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New Fortress Energy, Sri Lanka, and Planet Earth

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By Dr. Asoka Bandarage

On September 17, New Fortress Energy (NFE), a US-based energy infrastructure company, signed a momentous legal agreement with the Government of Sri Lanka (GOSL). The signing apparently took place in the dead of the night, at 12.06 a.m., and the foreigner who came for the signing swiftly returned to the US on a flight at 2 a.m.

The back-door deal allows NFE to build a terminal for liquefied natural gas (LNG, natural gas kept in a liquid form for ease of transport) off the coast of Colombo. It also enables NFE to purchase, for USD 250 million, the Sri Lankan Treasury’s 40 percent stake in West Coast Power (WCP), which owns the 310 MW Power Yugadanavi Plant in Kerawalapitya, a contributor to the national electricity grid. NFE would have the right to build a new LNG terminal aiming to increase output to 700 MW, with a target of 350 MW by 2023. NFE will initially supply an estimated 1.2 million gallons of LNG a day to the GOSL, with expectations of significant growth as new power plants become operational.

This complex deal, involving a floating LNG terminal (also known as a Floating Storage Regasification Unit, or FSRU), power plants and energy sales estimated at six billion USD, is likely the largest contract the GOSL has ever made with a private company. It also threatens Sri Lanka with a loss of hundreds of millions of dollars and a serious compromise of the country’s energy security.

Interestingly, the Chairman and CEO of New Fortress Energy is Wes Edens, the American billionaire deemed the ‘new king of sub-prime lending’ by the Wall Street Journal in 2015 (and a ‘slumlord’ by community protesters in Milwaukee). He is also a big donor to the Democratic Party and a co-owner of the Milwaukee Bucks basketball team. Celebrating his deal with pandemic-ravaged, debt-ridden and economically desperate Sri Lanka, Wes Edens said:

“This is a significant milestone for Sri Lanka’s transition to cleaner fuels and more reliable, affordable power. We are pleased to partner with Sri Lanka by investing in modern energy infrastructure that will support sustainable economic development and environmental gains.”

Local Opposition

In Sri Lanka, however, the united trade union alliance, other mass organisations, as well as several Ministers and Members of the Parliament, are protesting the agreement. They are calling for its abrogation on grounds that it threatens national political, economic and energy security.

The Ceylon Electricity Board Engineers’ Union (CEBEU) is championing the resistance and points out that the agreement violates the government’s own National Energy Policy, approved in August 2019. The policy clearly states in strategy 3.1.2 that “considering the impact to the national energy security, operation of the first LNG terminal and LNG procurement shall be kept under state control.” The policy also states in 3.8.2 that the “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 scheme ensuring transparency and accountability.”

The CEBEU argues that the NFE’s ‘unsolicited proposal’ contradicts “the procurement policies and principles” of the National Energy Policy and the Sri Lanka Electricity Act. As CEBEU President, Saumya Kumarawadu explains, the signing of the NFE agreement during the ongoing bidding process has completely disrupted the transparent and formal procedures to procure an LNG terminal facility and pipelines through competitive offers from other parties, more favourable to Sri Lanka.

The CEBEU fears that the agreement would result in the Ceylon Electricity Board, the long-time provider of electricity to the country, losing its ability and mandate to supply the cheapest source of power under its least-cost operating guidelines. The CEBEU has extensively examined the pricing formulas for LNG supply in the NFE agreement, and considers them “very much disadvantageous to Sri Lanka.” They cite offensive conditions of the agreement, including:

  • “Inclusion of very high Take or Pay (TOP) gas volumes than the actual minimum requirement of the country with strict conditions that NFE should be paid irrespective of whether the contracted volumes are consumed or not.
  • Contract term initially for five years with almost definite compelled further extensions.
  • Exclusive rights of supplying LNG to Sri Lanka electricity generation.
  • NFE being granted all tax exemptions/benefits/investment incentives available under Sri Lankan law.”

Sri Lankan activists argue that under the NFE agreement, the supply of LNG may not be limited to just the electricity sector but could also extend to other sectors, such as transport and domestic usage, giving a foreign company enormous control over the country. As the CEBEU points out:

“The main aim of NFE is not the mere USD 250 million investment in shares of WCPL but the securing of multi-billion dollar LNG supply contract without a competition and with exclusive rights of supplying LNG to the whole country with an undefined extended duration beyond five years with massive controlling power on the country’s national security and energy security and with guaranteed exorbitant profits.”

Given the Asia-Pacific Strategy of the US to control the Indian Ocean, including strategically located Sri Lanka, local activists point out the dangers of complete dependence on the US for LNG supply to local power plants. Activists lament: “They [the U.S.] will not let us off the hook once they establish their foothold here. We are in deep trouble.”

A Press Release by the National Joint Committee of Sri Lanka of August 2, 2021, points out that the current GOSL was elected into office with a massive mandate to safeguard national resources and strategic assets from neocolonial exploitation.

The current economic crisis and external political pressure should not be excuses to sell the country for short-term political and economic expedience. This, of course, is the situation for many countries, not only Sri Lanka.

NFE and LNG in global context

NFE is a global company with an expanding “network of liquefied natural gas (LNG) terminals, power generation facilities and natural gas logistics infrastructure,” around the world. With operations in North America, Europe, the Caribbean, Central America, and Africa it has positioned itself to be the leader in the world’s transition to LNG and to “light the world.”

As in Sri Lanka, NFE presents its global LNG projects as “clean, cheap and safe alternatives to coal and oil.” However, activists (and energy experts critical of ‘greenwashing’) question its assumptions and practices. As the Natural Resources Defense Council (NRDC) points out in its report ‘Sailing to Nowhere: Liquefied Natural Gas is not an Effective Climate Strategy’, expansion of US-produced LNG “could have enormous environmental impacts and costs for decades to come.”

LNG production involves extensive use of hydraulic fracturing (‘fracking’), the process of injecting liquid at high pressure into subterranean rocks to force open fissures and extract oil or gas, and LNG processing can increase air pollution and contaminate water supplies, harming human and environmental health.

The fracking-driven expansion has transformed the US from a gas importer to a gas exporter, aggressively seeking overseas markets to sell its oversupply. While natural gas is considered a ‘bridge fuel’ towards sustainability, with lower carbon dioxide emissions than coal or oil, the extraction, processing, and transport of gas emits greenhouse gases, including through leaks and releases from wells, pipelines, storage and processing facilities. Methane, the principal component of the gas, is the second biggest driver of climate change, and gas production systems are the second largest emitters of methane in the US. The NRDC concludes that:

“…using LNG to replace other, dirtier fossil fuels, is not an effective strategy to reduce climate-warming emissions. In fact, if the LNG export industry expands as projected, it is likely to make it nearly impossible to keep global temperatures from increasing above the 1.5 degrees Celsius threshold for catastrophic climate impacts.”

The Public Accountability Initiative, a nonprofit organization that researches connections between corporate and government power, argues that “Financial firms like Wes Edens’ New Fortress Energy are critical players in propping up the fossil fuel industry, which is responsible for our current climate crisis.”

Ecological alternatives

Social and environmental activists also point out that, while NFE and other power companies seek to make huge profits from LNG, flooding energy markets in countries such as Puerto Rico and others in the Caribbean with ‘fracked gas’ will not build resilience. Instead, they call for localised renewable energy sources, such as rooftop and community solar and distributed microgrid technologies, which are more sustainable and more resilient to natural disasters such as earthquakes and hurricanes than centralised fossil-generated power.

Sri Lanka, like Puerto Rico, is an environmentally challenged island that needs to heed these warnings.

The recent environmental devastation, off the coast of Sri Lanka, caused by the explosion of the X-Press Pearl ship carrying toxic cargo, should provoke similar demands for action. For example, strict regulations on the maritime transport of toxic substances, including LNG, are desperately needed to avoid further disasters.

If the Democratic administration in the US is genuinely committed to mitigating climate change, it needs to move away from the global export of dangerous and controversial LNG. Instead, economically struggling countries and regions like Sri Lanka and Puerto Rico need to be allowed, with their sovereignty intact, to develop truly clean, safe, and cheap energy sources, such as solar and wind power, that uphold local and bioregional paths to environmental and human protection.



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‘Lord Edgware Dies’

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It has been some time since I read an Agatha Christie, the plot of which I cannot remember. So, I was delighted to find on the shelves of a friend Lord Edgware Dies, which I had a vague memory of, but no certainty about who had done it.

When I read it, I found that my memory of who was probably the killer was correct, but I could not be certain and the red herrings Christie threw in were so diverting that until almost the very end I wondered if I had been wrong.

The plot is very simple. Jane Wilkinson, who is married to Lord Edgware, tells him that she is desperate for a divorce since she is in love with a very proper Anglo-Catholic peer, Lord Melton, but Edgware refuses to divorce her. She asks Poirot to talk to him, which he does, and is surprised to find that Edgware has told Jane he is prepared to give her a divorce. This was, after he had categorically refused, through a letter, which Jane said she had not received.

That night Edgware is murdered, after Jane had been to see him, or so the butler said, and also Edgware’s secretary. But Jane had been that evening at a grand dinner many miles away, where a dozen fellow guests could swear to her presence.

There was a solution however to the mystery of two Jane Wilkinsons, namely a skilful impersonator called Carlotta Adams who, in the opening chapter had impersonated Jane Wilkinson, who had also been at the performance. But when Poirot goes to see her, he finds that she had been found dead on the morning after Edgware had been killed, of an overdose. And in her bag was a gold case, with a strange inscription, that contained the drug, along with a pair of pince-nez.

Her maid said she had written a letter to her sister in America and posted it the previous night. Poirot asks Inspector Japp to get the letter, and a transcript is received from America, and in it the name of Edgware’s nephew Ronald Marsh is mentioned; he had taken Carlotta to dinner after her performance, with which the book opens, and had then set her a challenge. Japp arrests Marsh, but Poirot is not happy and asks for the original of the letter, which the sister sends him. That shows that a page is missing, and the tear is obvious, though that raises the question as to why it had not simply been cut.

Matters are further complicated by the fact that Marsh had gone in a taxi to the Edgware house, along with Edgware’s daughter Geraldine, in the interval of an opera which had previously seemed to provide them with cast iron alibis. Geraldine had gone in to fetch her pearls so that Marsh could raise money he needed, and thus had an opportunity to kill Edgware, as did Marsh, for the driver said he had got out of the taxi while waiting and gone into the house.

Agatha Christie

Marsh explained why he had gone to the house on the night of the murder as having followed Bryan Martin, an American actor, who had been in love with Jane, whom he saw go into the house with a key. But there was no one visible when he entered, and Geraldine almost immediately came down and they left together. And Martin too has become an object of suspicion to Poirot, for he had been to see him before the murders were discovered with a story of being followed by a man with a gold tooth – a story Poirot immediately realized was false when he was asked how old the man was, and was told he was young, for young people did not have gold teeth.

A heap of French money Edgware had got for a trip to Paris was missing, but since Marsh had no need for it after his cousin’s offer of help, Poirot deduces that it must have been taken by the butler, who has disappeared. Christie has stressed that he is astonishingly handsome, unusual in a butler, and Poirot notes a resemblance to Martin, so he thinks the mysterious man going into the house must have been him.

Incidentally, later Poirot assumes that Edgware’s change of mind was because he was involved in some scandal, and I believe Christie intends us to see the cause of this in his handsome butler, though this is not specified.

Meanwhile, Poirot has asked Japp to find out the provenance of the case found in Carlotta’s handbag, and it turns out to have been made in Paris, specially commissioned, and collected by a woman with pince-nez.

But then another murder occurs—that of another guest at the grand dinner, which provided Jane with her alibi. The victim is an actor who had been bemused when Jane, at a lunch, thought the Judgment of Paris referred to the city. He told Hastings he wanted to see Poirot, but was killed before he could get to the appointment. Poirot had rushed there when told about his request, but it was too late.

Meanwhile, Poirot has tried out the pince-nez on Edgware’s secretary, but she could not see through these. It was only a chance remark heard outside the theatre that led him to try them out on Wilkinson’s maid Ellis, a spare pair that had been appropriated for the night of the murders.

Poirot then lays things out, having summoned Martin and told him that he probably suppressed Edgware’s letter, as he had been dropped by then and he did not want Jane to marry another. But after teasing Martin, Poirot says that Jane was in fact the murderer, and she got Carlotta to impersonate her at the dinner while she went to the house and killed her husband. After meeting Carlotta later and checking with her through a call that she had not been rumbled, Jane had gone ahead with the murder – she put veronal into her drink and the case with veronal into the handbag. She forgot to take out the pince-nez she had used earlier to imitate an American. Carlotta had registered as the American in a hotel and Jane had gone to see her, and there they exchanged identities. After seen the letter, she made use of it by tearing off the page that referred to her, and the S of She, so that the person who had challenged Carlotta to impersonate her seemed to be a man.

There is a coda in which Jane, condemned to death, writes to Hastings, still full of pride at her ingenuity hoping she will be remembered.

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Desilt reservoirs, learn from our ancient irrigation systems

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Polgolla

by Prof. O. A. Ileperuma

Silting of reservoirs is a major problem today affecting our hydropower production and irrigation systems. The main Mahaweli reservoirs are silted to a considerable extent reducing the water holding capacity of them. Due to poor soil management practices, floodwaters deposit large amounts of silt in these reservoirs. When the Polgolla reservoir was fully drained about two years back, one could see mountains of silt in the lower reaches of the reservoir. A rough estimate is that 50% of the total capacity of these reservoirs has been lost to siltation. This is a serious issue which affects not only power and agriculture but also flood control.

Our ancient irrigation systems ensured that desilting of reservoirs took place under royal decree where all users of the reservoirs were ordered to carry out desilting of reservoirs during the dry season. The clay thus collected was used in making bricks for the construction of great stupas which dot the landscape of our ancient kingdoms. This ensured that the reservoirs had their full capacity filled with water for the next cultivating season. Our ancient kings were clever enough not to construct reservoirs by blocking main rivers such as the Mahaweli. A classic example is the Minipe left canal where they tapped only the surface water of Mahaweli. Even the bigger tanks such as Nuwara Wewa and Parakrama Samudraya were fed with minor rivulets. There were also other ingenious features in the cascade irrigation systems built by the ancient kings, such as mud sluice canals and forest reservations between the reservoirs in the cascade system. These reservations helped trap silt and remove excess nutrients, which could otherwise contribute to increasing salinity as water flowed from one reservoir to another.

Victoria

Moragahakanda

A classic engineering marvel is the former Yoda Ela, which carries water from Kalawewa to Nuwara Wewa and Tissa Wewa. It is 87 km long although the straight distance between these points is only about 40 km. The gradient of this canal is about 10 cm per km or 6 inches per mile. Yodha Ela functions as a moving reservoir and feeds about 4,600 hectares of paddy lands. It is a winding canal with about 120 smaller reservoirs on its way. It was constructed during the reign of King Dhatusena around 459 AD and later expanded by King Parakramabahu by connecting more reservoirs to the network. Unfortunately, during the Mahaweli project our modern-day engineers constructed a concrete canal replacing the winding path of this Yoda Ela also called Jaya Ganga. This effectively removed the ability of the old Yoda Ela to remove silt and nutrients. The bank of this Ela has wet zone trees such as jak and areca nut growing well. They take up the nutrients from the flowing stream making the water suitable for irrigation later.

Ancient Mesopotamian civilisations depended on dams constructed along the two main rivers, Euphrates and Tigris. After continuous irrigation of their fields over several thousand years, salinity of the irrigated lands increased making them unsuitable for agriculture. People died due to famine and this clearly illustrates the danger of blocking main rivers for agriculture. There is scientific evidence that the salinity of paddy soils in the Mahaweli C area is increasing.

We saw the devastation caused by Cyclone Ditwah. The sluice gates of the Kotmale Reservoir were opened, and Kandy and Peradeniya were flooded. If the reservoir had had greater storage capacity, couldn’t the opening of the gates have been delayed? This may not be an argument that modern-day engineers would readily accept, and I am not an irrigation expert. These ideas may well be naïve. But most of us tend to think of reservoirs mainly in terms of hydropower generation and irrigation, while their role in flood control receives much less attention. The question therefore deserves serious consideration. Could restoring lost reservoir capacity through desilting help improve our ability to manage extreme rainfall and reduce flood risks?

Desilting our reservoirs should be considered a national priority.

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Losing out to Ethiopia

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From Trailblazer to Tailender

Export diversification – Missing the wood for the trees – Part III

by Gomi Senadhira

In Sri Lanka, the word “Ethiopia” is often used as disparaging slang to describe individuals or areas experiencing extreme poverty, starvation, or severe economic hardship. This linguistic habit originated in the 1980s with the Western media coverage of the devastating Ethiopian famine of 1983-85. That media coverage shocked the world but also left an outdated and offensive global stereotype that the country is permanently starving. Much has changed since then. By now, with an annual growth rate of around 9%, it is the fastest-growing economy in sub-Saharan Africa. Ethiopia has also emerged as a highly competitive exporter and is challenging not only its competitors in the region but also countries like Sri Lanka. This article is on how Sri Lanka has lost ground to Ethiopia (and a few other countries) in the GCC markets for agricultural and floricultural products.

Sri Lanka – A Pioneer in the Agriculture and Floricultural Market in the GCC

As discussed in Part II of this article, by the mid-1980s Sri Lanka had established a strong foothold in the GCC’s fruit, vegetable, and floricultural market. Geographical proximity and well-established shipping and air links gave Sri Lanka a strong comparative advantage over Southeast Asian and African nations. Thailand, Vietnam, and Kenya were not even in the market. At that time, Ethiopia was experiencing (as BBC news reports described) “a biblical famine”.

The market was not very large, but it was lucrative and growing. Trade Minister Lalith Athulathmudali as well as the Chairman of the Export Development Board, Victor Santiapillai, who visited Kuwait (and the GCC countries), recognised the market potential for these products and encouraged us to continue with our work. The minister was particularly keen to further develop links between the market for these products, exporters, and his Export Production Villages (EPVs). So, it was becoming a successful case not only for export diversification but also for transferring gains from exports directly to rural households.

From Trailblazer to Tailender

As a result, even by the beginning of this century Sri Lanka had a larger market share than most of its competitors from Asia or Africa. But since then, our competitiveness has weakened significantly. The tables below provide a comparative snapshot of Sri Lanka’s performance vis-à-vis Thailand, Vietnam, Kenya and Ethiopia in the GCC market for vegetables, fruits and floricultural products. As illustrated therein, in 2001 Sri Lanka was ahead of Thailand, Kenya and Ethiopia in this small but rapidly growing market. Since then, we have fallen behind Thailand, Kenya and many other countries in that lucrative market. If this trend continues, Sri Lanka will fall behind Ethiopia within the next few years. (See Table 1)

In the GCC market for vegetables (covered in HS chapter 07), Sri Lanka was ahead of most other competitors in 2001. As illustrated in Table 1 , Sri Lanka had failed to develop this market, while Thailand, Kenya, and even Ethiopia had very efficiently increased their market shares. The GCC is a market to which Sri Lanka can supply some vegetables, like cabbages, by sea. It appears Sri Lanka had also failed to exploit this mode of supply.

We can see a similar trend in the market for fruits. Vietnam, Kenya, and Thailand have emerged as major players, while exports from Sri Lanka have staggered on slowly. In this segment, Vietnam has emerged as a leading player during the last twenty years and the GCC imports from Viet Nam have shot up from US$44 thousand in 2001 to US$346 million by 2024. In part one of these articles, I discussed the remarkable increase of jackfruit exports from Vietnam “…just $3 million in 2015 to an impressive $236.8 million in 2023” while most of our jackfruit production rots under the trees. This explains how countries develop their markets, geographically and product-wise. (See Table 2)

Sri Lanka’s performance has been weakest in the market for floricultural products (HS Chapter 06), which groups live trees, cut flowers, and ornamental foliage. When we first entered the market in the 1980s, the market was dominated by the Netherlands, and Kenya and Ethiopia were not even in the market. At that time, we identified the Gulf states as a market where Sri Lanka could have a dominant presence due to geographical proximity. Even in 2001, Sri Lanka was ahead of Kenya, Ethiopia, and Thailand. But by now, Kenya has emerged as the dominant supplier. Ethiopia is also expanding its market share and is the third-largest exporter. (See Table 3)

Missing the Wood for the Trees

In the mid-1980s, Sri Lanka first established its foothold in the GCC market. Since then, Thailand, Vietnam, Kenya, and even Ethiopia have moved well ahead of us and have become leading players. Why did we lag behind in our export diversification efforts in general and, more particularly, in the GCC market?

The reasons are very clear. After the initial attempts in the 1980s and early 1990s, Sri Lanka has not been proactively involved in identifying, developing, and promoting new products and markets, or protecting and further developing new markets already established. The focus has simply been on traditional exports: tea, coconut, cinnamon, and garments, while other products were almost ignored. In essence, we have been and continue to focus intensely on a narrow group of products and markets, and we have lost sight of the bigger picture.

(The writer can be reached at senadhiragomi@gmail.com)

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