The hottest potato now on the lap of the Government of Sri Lanka (GOSL) is an unsolicited proposal from a giant U.S. corporation, New Fortress Energy (NFE), a NASDAQ quoted company on the New York Stock Exchange, to build a new offshore LNG (liquefied natural gas) receiving, storage and regasification terminal in Colombo. A framework agreement to go ahead with this proposal has already been allegedly signed but very little of this was known to the wider public. Unsurprisingly, allegations that this was done in secret is being widely bandied about. Lesser constituents of the government are unhappy about this proposal and Finance Minister Basil Rajapaksa who is pushing it on the grounds that it will enable cheaper long-term electricity generation benefiting hard-pressed consumers had a discussion with party leaders of the ruling coalition on this subject last Thursday. What finally emerged there has not been revealed but it is clear that the government is determined to push ahead with the proposal.
Unsolicited proposals are by their very nature suspect. The recent discussions on the project did not reveal who NFE’s local agent is, or if there is any. It is unlikely, if not impossible, that a U.S. based company would make such a far reaching proposal with widespread ramifications without an extensive knowledge of the ground situation. For this a lot of domestic input would have been necessary; and the total picture, obviously, was at the fingertips of the offeror. But there has not been the slightest hint or whiff of a rumour of who the local participant might be. We all know that big projects, the Accelerated Mahaweli Development Project is one good example and the Norochcholai coal fired power plant is another, enabled massive commission incomes, probably disproportionate to the work and effort expended in winning the contract for an overseas principal, was earned locally. In the case of most projects, local agents are known by and large. This is as it should be because that is what transparency is all about.
Well documented allegations have been made that the proposal under consideration is a threat to the country’s energy security and would potentially cause enormous losses to Sri Lanka. We do have a National Energy Policy gazetted in August 2019. This is intended to ensure energy security through the supply of reliable, cost effective and competitively priced energy services from diverse sources. Nobody would, or could, quarrel about the push towards renewable energy in place of fossil fuels that are finite and environment degrading. This is the global trend. We in Sri Lanka, having now largely exhausted our hydropower resources that once upon a time gave us very cheap electricity, is now looking at renewables including solar and wind power. But these targets are not achievable in the short term although tight deadlines have been set. It is not possible to immediately dispense with expensive thermal power for which we have, and will continue to pay, a heavy price. That is why the National Energy Policy has identified LNG as the next fossil fuel option for us. But it has made clear that LNG procurement shall be kept under state control in the context of its impact on national energy security.
This policy further establishes that procurement of plant, equipment, crude oil and other fuels as well as power purchase agreements and similar concessions will be made through a streamlined competitive bidding process ensuring transparency and accountability. Critics of the NFE proposal are hammering home the point that all these safeguards will go down the river if the government goes ahead with its plans to sell-off 40 percent of the shares of the state-controlled West Coast Power Private Ltd. (WCPL) to NFE at a price of USD 250 million. The wide-ranging proposal made by the U.S. corporation includes an LNG terminal project together with what’s call a “Floating Storage Regasification Unit” and associated mooring systems and pipelines. There is a high possibility that NFE will supply most of the LNG consumed in the country in the future if this deal goes through. What is most disturbing is the ‘Take or Pay’ (TOP) clause in the proposal that ensures that NFE should be paid irrespective of whether contracted volumes are consumed or not. This is not altogether unusual in Power Purchase Agreements, several of which are already in force between the CEB and small scale independent power producers in business here. Under these arrangements what’s called ‘capacity charges’ are paid. But in the case of a TOP arrangement for future LNG supplies, the costs would be mind-boggling.
Within the last three months there have been two cabinet memoranda pushing the NFE proposal which is strongly supported by the Finance Ministry on the basis that it will enable much cheaper power generation than at present with the foreign investor carrying the capital component of the investment which will benefit the already hard-pressed consumer fearful of having to pay more for his electricity. We are not aware whether there is a cabinet decision to press on with the project although information presently available strongly implies that a virtual fait accomplii has been presented with the framework agreement allegedly already signed in the dead of night. Meanwhile the Energy Ministry is fast tracking the exploration for natural gas in the Mannar basin. What use would any possible strike be if the country’s future LNG needs have already been contracted out?
Address cause of mob justice
Friday 20th May, 2022
There has been a call for the appointment of a Parliamentary Select Committee to probe the alleged complicity of some defence and police bigwigs in goon attacks on a group of anti-government protesters in Colombo on 09 May. This call should be heeded. The SLPP goons who went on the rampage, and others who made use of the Galle Face attacks to set the country ablaze must be severely dealt with, according to the law.
No one should be allowed to attack peaceful protesters, or destroy anyone else’s property under any circumstances, and Monday’s SLPP goon attacks and the ensuing spate of mob violence amounted to an assault on the rule of law. There should be zero tolerance for mob justice, which is a manifestation of savagery, and antithetical to democracy.
Questions have been raised in Parliament about the government decision to provide the MPs, affected by mob violence on 09 May, with houses in a state-run housing scheme. Prime Minister Ranil Wickremesinghe said it was only a temporary arrangement, and there was a precedent. He got it right when he said that unless steps were taken to look after the lawmakers affected by mob violence, good men and women would be wary of entering Parliament. Most members of the current Parliament cannot be considered decent, but indiscriminate attacks on the MPs, and a sustained hostile campaign against the legislature, which some politicians and their parties have unfortunately brought into disrepute, will make decent people avoid politics like the plague; Parliament might end up having only trigger-happy characters as its members, in such an eventuality, as the PM said.
Most of the problems the country is beset with boil down to one thing—the breakdown of the rule of law. Parliament ought to address this issue and sort it out urgently if further trouble is to be averted. Given the country’s rapid descent into lawlessness, nobody will be safe. If the rule of law had prevailed, the Galle Face protesters would have been safe on 09 May, and there would have been no retaliatory attacks.
The breakdown of the rule of law is also one of the main reasons for the present economic crisis. Anti-graft laws are not properly enforced, and powerful politicians and their cronies are free to amass huge amounts of ill-gotten wealth at the expense of the state coffers, and even make a vulgar display of it with impunity. Election laws are blatantly flouted; candidates are free to receive and spend colossal amounts of undeclared funds, and even anti-social elements like drug lords can bankroll election campaigns. Massive tax cuts and import duty waivers that the current administration effected immediately after the presidential election in 2019 were intended to benefit the moneybags who lavished funds on the SLPP politicians for electioneering and other purposes. They led to a sharp drop in the state revenue, and a huge increase in money printing, which contributed to soaring inflation and unprecedented currency devaluation.
The current economic meltdown has been blamed on a coterie of politicians and their kith and kin who have earned notoriety for bribery and corruption. They would not have been able to return to power, much less ruin the economy, if they had been made to pay for their crimes, after their defeat in 2015. They could have been dealt with while they were in the Opposition during the Sirisena-Wickremesinghe regime (2015-2019). But the yahapalana leaders struck various deals with them. This is the price the country has had to pay for allowing the rule of law to be subjugated to the interests of the politicians in power.
Meanwhile, the government is planning to compensate the MPs whose properties were destroyed by violent mobs last week, we are told. Before that, the taxman should be made to ask the victims how they raised funds for the acquisition of the properties that have been either damaged or destroyed. If they cannot provide satisfactory answers, public funds must not be utilised to compensate them.
Thursday 19th May, 2022
Dissident SLPP MP Wimal Weerawansa has hinted that goon attacks on a group of anti-government protesters on 09 May were due to a clash between President Gotabaya Rajapaksa and his brother, Mahinda Rajapaksa, who was the Prime Minister at the time. He went ballistic in Parliament, on Tuesday, while decrying the attacks on the Galle Face protesters. He laid the blame for the incidents of violence at the feet of those who had organised a meeting of local government members at Temple Trees, on that day. Calling for legal action against all of them, he revealed that the police had not carried out President Rajapaksa’s order that the SLPP goons be prevented from marching on the Galle Face Green. He claimed someone had prevented the police from using force to disperse the mob.
Most of the pro-government goons were sozzled to the gills and staggering, and a high velocity stream of water would have swept them off their unsteady feet, and sent them crawling whence they had come, but the police did not use water cannon on those characters. The CID has questioned Senior DIG Deshabandu Tennakoon, who was present at the Galle Face Green, and he should be able to reveal what actually happened. The person who ordered the police to give kid-glove treatment to the SLPP rowdies must be traced and brought to justice.
Weerawansa also claimed that there had been a delay on the part of the Army in reaching the Galle Face Green to prevent the goon attacks although the President had called for immediate action. The allegation must be probed.
Accusing the police of having done nothing while his house was being attacked, Weerawansa claimed that the police had been asked to look the other way. He called for action against the police and security forces top brass responsible for the breakdown of law and order on 09 May.
The police have arrested some SLPP MPs and their supporters for the Galle Face attack, but it is the masterminds behind the incidents who have to be taken in for questioning. Let the police be urged to arrest those who organised the Temple Trees meeting, and incited violence.
Make MPs wait in queues
Arrangements have been made for the members of Parliament to refuel their vehicles at the police filling station in Colombo while hundreds of thousands of people are waiting in long queues for petrol, diesel and kerosene, in all parts of the country. Why should the MPs be given this kind of special treatment? They do not carry out their legislative duties and functions properly, and it defies comprehension why special arrangements should be made to make fuel available to them.
Parliament wasted its time on Tuesday. The government and the Opposition should have elected the Deputy Speaker unanimously instead of resorting to a political battle. The vote on the Opposition’s motion for suspending Standing Orders for a motion of censure against President Gotabaya Rajapaksa to be advanced was an exercise in futility. The entire country has censured the President so much so that he has even agreed to strip himself of some of his executive powers, and taken steps to appoint an interim government. Therefore, the question is whether there is any need for Parliament to censure the President separately at the expense of what needs to be done urgently to stabilise the economy and grant relief to the public. Perhaps, Parliament should consider passing a motion to censure itself for its callous disregard for the suffering of the hapless public.
The MPs must be made to undergo the same hardships as the ordinary people who maintain them; their perks and privileges will make even their counterparts in affluent countries green with envy. In Sweden, as we have pointed out in a previous comment, the MPs and ministers are not entitled to vehicles or fuel allowances; they are given only bus and train passes. If they use private vehicles, they have to do so at their own expense. Only the Prime Minister is given an official vehicle there. But in this country, which politicians and their kith and kin have bankrupted, the MPs get first dibs on everything, and live in the lap of luxury while the ordinary people are suffering.
The MPs must be made to wait in queues to refuel their vehicles.
Grusha, Ranil and divided House
Wednesday 18th May, 2022
Parliament has demonstrated, once again, that it does not give a tinker’s cuss about unity and collective action. While the country is burning, and yearning for political stability, the government and the Opposition turned yesterday’s election of the Deputy Speaker into a political battle. The SLPP sought to prove that it exercised control over the House; it fielded MP Ajith Rajapaksa, who received 109 votes, and the Opposition candidate Rohini Wijeratne (SJB), could secure only 78 votes while 23 votes were rejected. The Opposition’s motion seeking the suspension of Standing Orders for a censure motion against President Gotabaya Rajapaksa to be taken up expeditiously was also defeated. The government secured 119 votes as opposed to the Opposition’s 68.
The government may try to make yesterday’s votes in the House out to be another victory for the ‘Rajapaksas’. But numbers are deceptive. One may recall that in 2018, the UNP-led UNF managed to secure a comfortable majority in the House and foil an attempt to dislodge it, but the UNP and its offshoot, the SJB, suffered humiliating electoral defeats the following year. The SJB and its allies should also have a proper assessment of their strength. The censure motion against the President will only cause the House to waste time and put paid to efforts being made to bring about political reconciliation.
Prime Minister Ranil Wickremesinghe, in his address to the nation, on Monday, spoke the unvarnished truth. He made no revelations, though. Everybody knows the worst is yet to come. But he is right in having reminded the people of the tough times ahead and the need to brace themselves for the worst-case scenario. He also infused the public with some hope.
The subtext of the PM’s speech was of interest; he said the country’s foreign currency reserves had been at USD 7.5 billion in November 2019 (when his government fell), the implication being that he cannot be blamed for the current economic mess, which mainly is due to the prevailing forex crisis. But those who were at the helm of the yahapalana government are also responsible for the present economic downturn. The debt overhang is partly inherited. According to Verite Research data, at the end of 2014, Sri Lanka’s economic growth rate was 5%, and it dropped to 2.3% in 2019. Between the end of 2015 and the end of 2019, the country’s external public debt increased by USD 12.5 billion, and gross official reserves decreased by USD 0.57 billion.
Successive governments including the yahapalana regime have done precious little to increase foreign exchange reserves by boosting exports and restricting imports. The Covid-19 pandemic aggravated the crisis; earnings from tourism, and remittances dropped sharply, and lockdowns, etc., here and overseas, took a heavy toll on Sri Lankan exports. The SLPP dispensation drove the country to bankruptcy by mismanaging the economy; it refused to seek IMF assistance early, reduced taxes recklessly, indulged in wasteful expenditure, carried out various rackets such as the sugar tax scam, threw money around by way of relief for political reasons, printed enormous amounts of money thereby causing currency devaluation and soaring inflation, and allowed illegal money transfer schemes such as hawala and undiyal to flourish, with some corrupt government bigwigs allegedly benefiting therefrom. The SLPP’s argument that the pandemic was the root cause of the present economic crisis is untenable in that the foreign currency reserves of other countries in the region grew significantly despite the global health emergency.
The ‘new’ government’s efforts to find out the causes of the economic crisis are superfluous; there is no need to reinvent the wheel. The Central Bank, the Finance Ministry, the IMF and independent economists have identified them and recommended how to tackle them. The task that the government is expected to accomplish is to bring about political and social order, without which no economic recovery is possible, have external debt restructured urgently, find bridge financing to make essential commodities and services available, while trying to secure the IMF bailout package expeditiously, eliminate waste and corruption, curtail state expenditure, present a new budget, and restore the rule of law.
Meanwhile, Prime Minister Wickremesinghe would have us believe it is pure altruism that has driven him to undertake his current mission, which is a massive political gamble. He has likened himself to Grusha in Brecht’s Caucasian Chalk Circle. One finds this analogy interesting. Grusha is a dazzling emblem of love, faithfulness, integrity, selflessness, righteousness and justice. Could this be said about the new PM? We leave it to our readers.
However, there is one striking similarity between Grusha and Ranil. Grusha saves the child of a Governor killed in a coup, and Ranil stands accused of trying to protect a former Prime Minister’s son, among others, amidst a political upheaval.
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