterday. It has got hold of something to beat the government with.
There is no way the government can prove its claim that there has been no wrongdoing on its part where the low-grade coal imports are concerned. The National Audit Office itself has pointed out serious procurement irregularities related to coal imports. Power tariffs will have to be increased again to meet the additional cost of operating oil-fired power plants to make up for the generation shortfall at Norochcholai. It has been reported that Sri Lanka’s household electricity tariffs are among the highest in South Asia, and further power tariff hikes will make the situation far worse, and Sri Lanka will have its work cut out to attract foreign investors who factor in power prices before parking their money in any investment destination. Ordinary Sri Lankans are struggling to make ends meet, and their patience is wearing thin, and this will make the task of mobilising popular support easier for the Opposition. It was people’s economic hardships and public protests that made the JVP’s meteoric rise to power possible in 2024.
Governments with supermajorities succumb to the arrogance of power and ruin things for themselves. The best way out of the current coal imbroglio would have been for the JVP-NPP government to ask Minister Jayakody to step down and let the national anti-graft commission and the police institute legal action against him. Such a course of action would have helped the government convince the public that it was serious about fulfilling its pledge to eliminate bribery and corruption and send a clear message to the corrupt elements in its ranks that they would not be protected.
The JVP/NPP is now without any moral right to be critical of former Presidents who defended their cronies involved in corrupt deals. A fish is said to rot from the head down.
Editorial
Corrupt vs Corrupt
Friday 10th April, 2026
A motion of no confidence against Energy Minister Kumara Jayakody is scheduled to be taken up in Parliament, today. The JVP-NPP government, which came to power promising to eliminate bribery and corruption and cleanse Parliament, finds itself in an unenviable position. It assured the public that its members would be above suspicion, but it is now in the dock over a corrupt deal. It has chosen to defend Minister Jayakody indicted of corruption and allegedly involved in a corrupt coal procurement deal. The only way the JVP/NPP can extricate itself from the current imbroglio is to ask Minister Jayakody to step down.
President Anura Kumara Dissanayake badly dented his good governance credentials on Tuesday by claiming in Parliament that the low-quality of coal imports had caused a drop in electricity generation at the Norochcholai power plant, but there had been no irregularities in the coal procurement process. He sought to fix the blame squarely on the coal supplier. He was obviously defending his friend, Jayakody, caught in a cleft stick. Interestingly, no sooner had he made that claim than the National Audit Office released its report on the coal procurement process revealing very serious irregularities therein. This official document has helped knock the bottom out of the government’s argument in defence of Minister Jayakody.
Keheliya Rambukwella and several Health Ministry panjandrums who served under him were arrested, remanded and prosecuted for their involvement in the procurement of substandard medicines which caused huge losses to the state coffers. So, why Minister Jayakody and his officials have not been dealt with in a similar manner over the coal scam defies comprehension. There is a prima facie case against them. The JVP-NPP government has made a mockery of its commitment to upholding the rule of law and accountability. The SLPP-UNP government ruined its chances of winning elections by defending Rambukwella and defeating a no-faith motion against him in 2023. The JVP-NPP administration is doing something similar.
The worst is yet to come where the adverse impact of the coal scam is concerned. Electricity tariffs will have to be increased again to recover the additional cost of burning diesel to produce more than 150 MW of electricity a day to make up for the Norochcholai generation shortfall caused by low-grade coal imports, independent experts have pointed out, warning of power cuts in a few months. The Opposition has stated that unofficial load shedding is already on. It has produced documentary proof in support of its claim.
More information about the Health Ministry procurement rackets came to light after the defeat of the no-faith motion against Rambukwella. Similarly, the magnitude of the coal procurement scam is yet to be determined. JVP/NPP politicians are known for their glib tongue, but they will not be able to pull the wool over the eyes of the resentful public battered by the soaring cost of living.
Two-thirds parliamentary majorities are apparently accursed in this country. Governments with such steamroller majorities indulge in corruption, succumb to the arrogance of power, which blinds them to reality, and dig their own political graves. They remind us of Lord Acton’s words of wisdom about the corruptive nature of power. One may recall that the SLFP-led United Front government, which abused its two-thirds majority, had a Humpty-Dumpty-style fall in 1977.
The Mahinda Rajapaksa government, which had a razor-thin majority, defeated the LTTE, developed the economy, implemented many development projects and lived up to the people’s expectation, but it failed pathetically after securing a second term and mustering a two-thirds majority in 2010. It became a metaphor for corruption, and suffered a catastrophic fall. The Gotabaya Rajapaksa government also became a victim of its two-thirds majority, so to speak. The JVP-NPP government is moving in the same direction, defending corrupt politicians and covering up crooked deals.
Ironically, many key Opposition figures who are flaying the JVP-NPP government for corruption and trying to engineer its ouster are themselves facing allegations of corruption. The people seem to have little option but to set thieves to catch thieves.
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