Wednesday 26th January, 2022
President Gotabaya Rajapaksa is reported to have directed Minister of Power Gamini Lokuge to ensure an uninterrupted power supply. The government would have us believe that enough fuel is provided to the CEB, and there will be no power cuts. Curiously, the CEB has announced a power-cut schedule! President of the CEB Engineers’ Union (CEBEU) Samuya Kumarawadu has said power cuts will be inevitable even if fuel is made available because the hydro power generation is expected to drop drastically. These contradictory statements have left the public confused.
Some of the policies of the incumbent dispensation have failed to work because they are not tempered with pragmatism. The government’s green agriculture programme serves as an example. The President’s renewable energy project also seems to have gone the same way; CEB engineers are stressing the need to step up thermal power generation to prevent blackouts. We quoted CEBEU Secretary Dhammika Wimalaratne yesterday as having said that the proposed fourth unit of the Norochcholai coal-fired power plant, if constructed, would provide a vital cushion with an additional 300MW, and what Sri Lanka needed was ‘an LNG-coal cake with solar and wind icing’.
CEBEU President Kumarawadu has told the media that if the Sampur coal-fired power plant had been built, an additional 500MW of electricity could have been added to the national grid, and there would have been no power crisis. Former President Maithripala Sirisena is often heard grumbling about power outages and blaming the CEB, but it is he who scrapped the Sampur project in 2015 without offering any viable alternative when he was the President. He obviously did not have the big picture in mind, and gave it the big I am for political reasons.
Coal combustion is a dirty process, as is public knowledge. Environmentalists are right in demanding that the country be weaned off coal and other fossil fuels used for power generation, but if the use of coal is to be discontinued without hurting the economy and causing hardships to the public, ways and means of meeting the resultant shortfall in the national power supply must be found.
Making agriculture and power generation eco-friendly is not only an uphill task but also a political high-wire act; balance is of the essence, and haste has to be avoided. As agrochemicals are to agriculture, so is coal to power generation. Everybody loves food free of harmful chemicals, but nobody is willing to contend with food shortages due to bans on agrochemicals! Similarly, nobody likes coal combustion, which pollutes the environment, but everybody wants an uninterrupted power supply! Successive governments have not adopted a pragmatic approach to solving these two problems; they have only resorted to vapid sloganeering and other such populist measures coupled with ad hoc measures without grasping the nettle.
Meanwhile, there is a pressing need for a proper assessment of the country’s power needs. Chairman of the Public Utilities Commission of Sri Lanka (PUCSL), Janaka Ratnayake, has recently revealed that the CEB made 16 requests for emergency power purchases between 2016 and 2020, claiming that there was no other way to avert power cuts; 15 of those requests were turned down, but there were no power cuts, the PUCSL chief has said. If so, why on earth did the CEB seek to buy power? Did those who made those requests try to mislead the PUCSL and make the CEB purchase power unnecessarily so that they could line their pockets? Surprisingly, there has been no inquiry to find out why the CEB did so.
We are not short of experts of integrity who are willing to help the country sort out burning issues, and the need to seek their views when vital policies are formulated cannot be overemphasised. Short-term remedies such as making fuel available for the CEB’s thermal power plants are no doubt necessary to prevent blackouts, but the only way to avert a crippling power crisis is to augment the CEB’s generation capacity systematically. This is the challenge before the present government, which ought to bear in mind that pragmatism is the key.
Political compulsions vs rationality
Saturday 28th May, 2022
Reports that the public sector workers will be given a pay hike from the budget to be presented in a few weeks have stirred up a lot of controversy. One cannot bring oneself to be critical of a pay hike for workers, but the question is whether the government which is even without funds to pay the public workers their salaries will be able to grant them a pay hike. Is it planning to print more money? The government seems to have got cold feet due to adverse criticism of the alleged offer of a pay hike to the state sector, if a claim attributed to it is anything to go by; it has said the reports of the salary increase at issue are not true. One could only hope that it is telling the truth, for once, and will act sensibly without ruining the economy further.
One of the main reasons why the economy is in a tailspin is excessive money printing, which is the only thing the Rajapaksa government has done efficiently. Some leaders of the present dispensation and their officials went so far as to argue that money printing did not cause an increase in inflation! No wonder the economy deteriorated under the watch of these pundits. The current crisis has come about mainly due to economic mismanagement during the past few years. No less a person than IMF Managing Director Kristalina Georgieva has said the crisis here is owing to mismanagement, and therefore the most important thing to be done is to put the country back on a sound microeconomic footing. Massive tax cuts and duty waivers have caused a steep decline in state revenue. Therefore, besides the worst-ever foreign currency crunch the country is experiencing, there is a huge rupee crisis.
Colossal amounts of money already printed have caused soaring inflation and currency devaluation. Prices increase almost daily, and essentials are prohibitively expensive for most people, who are protesting. It is high time the government stopped printing money haphazardly for politically-motivated programmes, and heeded expert advice. The Central Bank (CB) is struggling to tame the runaway inflation by absorbing excess liquidity; it has increased interest rates by an unprecedented 700 basis points. Such measures are bound to make the economy contract, and adversely impact the private sector with about six million workers, in the short run, however essential they may be to contain inflation and ensure the country’s long-term economic wellbeing. What the CB is performing is a balancing act.
The business community has already warned of job losses in the private sector, and asked for a debt moratorium to prevent the collapse of many small and medium enterprises (SMEs). Yesterday, we quoted Chairperson of the Sri Lanka United National Businesses Alliance, Tania Abeysundara, as having said that around 4.5 million Sri Lankans employed in SMEs might lose their jobs in the coming months unless the government stepped in and assisted the businesses in trouble. This is a frightening proposition.Most workers deserve better pay. But pay hikes must not be politically determined, especially amidst an economic crisis, if further trouble is to be averted. The yahapalana government made the mistake of promising a huge salary increase to the public sector workers before the 2015 presidential election, and implementing its pledge to win the parliamentary polls a few months later, thereby causing an unnecessary stress on the economy. The incumbent administration has already increased the salaries of some categories of public sector employees including teachers and given a special allowance to all state sector workers besides distributing cash by way of relief for political reasons. A general election may have to be held sooner than expected. Let the government be urged to ensure that political compulsions do not overtake rationality in preparing the budget to be presented. The least it can do to help resolve the economic crisis is to leave the task of managing the economy to experts and give them a free hand. Everything it touches turns into a mess.
Running, hunting and flying trapeze
Friday 27th May, 2022
What was widely expected of the SLPP and the Opposition, by way of their contribution to resolving the current economic crisis, was the formation of a national unity government. Religious dignitaries and civil organisations campaigned hard to bring the warring parties together, and political leaders had the public believe that they were making a serious effort to form a multi-party Cabinet, but the mountain that laboured has brought forth a mouse—a deformed one at that.
Some of the newly-appointed ministers are at daggers drawn. They have turned hostile towards even President Gotabaya Rajapaksa. Ministers Harin Fernando and Manusha Nanayakkara continue to inveigh against the President. Fernando has, at a recent media briefing, repeated some of the allegations he levelled against the President and other members of the Rajapaksa family while he was in the Opposition. He and Nanayakkara are obviously trying to remain in the good books of the irate public by criticising the President and the SLPP while being members of the Rajapaksa government. But the problem with running with the hare and hunting with the hounds is that there comes a time when the person doing so does not know whether he/she is running or hunting.
It is hoped that the ongoing uneasy political cohabitation between the SLPP and a section of the Opposition does not exemplify a local saying about connubiality –– ‘even the shadow of a doomed marriage is crooked’. There should be a healthy relationship between the President and the Cabinet if the government is to be prevented from becoming a two-headed donkey that tries to pull in two different directions simultaneously. A toxic relationship between the President and the Cabinet or some members thereof takes its toll on the performance of a government, as has been our experience. We have witnessed such scenarios twice during the past two decades, or so.
President Chandrika Bandaranaike Kumaratunga and the UNF ministers including Prime Minister Ranil Wickremesinghe fought bitterly from 2001 to 2004. President Kumaratunga had to stomach many indignities at the hands of the UNF ministers. Their enmity stood the LTTE in good stead. President Kumaratunga finally sacked the UNF administration. There was a similar situation from 2015 to 2019; President Maithripala Sirisena and the UNF Cabinet including PM Wickremesinghe hardly did anything other than fighting so much so that the former sought to dislodge the UNP-led government and hold a general election only to be left with egg on his face courtesy of a landmark Supreme Court ruling against his rash executive action. Their clashes rendered the yahapalana government dysfunctional and led to national security being severely compromised; a group of terrorists struck with ease on 21 April 2019, destroying more than 270 lives in churches and hotels, as a result.
Meanwhile, Ministers and high-ranking state officials must not be at loggerheads. The need for a healthy relationship between the Cabinet and the bureaucracy for the country to face challenges, overcome crises and achieve progress cannot be overemphasised. When Basil Rajapaksa was the Finance Minister, it was reported that the then Central Bank (CB) Governor Ajith Nivard Cabraal had not been able to meet him for months to discuss vital issues concerning the economy.
The Finance Minister and the CB Governor are like two aerialists who perform flying trapeze; they must have absolute faith in each other, and be adept at synchronised movements if disaster is to be averted. In the case of Sri Lanka’s economic circus, there is no safety net. A government must not expect the CB Governor to perform monetary pole dancing. One may recall that a CB chief who chose to display his skills on the pole in a bid to entertain his political masters, during the yahapalana government, had to flee the country, in the buff, as it were.
CB officials have recently revealed before the COPE (Committee on Public Enterprises) that they warned of an economic meltdown about two years ago, but their efforts to convince the government of the need to take urgent action to straighten up the economy were in vain. One could only hope that a similar situation will not happen again, and the political authority will listen to expert advice and do what needs to be done urgently to save the economy, and grant relief to the public calling out for help.
Govt. playing with fire
Thursday 26th May, 2022
The government seems determined to perpetuate people’s suffering. It claims that adequate fuel stocks are available in the country, but pumps at most filling stations have run dry, and long lines of vehicles are seen everywhere. When the fuel supply was restricted, recently, despite the unloading of two or three oil shipments in quick succession, it became obvious that the government was planning to jack up petroleum prices. What was feared came to pass; oil prices increased. But the fuel shortage remains.
What prevents the Ceylon Petroleum Corporation from maintaining an uninterrupted fuel supply if it has enough stocks? Is it starving the market again with a view to effecting another price hike? The only thing it does promptly is to close the filling stations where clashes occur; this measure only aggravates the suffering of the peaceful people. Why can’t the police prevent such incidents at petrol stations, where they have a significant presence?
More than 40 filling stations have been closed countrywide, owing to clashes, according to media reports. It is only natural that tempers flare when people languishing in queues for long hours have to return home without fuel. Most people spend more than 12 hours in queues to obtain petrol and diesel. How would Minister of Power and Energy Kanchana Wijesekera, who has filling stations closed at the drop of a hat, feel if he happened to queue up for fuel and return empty-handed after hours of waiting?
Minister Wijesekera talks nineteen to the dozen in an accusing tone that suggests that he thinks the people have bankrupted the country and got their comeuppance. Let him be reminded that he is part of a failed government, whose leaders have ruined the country by mismanaging its economy and helping themselves to public funds; he is also responsible for the current mess. He should be considerate towards the people, and take action to ensure that fuel is distributed efficiently, instead of lecturing to them. He and his bosses ought to realise that they are playing with fire. They know what it is like when public anger spills over on to the streets, don’t they?
Fathers of crisis
Parliament is not without some good men and women who take their legislative duties and functions seriously and do their utmost to safeguard the interests of the hapless public. The Chairman and some members of the COPE (Committee on Public Enterprises) are among them. They have exposed various rackets in the public sector and censured errant state officials. They deserve public plaudits.
COPE Chairman Prof. Charitha Herath has called for a PSC (Parliamentary Select Committee) to find out who is responsible for ruining the economy and bankrupting the country. There is no need for an investigation to identify those who have reduced the country to penury.
The present economic crisis is not of recent origin, but it is the current regime that worsened it. The blame for the current mess should be apportioned to President Gotabaya Rajapaksa, former Prime Minister Mahinda Rajapaksa, who held the finance portfolio, and former Finance Minister Basil Rajapaksa. They did not heed expert advice, and ran the country like a petti kade in Medamulana. It has now been revealed that the Central Bank economists warned of an economic crisis well in advance, and called for action to avert it, but the government chose to ignore their warning.
A PSC probe, if conducted impartially, will help officially establish who is responsible for the economic meltdown. It must also be found out how US dollars disappeared from the country so fast, and whether there is any truth in the allegation that large amounts of foreign currency were smuggled out systematically during the past two years or so.
People have no faith in PSC probes thanks to the one into the Treasury bond scams, under the yahapalana government. The ruling party members of the PSC that investigated the bond racket behaved like a bunch of ruffians, insulting and intimidating the Central Bank (CB) officials, who testified against the then CB Governor Arjuna Mahendran. They stooped so low as to spoil the final COPE report with a slew of footnotes, and the Central Bank officials were prevented from countering their flawed arguments.
If a PSC is to be set up to investigate the economic crisis, the right persons will have to be appointed as its members, the majority of whom should come from the Opposition, if it is not to end up being another Treasury bond probe committee.
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