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Covid: The inside story of the government’s battle against the virus

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By Laura Kuenssberg, Political Editor (BBC)

At the beginning of March 2020, I asked a senior member of the government: “Do you feel worried?” They replied: “Personally? No.” But just weeks later, Downing Street was scrambling to manage the biggest crisis since World War Two.

Since then, monumental decisions have had to be taken. And there have been many accusations of failings – the desperate shortages of personal protective equipment (PPE), Covid ripping through unprepared care homes, hundreds of billions borrowed and spent to keep the economy going, to name a few.

I have asked 20 of the most senior politicians, officials and former officials, who either witnessed or were involved in the big decisions, to pick five pivotal moments from the past 12 months.

What they say tells us so much about what really happened, what our leaders were thinking, and, strikingly, how little they knew. The contributors are not being named, so they could speak freely.

On 31 January, it was reported that coronavirus had arrived in the UK, as two people were admitted to hospital. Meanwhile, more than 80 Britons evacuated from China were quarantined at a facility in the north-west of England. But for the government, Brexit had sucked up all the political energy – it was the day the country officially left the EU.

The prime minister and his team were exhausted but elated. It felt like Boris Johnson had “just really started to take flight”, one member of the team tells me.

Ministers and officials had already been meeting to discuss the virus in China – but it felt thousands of miles away. There was a “lack of concern and energy,” one source tells me. “The general view was it is just hysteria. It was just like a flu.”

The prime minister was even heard to say: “The best thing would be to ignore it.” And he repeatedly warned, several sources tell me, that an overreaction could do more harm than good.

A small group in Downing Street had started daily meetings, after, according to one of those who attended, “it became clear that there was no proper, ‘Emergency break-the-glass’ plan.”

But for many of those I’ve spoken to, the game-changer was at the end of February, when the virus took hold in northern Italy – it was closer to home, and England’s chief medical officer, Chris Whitty, had, one minister told me, warned that if it got out of China, it would become global, and be on its way to the UK.

“The biggest moment for me was when I saw those pictures of northern Italy,” one senior minister says. “I thought that will be us if we don’t move.”

Reports of the chaos there catapulted the virus, one senior minister says, “from not on the radar, to people on the floor of hospitals in Lombardy.” They say that was the moment “we knew that it was inevitable”.

Ministers and officials became locked in arguments over how to respond. The prime minister and many cabinet ministers were reluctant to consider anything as draconian as a lockdown. To many people, the very idea would have seemed fanciful.

Even stopping shaking hands seemed a step too far for the prime minister.

Before the first major coronavirus briefing on 3 March, he had, I am told, been prepared by aides to say, if asked by journalists, people should stop shaking hands with each other – as per government scientific advice.

But he said the exact opposite. “I’ve shaken hands with everybody,” he said, about visiting a hospital with Covid patients.

And it was not just a slip, one of those present at the briefing says. It demonstrated “the whole conflict for him – and his lack of understanding of the severity of what was coming”.

A Downing Street spokesperson told the BBC: “The prime minister was very clear at the time he was taking a number of precautionary steps, including frequently washing his hands. Once the social distancing advice changed, the prime minister’s approach changed.”

By this point, Mr Johnson was attending emergency committee Cobra meetings with officials and leaders from Holyrood, Belfast and Cardiff – although he had missed the first few.

But one senior politician who attended at the same time says: “The early meetings with the prime minister were dreadful.” And inside Downing Street, senior staff’s concerns about the government’s ability to cope grew.

There were huge logistical considerations about equipment, facilities and how fast the disease might move in the UK, and questions about how effective the actions taken in China to suppress the virus would be here. It was not well understood, for example, that people without symptoms could still pass it on, nor that Britons returning from half-term holidays in northern Europe were bringing the virus back home in large numbers.

“There was a genuine argument in government, which everyone has subsequently denied,” one senior figure tells me, about whether there should be a hard lockdown or a plan to protect only the most vulnerable, and even encourage what was described to me at that time as “some degree of herd immunity”.

There was even talk of “chicken pox parties”, where healthy people might be encouraged to gather to spread the disease. And while that was not considered a policy proposal, real consideration was given to whether suppressing Covid entirely could be counter productive.

On 3 March, when the prime minister set out the government’s plan, the focus was on detecting early cases and preventing the spread.

But on 12 March, with journalists crammed into the state dining room at No 10, he told the public that the country was facing its worst health crisis in a generation. Anyone with symptoms was told to stay at home for a week.

Advisers seemed confident it was not yet time to close schools or stop large crowds gathering. And the government’s scientists felt they had time to slow everything down – the peak was not expected for another 10-14 weeks.

That same week, though, nervousness was rising among others in government that the virus was outpacing everyone’s expectations, and the plans in place to smooth out the outbreak would not work.

One source tells me it felt like the “government machine was breaking in our hands”, things were “imploding”, and within 48 hours the approach outlined on the 12th would feel out of date.

There has been no shortage of controversy over whether the government was too slow to close the doors on 23 March – but many of the conversations I have had, pinpoint the moment it became urgent in No 10.

On 13 March, the government’s Scientific Advisory Group for Emergencies (Sage) committee concluded the virus was spreading faster than thought.

But it was Downing Street “modellers in the building”, according to one current official, who pored again over the numbers, and realised the timetable that had only just been announced was likely to result in disaster.

The next morning, a small group of key staff got together. Simple graphs were drawn on a whiteboard and the prime minister was confronted with the stark prediction that the plan he had just announced would result in the NHS collapsing under the sheer number of cases.

Several of those present tell me that was the moment Mr Johnson realised the urgency – that the official assumptions about the speed of the spread of this new disease had been wrong.

To prevent the NHS “falling over”, he was warned, the government would have to impose measures as infections rose. And while they could be relaxed as cases fell, this pattern might recur across “multiple waves for 18 months”.

Several sources recall vividly the “snake like graph” they were shown that day.

Then, one official says, everything started to move at “lightning speed”. And behind closed doors – before the terrifying projections of Imperial College became public, a couple of days later – plans were accelerated.

On 16 March, the public were told to stop all unnecessary social contact and to work at home if possible.

New cabinet committees were formed. And the machine moved into a different phase, with the prime minister and the “quad” – Matt Hancock, Michael Gove, Dominic Raab and Rishi Sunak – the new decision-making form. It was, I am told, “high tension – [with] a lot of testosterone in the room”.

For many inside government, the pace of change that week was staggering – but others remain frustrated the government machine, in their view, had failed to move quickly enough.

There was tension between those who wanted to ensure systems were as ready as they could be first, and others who argued vociferously that moving fast against the virus was more important than anything else.

But those I spoke to now agree on one thing – how much they did not know about the disease.

“You can kick yourself about the things that you wish you knew,” one minister says, “but we just didn’t have anything in place.”

Another cabinet minister says: “It’s easy to say we should have locked down longer, gone harder, but there are more complex debates about where the national interests really lie.”

And it was all so strange.

One minister who made some of the public announcements when lockdown came says: “I remember when I wrote it into the script, I just couldn’t believe that I was saying this.”

And one official, struck by how huge it all felt, says he googled: “Did they shut the schools during the War?”

Another, meanwhile, admits, “We were more blind than we told the public,” and suggests that is still the case one year on.

On 18 March, we reported that a small number of members of staff in No 10 had fallen ill. One insider says: “People were dropping like flies.”

The prime minister, however, was acting as though he was impervious to the risk. He had developed a habit of banging his own chest, telling staff he was “strong as a bull”. Soon, though, this chest-banging turned into “extreme coughing fits”. Tests, in short supply everywhere, were requested for him from 25 March. And two days later, he tested positive.

He switched to the chancellor’s bigger suite of offices so that he could keep working, screened off from the rest of the building. Insiders recall how much he hated this and, in a second spell of isolation in the autumn, chairs had to be placed across the door “like a puppy gate”, so he could still communicate with the tiny number of staff allowed into the same part of the building.

Then, at the end of March, the prime minister became increasingly ill – each video call he made to reassure the public required more takes.

On 6 April, he agreed to go to St Thomas’ Hospital and, struggling for breath on a phone call, I have been told, confirmed he wanted Foreign Secretary Dominic Raab to stand in for him.

Initially, Downing Street tried to give the impression that all was well. Journalists were even told that Mr Johnson was working on his red boxes. That message has been put down to a mix up, and we now know this was far from the truth.

The moment of genuine crisis came when he was moved into intensive care. No-one knew if the prime minister would make it through the night – or what the plan was if he did not.

By this point, with so many in No 10 and in government already sick, there were, I have been told, about “half a dozen people running things”.

Fears that he might need to be intubated were shared by a tiny group inside Number 10. They discussed the possibility that ministers would have to gather in the cabinet room, with the doors closed, until they chose a successor – but there was no fixed protocol, and no conclusion was reached. The Tory Party, I have been told, even started to consider how to transfer the leadership without a contest, fearing that such a competition could be seen as “venal” after the prime minister’s death.

Then cabinet ministers were summoned urgently for a conference call. “All of a sudden we were asked to join this call – not knowing if he was alive,” one tells me. Then No 10 prepared to make the news public.

The Downing Street voice on the other end of the phone cracked with fear as I was asked to get to the Foreign Office as soon possible with a camera to talk to Mr Raab, who was being sent out to try to reassure the country. We reported the news that Mr Johnson was in intensive care from the back of a taxi.

A former official tells me: “We thought we really could lose him – we had to plan for a full transition.” That night was “long and shocking”, one source says.

By the end of May, the number of coronavirus cases was falling, the prime minister was back at work full time, and the public had surprised the government by overwhelmingly sticking to the rules.

Furthermore, despite some embarrassing and prominent lockdown breaches – in April, for example, Scotland’s chief medical officer, Catherine Calderwood, had to quit over her visits to her holiday home – there had been what one senior minister describes as “tremendous goodwill”.

But then came the Mirror and the Guardian’s scoop – in March, the prime minister’s chief adviser, Dominic Cummings, had travelled hundreds of miles to County Durham, after his wife fell ill with Covid. He, too, succumbed to the virus and his stay on his family’s farm to recover, before returning to London, had been kept secret – apart from among a tiny number of Downing Street staff.

And Mr Cummings was determined not to quit. After considering sacking him, the prime minister stuck by him – but first, there was what has been described to me as tense “mediation between a couple deciding whether to divorce”.

Before making that decision, he had summoned Mr Cummings to go through his version of events. Together, they planned for him to give this version publicly – despite others’ protestations. The result was the surreal press conference in the Downing Street rose garden.

Many of those I have talked to describe this episode as a terrible turning-point.

“Even for us, this is mad,” a member of the Downing Street team tells me.

Senior ministers say: “The handling was a fiasco”. “It was ridiculous”, and, at a time of national emergency, “broke the political consensus”.

Perhaps, after two months of lockdown, the public was ready to be angry with someone.

MPs’ inboxes were swamped with irate emails – mine too. “The early pandemic washed away all the bitterness of Brexit,” one senior minister tells me. “That all came flooding back, all that bile, all that pent up frustration.”

Some ministers tweeted their support for Mr Cummings. One of those who refused says: “He should have resigned straight away. You lead by example. I was busy chopping logs with my chainsaw to get the frustration out.”

Some polling suggests the Barnard Castle episode really did dent the public’s trust in the government. “It gave people who wanted to break the rules an excuse,” one source says.

But inside government, there was a belief that an extraordinary period of unity had already started to fade, and the public had started to tire of the rules once the government had moved towards its plans to lift them.

There is no question, though, the whole misadventure made the politics of the pandemic more scratchy and less consensual.

Mr Cummings was not the only one to be caught up. In June, Northern Ireland’s Deputy First Minister, Michelle O’Neill, provoked anger by attending a huge Republican funeral.

But it was after Barnard Castle that it felt like the mood in the country had changed.

“People wanted to portray the PM as a clown,” one minister tells me, “or not up to the level of events.”

Britain in the summer did not feel like a country still gripped by a pandemic.

“There was loads of over optimistic messaging,” one politician says.

For example, the time when a Labour MP asked for advice at the end of June for his constituency, which was home to a popular beach and he was worried about huge numbers heading for the sea. “Show some guts,” the prime minister told him.

In July, a grinning chancellor delivered plates of Japanese curry to unsuspecting customers at a London restaurant, to promote his “eat out to help out” scheme. Then the prime minister started to encourage people back to the office.

But behind closed doors, there were significant doubts about the wisdom of this new mood. “We knew there was going to be a second wave,” one cabinet minister tells me, “and there was a row about whether people should work from home or not – it was totally ridiculous.”

The summer optimism and opening was “the biggest mistake – a rush of blood to the head”, another senior figure says. “The PM has to carry the can”.

The prime minister believed that another lockdown would be a disaster and wanted to avoid it at all costs – but for many of those involved in making the decisions, his hostility to tightening the rules again was frustrating, dangerous and political.

“The policy objective in the summer and the autumn was – do the minimum possible,” one tells me.

But by the end of August, with Britons packing beaches, the warnings of what might come were already flickering in Number 10.

Some days, sources suggest, the prime minister would express concern about the virus coming back. Others, he would be in “let-it-rip mode”. And senior officials expressed deep concern about what seemed to be changes of heart on a daily basis.

The disease would not be contained by indecision, and by the start of September, with schools and universities having returned, “you could clearly see a steady increase,” a senior figure says.

The testing system had not been able to keep pace with demand, and too few people were willing to, or could afford, to self-isolate if they tested positive. “The idea that you could liberalise in the summer was based on the idea that you could whackamole with test and trace,” the source says. “But if you didn’t whack the right moles then it doesn’t work.”

By the middle of September, “the data was already screaming out”, one insider says. On the 17th, I was told by one source: “If you do nothing now, by the end of October you will get something worse than the first wave.”

The possibility of a short “circuit breaker” lockdown was already being discussed in Downing Street that week. Prof Whitty, the UK’s chief scientific adviser Sir Patrick Vallance, and Mr Cummings and others were arguing hard for action to be taken – but the prime minister was unpersuaded.

Others wanted to push again – one current official recalls a “concerted effort” – and on Sunday 20th, the No 10 team gathered a range of scientists. But the prime minister remained reluctant.

Another current official describes his attitude as, “if there is a way not to act, why do it?”.

Over the next 36 hours, I have been told, a small group inside Downing Street repeatedly tried to change Mr Johnson’s mind – but by then, he was operating in a very different atmosphere.

“A swampiness had risen because of ideological pressure on this government at every turn to do less – and to do it more slowly,” a senior figure says. And it is understood Mr Johnson had privately assured groups of MPs there would be no more restrictions.

The Treasury was pointing out the damage any further restrictions would do to the economy, many of the traditional Tory-backing newspapers were hungry for restrictions to be relaxed, the party was restless, and I remember cabinet ministers who had hardly any cases of the virus in their constituencies at that point, suggesting they saw no evidence for further action.

So when Mr Johnson made changes to the coronavirus restrictions on 22 September, they were tweaks, rather than a real tightening up. I remember talking to Tory backbenchers that day who felt they had won.

The importance of the missed September moment is cited by many senior figures – and some now concede it was a mistake.

“We strained at the leash to get things going,” one cabinet minister admits. “I was aggressively for that – but I have learned that it is better to go slow.”

Another senior minister, one of those who pushed for more radical action at the time, now says: “We should have locked down more severely, earlier in the autumn – the whole point was, the earlier you act the more you buy yourself time for a strategy that can get out.”

You can still hear the frustration in the voices of those who lost the argument.

“The PM was saying the Tory Party won’t swallow it,” one tells me. “Everyone else felt, we know we are going to have to do a lockdown.”

And there is no question that the tier system that was introduced over the autumn, which portioned England into different levels of restrictions, was soon tied up in confusion and regional spats.

“It was completely unintelligible to any normal human being,” one senior official says. “It was too slow, and too Byzantine, and that resulted in more cases.”

Another says now: “We ended up tying ourselves into ever tighter knots,” as the system became more and more particular to each part of the country.

It is impossible to know what would have happened if the brakes had been slammed on in September – but some ministers pin the terrible scale of the second wave, at least in part, on the apparent reluctance to act.

The circuit-breaker that was imposed later in Wales did not make the problem go away, however. Case numbers weren’t the only concern – the economy had been shuttered, and shattered. Political demands had changed.

In defence of Mr Johnson, one senior minister says: “He’s not to blame if he was trying to reflect the aspiration for the country back in the summer”. Another tells me the plans, and the billions spent on “test-and-trace and tiering meant it was reasonable to do the unlock”.

They reject the idea that a circuit breaker was the obvious option – “There wasn’t a slam dunk recommendation.”

Regarding the potential introduction of national restrictions in September, Downing Street referred us back to comments made by the prime minister to parliament in early November.

“No-one wants to impose measures unless absolutely essential,” Mr Johnson told the Commons. “So it made sense to focus initially on the areas where the disease was surging and not to shut businesses, pubs and restaurants in parts of the country where incidence was low.”

But while there is no question mistakes were made in the first phase of the pandemic, when so much about the virus was a mystery, those involved in the decisions are already less forgiving of their own mistakes the second time around.

“A miracle,” is how one minister describes the vaccine gamble to me. A government so often lambasted by critics for busting convention did it again – but this time, so far, with a stunning outcome.

Vaccines had been discussed in January, as the government machine began to contemplate, slowly, what might be ahead. Early on the chancellor, holding the cheque book, indicated a willingness to spend at speed, without asking for guarantees.

No 10 decided to “chuck everything at it”, at a meeting in April. With Sir Patrick’s crucial experience and deputy chief medical officer for England Prof Jonathan Van-Tam’s emphasis on the practicalities of delivering the vaccine, politicians were persuaded to take what was then a huge risk.

There was an early decision to “pay high, pay early, and ensure it works,” one senior official tells me.

And it seems their decision was informed by everything that had gone wrong with trying to secure PPE – the collapse of the NHS’s normal procurement process, which is controlled by the Department of Health.

The UK decided early not to participate in the EU’s joint plan to buy vaccines. While publicly this decision may have been politically controversial, behind closed doors it was “easy” and “straightforward”, ministers and officials say. “No-one wanted any of the Brexit baggage anywhere near it.” And, more importantly, the EU had made it clear any participating country would be unable to make its own deals with manufacturers the EU had an agreement with – or control its own supply.

The vaccines team had warned ministers at the start of May that nothing was certain – and developing a vaccine as quickly as the prime minister, who “wanted it yesterday”, required would be an uphill struggle. But, as one minister says, it was “the one thing we would wish that we had done in a year’s time”.

Another, a senior minister, says: “The PM strategically saw immediately that the combination of testing, drugs and vaccine was the way out.” And when it came to vaccines, the UK was ready to take an expensive gamble.

The Treasury was spending speculatively in ways it had not since the War – and vaccine spending has already reached nearly £13.5bn. “Imagine if it hadn’t come off and we had spent all of that taxpayers’ money,” one senior official says to me.

There was intense secrecy, throughout, with the various vaccines given secret code names to ensure commercial confidentiality. All were named after submarines – the Pfizer-BioNTech vaccine “Ambush”, I can now reveal, and the Oxford-AstraZeneca “Triumph”.

After 12 months of grappling with endless calculations about balancing risks to life, wider health and how the country makes a living, decision-makers are exhausted. They have to accept it is perfectly possible to be wrong, one senior minister tells me. And those who made the decisions are all too aware mistakes they made in these past 12 months may have had such a terrible cost.



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Twenty-five years of private sector-led renewable energy development

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by Dr Tilak Siyambalapitiya

A policy change in 1995 to allow private investments in electricity generation into the grid, a standard agreement and a standard price for electricity produced, enabled such investments to pick-up faster than in other countries. The first mini-hydro power project with entirely private sector funding and private ownership commenced operations in May 1996.

 

The agreement and the price

Dubbed the “most investor friendly agreement in the world”, Sri Lanka’s renewable energy developers were offered, since 1996, a non-negotiable 15-year agreement (20-years for projects signed after 2008). The agreement says, literally, “I will buy all your electricity produced for the next 15 years, any day any time; I will not penalize you for delays in your project or for not producing electricity at all or producing less electricity than you promised; I will not ask you to start or stop your power plant”. There is no other agreement in the business world 25 years ago or now, where such agreements are offered to a seller.

Then the price. The agreement carries a price, which too is not negotiable. It says: “I will pay you a price that reflects the fuel saved in major power plants; in case fuel prices go down, I will not drop the price below 90% of the price when you signed; if the fuel prices go up, I will keep on increasing the prices without any limit”.

I shall buy all your all your product at the following price for 20 years. If you do not produce too, even when I need it badly, I will only greet you with a smile !

Government procurements have to be on competitive basis. This policy of competition was further reinforced by the Electricity Act 2009, required to be implemented by the Public Utilities Commission (PUCSL). The legal validity of such renewable energy agreements and price offers, that make a mockery of rules of “competition”, has been debated in many quarters over the past 25 years.

 

Has it been good ?

Well, yes and no, depending on whom you speak to and your convictions. To the credit of the program, Sri Lanka’s renewable energy development accelerated after 1996. These are smaller power plants using hydropower, wind, wood and more recently, waste. If the government attempted to develop them through a state entity, excessive overheads and inefficiency would most likely creep-in. There would have been a politically appointed Chairman and a fleet of vehicles going up and down, to run a tiny minihydro.

On the other hand, had the state rigidly controlled what is developed and where, renewable energy projects developed would have been more efficient, well-engineered and certainly more environment friendly. Stories are many, where a private mini-hydro project agreed with the Central Environmental Authority to release water for downstream users, but later blocked it 100%. As the saying goes, “Sri Lanka’s streams and rivers are now flowing in tubes”, but we are proud about a vibrant renewable energy industry !

Renewable energy from such smaller private investments reached 1% of total in year 2000 and 4% by 2006. Buoyed by another policy change in 2007 that offered a contract for 20 years and an even more attractive prices, renewable energy from small power plants raced toward a 10% policy target for 2015. It reached the target indeed, with 11% of electricity produced in 2015 from the combined production in 147 minihydros, 15 wind and 3 each of grown biomass, wood waste and solar parks. Unlike many countries who make headlines by stating their renewable energy contribution in megawatt, Sri Lanka’s targets and achievement are stated in kilowatthour, honestly reflecting the true benefits to save fuel and to reduce emissions.

Continuing its race for development, by 2020 (provisional figures) electricity produced from smaller private renewable energy power plants reached 12%. Adding major hydros, the energy share from all renewable energy was 37% by 2020, a share unmatched by all countries and expatriate Sri Lankans that preach Sri Lanka on how to develop renewable energy.

 

Has the price been good to the investor?

The policy of paying renewable energy projects signed over 1996-2016 was to pay the value of fuel saved in the grid, calculated and published in advance every year. Agreements signed after 2007 enjoy an even more attractive pricing formula: a technology-specific, cost-reflective price. That means minihydros are paid a price to make that a profitable investment; wind power is paid to make that technology, a profitable investment.

Once signed, price paid does not change. If costs go up or down after signing, or bank interest rates go up or down, the price remains the same. Fortunately for all who signed in 2008-2009 or later, equipment costs and bank interest rates both have been on a downward trend. Projects that borrowed at 18% in 2018 possibly borrowed at 8% this year, but still enjoy the price paid calculated at 18% interest. By way of equipment costs, solar power has seen the deepest reduction in costs. More on that later.

 

What was the benefit to the public?

Why did the government offer such attractive rates and terms to private investors? Sri Lanka did not throw Rs 10 at renewable energy investors and say “do it if you can”. The key principle in the pricing policy was: price paid makes investments profitable (not just profitable but excessively profitable). The agreement still remains the “most investor friendly agreement” in the world.

In other words, the public of this country, through their electricity bills and through taxes, have paid for the investments, bank interest, and profits (above market rates), to make privately-owned renewable energy an excessively profitable venture. Other benefits of renewable energy need not be repeated here; they are all well known. So what is the benefit to the public who fully paid (and continue to pay) for these investments, of which the ownership is private?

It should be the longer-term benefit of cheaper renewable energy. That’s why the 2008 announcement on the revised policy said as follows: “Renewable energy, which is a natural resource, belongs to the State. Developers are provided with a high tariff to cover their expenses and to earn reasonable profits for an adequately long period (in this case the first fifteen years). Thereafter, the benefit of the resource should flow to the electricity customers, while continuing to provide an operating fee to the small power producers and full recovery of maintenance costs”.

The closest example is the CEB-owned fleet of hydropower plants, which are bigger. The familiar ones are Laxapana, Kotmale and Victoria, among a total of 15 power plants. The public of the country paid for those too, starting from 1950. How? Through electricity bills (because loans and government investments were apportioned between CEB and Mahaweli Authority), taxes and benefits foregone. The major hydros today produce at a cost of Rs 3.35 per unit of electricity. True, that except for Upper Kotmale, all are 20 years or more of age. The fleet of minihydros, too, as they mature into their contracts, after 15 years of good profits to investors, should deliver benefits to electricity customers. That’s why the 2008 announcement said: Therefore, once the developers’ costs and profits are paid, it is inevitable that in the long-term, renewable energy should flow into the national grid at prices significantly lower than the cost of thermal energy.

However, information published indicates that the principles on which small power producers were enabled in 1996 and then enhanced in 2008, are indeed being followed. CEB produces electricity from mature hydros at Rs 3.35 per unit (PUCSL assessment 2019). The price for mature hydropower in the private sector was Rs 5.38 per unit (CEB publication 2019), precisely following the principle of fairness: good profits to investor for 15 years, benefits to electricity customer in the longer term.

As more and more minihydros mature, later wind, biomass and solar projects mature, we should be seeing finally, that ALL renewables produce electricity at prices very significantly lower than all the alternatives. Renewables replace thermal power and we should be paid the same price, will not be an argument, now or then, or in the future. “My power plant is not so good, it does not have water, is not an argument”, because no one defined where to build the minihydro; the investor selected it.

The argument that private renewables can produce below the price of oil, gas or coal does not hold, then, now or in the future. Renewables were allowed because fossil fuels were expensive and bad. The price of fossil fuels comprise royalties, production and delivery costs. If one needs a comparison, royalties for renewables have to be paid to the “republic” (the treasury) and production costs paid by electricity customers. Since royalties are not charged for renewables, both CEB and private, then renewable energy prices should be compared only with production costs. The investment has already been fully paid by the republic.

I conclude with a quotation from the 2008 announcement: “Small power producers opting not to migrate to the new agreement by 30th April 2008, will be offered the tier 3 tariff announced for the relevant technology in the year in which the existing agreement expires, after its full tenure of 15 years is completed”. That means, retiring minihydros should be offered prices in the range of Rs 6 per unit.

It is yet to be seen whether the PUCSL and consumer rights groups are willing to fully and comprehensively understand the issue, step-in, and ensure that “renewable energy belongs to the republic”, as stated in the Sri Lanka Sustainable Energy Authority Act 2007.

The country’s streams are now flowing in tubes, but do benefits flow to the public who have fully paid the investors with profits?

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Danger of disregarding Geopolitical Realities

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Negotiating Agreements for Foreign Investments:

By Dr. S.W. Premaratne
Attorney-at-Law

Foreign Policy decision-maker, of a state, have to take into consideration the prevailing geopolitical environment of the international system, and of the region concerned, at a given time, when there is a foreign policy aspect involved in the decision that has to be taken regarding any issue Omission, or failure to give consideration to this aspect of the issue, can lead to disastrous consequences. Several examples from the recent political history of Sri Lanka can be given to illustrate this point.

Sri Lanka’s conduct of foreign policy, in the 1980s, is a clear example of the serious consequences of ignoring India’s concerns regarding Sri Lanka’s pro-West tilt in its foreign policy. Sri Lanka’s declared policy was non-alignment in maintaining relations with other states, specially the Big Powers in the West and the East. However, the J.R. Jayewardene government, that came to power, in 1977, sought to develop a closer relationship with the Western countries, led by the USA. The nature of the interactions between the diplomats of the USA and Sri Lanka, at the time, had given the impression to India that Sri Lanka was seeking the assistance of the USA for suppressing the Tamil militant movement in Sri Lank, fighting for the rights of the Tamil community. There were also reasons for India to suspect that there was an understanding between the Sri Lankan Government and the USA to allow the Trincomalee harbour to be used by the USA. It was this perception of India that Sri Lanka was following an anti-India foreign policy, endangering the security of India that motivated India to intervene militarily in the year 1987 to thwart the progress of the Vadamarachchi operation, aimed at militarily defeating the Tamil militant movement.

After aborting the progress of the Vadamarachchi operatio, the Indian government proceeded to compel the Sri Lankan Government to sign an Agreement – the Indo-Sri Lanka Accord of July 1987 – to ensure that Sri Lanka respected India’s security concerns and other interests when seeking assistance from outside Powers for Sri Lanka’s economic development or national security.

 

India’s concerns regarding China’s excessive involvement in Sri Lanka’s development projects

Sri Lanka’s political leaders and diplomats, whenever they get an opportunity, express their affection for their Big Brother, India, and express the need for further strengthening the friendship for the mutual benefit of both countries. India’s perception, however, is that, especially after the change of government in 2005, there is an evolving special relationship between Sri Lanka and China posing a serious threat to the national security of India.

Sri Lanka felt intensely isolated from the international community after adopting the Resolution A/HRC/46/L. Rev. 1 against Sri Lanka, at the UNHRC, in Geneva, in March, 2021, especially because India also decided to support the core-group indirectly by abstaining from voting.

The only consolation for Sri Lanka now is China’s expression of willingness to further strengthen its strategic relationship with Sri Lanka by extending further development assistance to Sri Lanka, within the framework of the Belt end Road Initiative. Subsequent to a telephone conversation between the two leaders, the President of China and the President of Sri Lanka, in a statement issued by the Chinese Embassy in Colombo, on March 30, 2021, it was stated that “China attaches great importance to the development of bilateral ties and stands ready to work with Sri Lanka to determine the strategic direction and achieve steady growth of the relationship. China stands ready to steadily push forward major projects, like the Colombo Port City and the Hambantota Port, and promote high quality Belt and Road Co-operation, providing robust impetus for Sri Lanka’s post pandemic economic recovery and sustainable development”. China projecting Sri Lanka as an intimate partner of the Belt and Road strategy indicates that Sri Lanka is distancing itself from the path of non-alignment and adopting an anti-Western and anti-India approach.

In the matter of obtaining foreign investments for development projects, Sri Lanka has failed to foresee the foreign policy implications of overreliance on China. The two massive development projects, initiated during the Mahinda Rajapaksa administration, which came to power in 2005, were the Hambantota sea port and the Port City Project in Colombo. The amount of money invested for these two projects, by China, was so massive that Sri Lanka happened to sign an agreement for permitting the management and control of the Hambantota Port by the state-controlled company of China, under a 99-year lease agreement. The Management and control of the Colombo Port City area also has been granted to the Chinese construction company, under a 99-year lease agreement. Not only India, but also the USA and other Western countries have expressed serious concern regarding the involvement of China in strategically significant massive development projects in Sri Lanka. India’s perception now is that Sri Lanka is an aircraft carrier of China, stationed in the Indian Ocean, close to India. Hambantota Port is viewed as another pearl in the string of pearls maintained for containing India by China.

India is also concerned over the lack of interest on the part of the Sri Lankan Government to go ahead with the development projects regarding which agreement had been reached with India, during the Sirisena-Wickremasinghe coalition government. In May, 2019, a Memorandum of Understanding was signed by the Sri Lanka Ports Authority (SLPA), Japan and India proposing the development of the East Container Terminal jointly, Sri Lanka and Ports Authority retaining 51 percent shares. However, the present Government deviated from that understanding and decided to nominate one Indian investor, Adani Group, disregarding Japan. But, the attempt of the Sri Lankan Government to involve the Indian Company in this project by offering 49 percent of the shares of the ECT was thwarted by the trade union action of the port workers, supported by an influential section of the Buddhist priests and also a section of the ruling alliance. The Sri Lankan government had no alternative but to respond to the demand of the trade unions by getting the Cabinet approval for developing the ECT only by the Colombo Port Authority, without involving India or Japan.

India has also expressed concern over the attitude of the Sri Lankan Government concerning the development and management of the Trincomalee oil tank farm. The lower farm has been managed jointly by the Ceylon Petroleum Corporation (CPC) and the Indian Oil Corporation (IOC) via Lanka IOC Private Limited. The 2003 tripartite agreement signed by the Sri Lankan Government, LIOC and the CPC covers the entire tank farm. India is now concerned about the excessive delay in granting the Sri Lankan Government’s approval for commencing the development of the Upper Tank Farm, comprising 84 tanks.

Another joint venture, regarding which Sri Lanka sought the involvement of India’s Petronet LNG Ltd. Company, and also a Japanese investor, was the proposed liquefied natural gas LNG terminal that was to be set up near Colombo. Although Indian and Japanese Investors had indicated their willingness to join this project, as partners, the Sri Lankan Government has not yet given its final approval for commencing the construction work.

India is also very much concerned over the lack of progress in the reconciliation process initiated after the end of the war. India’s concern in this regard was expressed very effectively and in very clear language in a statement made by the Indian Foreign Minister Jaishankar in the course of a media conference during his two-day visit to Sri Lanka in January, this year. In his statement the Indian Foreign Minister said: “As we promote peace and wellbeing in the region, India has been strongly committed to the unity stability and territorial integrity of Sri Lanka. Our support for the reconciliation process in Sri Lanka is long standing as indeed for an inclusive political outlook that encourages ethnic harmony. It is in Sri Lanka’s own interest that the expectations of the Tamil people for equality, justice, peace and dignity, within a united Sri Lanka, are fulfilled. That applies equally to the commitments made by the Sri Lankan Government on meaningful devolution, including the 13th Amendment to the Constitution”.

Sri Lanka should not consider that India’s interest and involvement in the post-war reconciliation process as a case of a foreign country intervening in the internal affairs of Sri Lanka illegally. India is guided by a mindset that there is a moral responsibility on her part to intervene and bring about a final settlement to the conflict in Sri Lanka.

 

Colombo Port City Economic Commission

Colombo Port City Economic Commission Bill which was challenged in the Supreme Court, purported to establish an Economic Commission for the administration of the Port City, built by a construction company of the Chinese Government, adjacent to the Colombo Port. This Bill seeks to grant extensive powers to an institution called the Colombo Port Economic Commission, whose members will be appointed by the President of Sri Lanka. According to the provisions in the Bill, the supervisory power of the Parliament of Sri Lanka has been excluded, both regarding the manner of exercising the powers granted by the proposed legislation to the Commission, and also regarding the selection of persons to be appointed as members of the Commission.

Moreover, regarding the activities that take place within the Colombo Port City area, some institutions of the Government of Sri Lanka are excluded from exercising their authority. Dr. Wijedasa Rajapaksa, in his written submissions submitted to the Supreme Court, in connection with the petition filed challenging the Bill, makes specific reference to the Customs Ordinance. He gives the warning that there may be importation of prohibited substances such as drugs, weapons, etc. He points out that in the event of any violation of International Treaties and Conventions, within the Port City area, it is not the Commission but the Sri Lankan Government that is responsible.

 

Conclusion

In view of the intense power struggle between China on the one hand and India and other partners of the Quad, led by the USA on the other hand, for dominance in the Indian Ocean area, the Parliament of Sri Lanka passing legislation for permitting such a high degree of autonomy to an administrative authority that can be controlled by the Chinese government will be considered by India as a serious threat to its security. This pro-China foreign policy orientation will also be an obstacle for Sri Lanka to promote friendly relations with democratic countries in the West determined to thwart Chinese domination in the Indian Ocean region.

 

 

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The Philippines and SL combine

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Singer Suzi Croner (Fluckiger), who was a big hit in this part of the world, singing with the group Friends, continues to make her presence felt on TNGlive – the platform, on social media, that promotes talent from all corners of the globe.

She made her third appearance, last Saturday, May 1st, but this time she had for company Sean, from the Philippines, who, incidentally, was in the finals of The Voice of Switzerland 2020.

Their repertoire, for TNGlive, on the evening of May 1st, including hit songs, like ‘Something Stupid,’ ‘Let Your Love Flow,’ (Sean), ‘If You Can’t Give Me Love,’ ‘Your Man,’ (Sean), ‘Crazy,’ ‘Great Pretender,’ (Sean), ‘Amazing,’ and ‘Stand By Me.’

It was a very entertaining programme, and Sean certainly did prove why he needed to be a finalist at the prestigious The Voice of Switzerland 2020.

You can take in the TNGlive scene, on a regular basis, by joining the Public Group TNGlive, on social media (Facebook).

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