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Opinion

Confusion on fourth Norochcholai coal power plant

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The statement appearing in your issue of 31st July, where Chairman CEB, Vijitha Herath, says ‘They have not awarded the construction to anyone as the technical and environmental impact study was ongoing’ is rather confusing, when the same news item says ‘However, the Cabinet had decided to award the contract to the China Machinery Engineering Corporation [CMEC] due to the contribution from 3×300 plants’.

There was an earlier news item, where Minister for Power and Energy Mahinda Ameraweera had said ‘The fourth Coal Power plant at Norochcholai would not be built without addressing the concerns of all stakeholders’. This statement of the Minister, gives the impression that a contractor has not yet been selected, perhaps withdrawing the earlier Cabinet paper where it was proposed to award the contract to CMEC and also as a Joint Venture.

The statement of Chairman CEB that the proposal to award the tender to CMEC is due to the contribution from the 3×300 plants could be contested. Would not any other contractor who had constructed the 3×300 plants have made the same contribution?

It should also be stressed that President Gotabhaya Rajapaksa, had said in no uncertain terms at the last Presidential Elections, and also after assuming office as President, that he will not approve any project without a feasibility and viability study and strictly follow tender procedure.

If the pledge of the President is to be kept, CEB should by now call for worldwide tenders, as this is a loan from China, and select the best and the lowest offer. If this is done, it could be presumed, China may offer the lowest with attractive terms as China seems to be keen in having a hold in this vital sector.

G.A.D.SIRIMAL

Boralesgamuwa

 

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Opinion

Judiciary – ‘a sleeping giant’?

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I stumbled upon an article published by Verite Research. It stated that the number of days it takes to enforce a contract through the court system in Sri Lanka was 1,318. That is in excess of three and a half years. The information was drawn from a World Bank study on the ease of doing business, with enforcing contracts being one of the metrics. A contract is one of the basic means of legal recourse. The article also showed that in Vietnam and Malaysia, time taken to enforce a contract was around 400 days. In Singapore it was 150 days.

You might safely assume that successive administrations since 2013 would have moved mountains to improve this most basic indicator. Especially considering that Sri Lanka was touting itself as a frontier economy in the region, in 2013, enforcing a contract ought to have been made much easier and quicker in the interim six -seven years.

Well, in 2013 it was 1,318 days and today, in 2020, the latest report from the World Bank shows that the number of days taken to enforce a contract is still 1,318 days! I dare say this may have something to do with inadequate reporting or a lack of data. I urge anyone to use the tools at hand to research this further.

Whatever these indices say about Sri Lanka, the lived experiences of many Sri Lankans are as good a measure as any. All Sri Lankans today, in 2020, know very well to avoid the legal system at any and all costs; as the expense, the time taken and the virtual harassment that the inefficiencies of the court system inflicts on ordinary citizens, are simply not worth the trouble. Even an employee that wants to seek redress for being unfairly treated by his or her employer will have to wait many years to obtain compensation, despite stringent labour laws. This shows that having strict laws in place is futile unless they can be implemented in a speedy manner.

During my career, I recall many instances where actions of competent officers were undermined by their organizations. I am aware of a specific instance at a foreign bank where there was a case of deferment of revenue by a senior officer, without formally advising the customer. This exposed a systemic failure of the bank’s internal systems, yet officers higher up the ladder were scapegoated. This allowed the bank to not only cover-up the deficiencies of their systems but to also conceal the incompetence of its expatriate CEO.

The expatriate CEO in question was conveniently transferred out of Sri Lanka, while the local officers are still in court, five years later. The expatriate CEO was allowed to take early retirement with full benefits, while the local officers even had their contributions to their own gratuity payments frozen by this foreign bank. The loss of earnings besides the effects on their reputations and the stress of the process is one thing. Yet to have an international organization use all of its financial and legal might to delay, block and mislead legal proceedings is shocking. What is downright disgusting is that the system is built for this type of delaying tactic, where justice comes after many years of court dates and many millions in legal fees.

Whether you are involved in a car accident or you have had a personal item stolen or you have been verbally abused, the most common course of action taken by you would be to shrug your shoulders and move on. Going to the police and resorting to legal action would basically be the utmost last resort, no matter what crime has been committed.

For reference, in the late 1980s, I met with a car accident while working in the Middle East; another motorist carelessly scratched my vehicle. There was a police officer nearby, who immediately intervened and took down my details. Within one week, I received a cheque from my insurance company to pay for the repairs. No going to the police station to record a statement, no prolonged wait for an insurance agent.

In Sri Lanka, if you are a business owner and you need legal recourse, you face a multi-year wait. Can we call this a fair judicial SYSTEM? Can something that is so clearly stunted, so obviously unfit for purpose, be described as a system? It you do so you must affix the word BROKEN, before the word, ‘system’. Is it broken beyond repair? Within this broken system, can there be justice? Without justice, can we be a truly democratic society?

There also seems to be a process of never-ending interviews and investigations. Witnesses and others related to an investigation are interviewed by the police for six or eight hours sometimes. I shudder at the thought of pages upon pages of unnecessary notes and records taken at these interviews. Another example of a lack of efficiency or intentional time wasting. The time taken to collect evidence after an offence has been committed simply allows those accused more time to escape punishment.

Sri Lanka has had a Ministry of Justice since 1947. Ministers of Justice throughout the years have included luminaries of public service such as Felix Dias Bandaranaike, Ratnasiri Wickramanayake, Nissanka Wijeyeratne in the past. More recently, W. J. M. Lokubandara, Rauf Hakeem and Wijeyadasa Rajapakshe have held this cabinet position. Yet, we see a shocking lack of attention paid to this issue which affects all Sri Lankans, of all walks of life.

By the Justice Ministry’s own latest available statistics, as at end 2016, about 725,000 cases were pending in courts, with the largest number, 535,000 cases, pending in Magistrates’ Courts. Consider what this number actually represents; in human terms. How many people must feel helpless at the lack of action? A wait that could last several years would be bad enough for the owner of an enterprise or an entrepreneur or even a simple shopkeeper.

Yet consider those waiting for justice for serious crimes; murder, rape, theft or even harassment. How desperate must someone feel to have been robbed, or had a loved one assaulted, but then wait years upon years for redress, with no guarantee and no definite time-line. How many people will watch the best years of their lives wither away in courtrooms around the country? The almost machine like process of taking a day off your job to attend a court date, only to be given another court date three-six months later, is simply dehumanizing. Let us call it what it is; an inhumane system, completely unfit for purpose.

If there are over 700,000 cases pending in our system, do we even dare consider how many cases never make it into the system at all? Such an estimate, if attempted would certainly be multiple times more and would perhaps be the most depressing statistic of all. Usually, what is most insidious is what the numbers do not show as well as the situations for which there are no numbers.

Sri Lankans seem to have internalized this notion of helplessness, perhaps this is ingrained in our psyche by design. We simply do not want to risk our precious time, energy, money, well-being and job security to take a case to the courts. The countless, faceless millions of Sri Lankans over the years that have had to simply grin and bear whatever misfortune befalls them, deserve better.

Worse still, this system allows those with even a modicum of power, to abuse it, as they know they will not be tried in a court of law, anytime within the next five years. The room this leaves for corrupt practices in every sphere of life is a blot on our society. The vacuum of law and order that this creates will necessitate desperate measures by Sri Lankans. We read many stories of Sri Lankans taking matters into their own hands, most times out of sheer desperation.

To gauge how bad the situation is, you need only revisit the infamous “Yahapalanaya” government, and its efforts (genuine or not) to litigate cases involving political corruption and abuse of power. President Maithripala Sirisena at the time decided to form special courts to hear such cases. This too seems to have been an abject failure, similar to the five year stint of that administration.

The people should also note that if certain cases need to be expedited, for political reasons, it can sometimes happen. Political expediency is the number one priority, not the needs of the common man. Yet another indication that the political class and elites of the country play by a different set of rules.

RW

Colombo

 

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Opinion

Will MCC agreement be signed?

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The MCC agreement, if signed would imperil the country as no other would because land is of existential importance.

The question is why the US is interested in investing a large amount of money in improving the land laws and methods of land registration when there are more important issues that a struggling economy is faced with. Why cannot the US think of our ailing industries, food security and self sufficiency, education and health which are in urgent need of assistance. President George Bush started the MCC programme mainly to counter the rising influence of China in Asia and Africa. And the programme always pertains two areas, land and transport, irrespective of the country and its needs, whether it is Indonesia or Congo. This is strategic in design furthering the hegemonic interests of the US.

President Gotabaya knows the reality that whether or not he signs the MCC the US if given half a chance will initiate a regime change and install a puppet government. People are asking why he is silent on this matter. It is true that he has not committed himself on the MCC issue up to now. When Ven.Ududumbara Kashyapa launched a fast unto death in Nov.2019 against the signing of the MCC he did not visit the monk but sent someone else with a message requesting the priest to stop the fast. But in his letter he did not mention the MCC but said he would not enter into any agreement that is adverse to the country. In his election campaign too he made no reference to the MCC but pledged he would not enter into agreements that betray the national interests. This apparent reluctance of the President to categorically state the government policy regarding this particular agreement has caused much concern among nationalists who made his victory possible.

National sentiment and patriotism featured strongly in Gotabaya Rajapaksa’s election campaign. The opposition was defeated as people felt that its leaders lacked national fervent and love for the country. It was felt that they were servile to foreign powers who helped them come to power. Buddhist monks strongly endorsed the candidature of Gotabaya. They did so because they realised the threat faced by the country due to foreign interference. It would not have been possible for Gotabaya to win the election without the support of these forces. People domiciled in foreign lands came in their thousands to vote for him. All these people view the MCC agreement as an imperialist plot. The Sinhala Buddhists particularly feel threatened by these imperialist plots and agendas. They will feel badly let down if their President disregards their feelings and signs the MCC agreement. Gotabaya knows all that.

Gotabaya Rajapaksa has said he will not hesitate to withdraw from any international organisation hostile to Sri Lanka. Whether this refers only to the UN bodies such as UNHRC and other outfits as well remains to be seen.

However, the President’s silence on this issue may be because being the president of the country he doesn’t want to pick on individual agreements. It may be too early to judge him on this score. He knows that he cannot afford to sign this agreement and antagonize all who went out of their way to bring him into power.

The government due to its economic difficulties may be tempted to sign an agreement that would bring in substantial funding. The US knows our weakness. China is closely watching the situation due to Road and Belt project. In this complex situation President Gotabaya may be playing a diplomatic game. He may want China to help us recover from the economic downturn so that MCC and such other agreements would be unnecessary.

N.A.de S. Amaratunga

 

 

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Opinion

Generation cost grossly underestimated and objectives not achievable

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Proposed new coal power plant at Norochcholai:

The Chairman of the Ceylon Electricity Board (CEB), at a press briefing held at the CEB recently, has announced that a fourth unit of 300 MW would be added to the Norochcholai Coal Power Plant. This plant is estimated to cost around USD 300 million and it will produce 1.8 billion units (1,800 GWh) of electricity annually at a cost around Rs. 8.50 plus per unit of kWh (The Island of 31.07.2020).

Regrettably, the Chairman is giving a grossly underestimated value for the generation cost leaving out more important costs. The specific capital cost being USD/kW 1,000, one may assume that the plant is a subcritical type with low efficiency and high emissions. These types of plants are no longer installed in developed countries as they have efficiency below 35% meaning the plant consumes higher amount of coal than a high-efficient plant to generate the same amount of electricity.

A low efficient plant will also emit higher amount of pollutants such as oxides of nitrogen, oxides of sulphur and particulate matter as well as generate higher amount of ash than a higher efficient plant. These emissions cause serious damage to health of people as well as damage to vegetation and crops and also fisheries within the exposed area. The disposal of ash collected at the rate of about 100,000 tonnes annually from a 300 MW plant has not been properly addressed even with the existing plants. The addition of a fourth unit will aggravate the ash problem and its impact on the environment.

A study undertaken by the Sri Lanka Energy Managers’ Association recently, the monetized value of such damage referred to as external costs of thermal power plants have been worked out. The cost of externalities in respect of a coal power is found to be about LKR 10 per kWh, according to this study. Though the CEB may not be accountable for such damages, the government will have to meet the cost of healthcare for affected people as well as cost to the economy due to loss of agricultural and fisheries productivity. Hence, it is important to include cost of these externalities when assessing different types of generation plants. With this cost included, the cost of generation of a coal power plant will be around LKR/kWh 18.50, rather than the LKR/kWh 10 as quoted by the Chairman.

The Chairman’s statement also says that an environment impact assessment (EIA) study is underway. Actually, in Sri Lanka, an EIA study has no meaning and is carried out merely to get over a legal requirement. There is no system to monitor regularly the performance of the plant once it is commissioned after receiving approval for its EIA. For example, in a coal power plant special pollution control equipment are installed to reduce the emissions such as Sulphur dioxide and particulates to a level making it eligible for EIA approval. If the control equipment starts malfunctioning due to some reason or other, pollutants are emitted in large quantities that violate the relevant emission standards but the plant will continue to operate causing heavy pollution.

When the control equipment is new, they reduce the emissions as expected, but there is the possibility that they will start malfunctioning soon, especially when operating in coastal environment. This was evident in the existing coal plant and there is the possibility it will happen with the new plant as well. The EIA only says that with the control equipment installed, emissions will be reduced to permissible levels. Though such an assurance is given at the beginning, there is no assurance that the plant will perform as expected throughout its lifetime. Hence, what should be selected is a power plant that will intrinsically not generate pollution such as a gas power plant or one operating with renewables.

Another issue is how the capital cost is met. The cost of the plant is expected to be USD 300 million or LKR 60 billion. How will the CEB raise this amount of capital? Is it on a loan raised from a Chinese source or from a commercial bank or from a multilateral financial agency like ADB or World Bank, but it is unlikely these institutions will fund coal power projects? Hence, the choice is limited to a Chinese Institution or commercial bank/s. There were also media reports that CEB may enter into a joint venture with China with 50:50 share and the CEB may obtain a loan from a local bank to meet its obligation. In any case, financing the project will include additional costs.

According to a report released by the Public Utilities Commission of Sri Lanka, the cost of generation of existing coal power plant is LKR 18.60 based on Bulk Supply Tariff submission by the CEB for the period Oct-Dec 2017, including finance cost, and excluding cost of externalities and transmission. In November 2019, Cabinet approval was granted for the CEB to hire Chinese technicians for maintaining the existing coal power plants. It is very likely that the CEB will have to depend on Chinese technicians to manage the new plant as well, in which case its maintenance costs will escalate.

The Chairman, therefore without misleading the Cabinet and the people saying that coal power is the cheapest with the exception of hydro power, should divulge the entire costs incurred in operating the new coal power plant. These costs should include the amortized annual capital cost, fuel cost, operation and maintenance cost, externality costs as well as cost of financing.

Though the building of the fourth unit of 300 MW was approved at a Cabinet meeting held on 03.06.2020 with the objective of meeting the power deficit anticipated in 2021, it is obvious that this objective cannot be achieved by the proposed coal power plant simply because it will take a minimum of five years to complete.

The Chairman, being a professional, owes an explanation to the Cabinet as well as to the public why he recommended building a coal power plant knowing very well that the expected objective of meeting the 2021 deficit claimed in the Cabinet decision cannot be achieved with the proposed plant.

With the high costs associated with a coal power plant and its inability to meet the 2021 deficit as announced, the government should seriously consider building a plant operating with an alternative source such as gas or a renewable source which is cleaner, costing much less and taking shorter time to build than a coal power plant.

Dr. Janaka Ratnasiri

Nawala

 

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