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Sri Lanka big business reaps huge profits during pandemic

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By Saman Gunadasa

Sri Lanka’s nine top companies amassed 364 billion rupees ($US1.8 billion) in earnings between April and June, collectively pocketing 21 billion rupees profit in the first quarter of their financial year.

This amount is only a fraction of the wealth secured by the super-rich and also seen in rising profits for the banks and other big companies so far this year.

In the first three months of 2021, listed companies on the Colombo Stock Market recorded 189 percent growth increase compared to the same period last year, with the largest earnings made by companies involved in finance, exports, logistics, liquor, health and stock trading.

Companies allowed to keep operating during the COVID-19 pandemic were some of the highest profit makers, in stark contrast to the devastating economic impact on workers, small entrepreneurs, self-employed and the poor who suffered sharp losses of income and jobs. As of yesterday, COVID-19 has taken the lives of more than 9,000 people in Sri Lanka with total infections climbing to over 425,000.

Among the top nine earners was Expolanka, a major logistics company with branches in 20 countries. It had a turnover of 95 billion rupees and 6.3 billion rupees net profit in the quarter.

In second place was LOLC, a leader in leasing, hire purchase, insurance and other financial activities. It earned 55 billion rupees with a 4 billion rupees net profit. Last year, LOLC pocketed 53 billion rupees after tax profit, the highest ever recorded by a Sri Lankan company. Its owner, Ishara Nanayakkara is one of the country’s top billionaires.

Hayleys and Vallibel One, a finance house owned by Dammika Perera, Sri Lanka’s richest individual, earned almost 90 billion rupees with combined net profit of 6.4 billion rupees in the April to June quarter.

The Hayleys conglomerate is involved in import-export industries related to rubber production and plantations with over 30,000 employees. Last year it generated 242 billion rupees in revenue and 14 billion rupees net profit, the highest ever during the company’s 143 years of existence.

John Keells, another top business firm, earned 38 billion rupees with 1.2 billion rupees net profit in the quarter. Tourism was the only component of the company impacted by the pandemic.

In addition to the top nine conglomerates, NDB, the country’s fourth largest private commercial bank, reported a net interest income of 5 billion rupees—a 15 percent increase from April to June compared to the same time last year. Sampath Bank reported a 34 percent rise in net interest income to 10.8 billion rupees in the same quarter.

Billionaire Dammika Perera was featured in the media last week, arrogantly declaring that Sri Lanka should not be locked down under any circumstances.

 “A government cannot run the country in a complete lockdown, can it?” he said, adding that without “dollar income via exports,” it could not import petrol, medicine, milk powder and other necessities. Perera said nothing about the massive export profits being amassed by his companies and other businesses.

Over the past month Sri Lankan President Gotabhaya Rajapakse, speaking on behalf of big business, opposed any lockdown amid rising COVID-19 infections and deaths and urgent calls of independent health experts for stringent health measures.

Limited lockdown restrictions reluctantly imposed on August 20 by Rajapakse, still allow big business to keep operating as essential services. Health experts have voiced their concerns about effectiveness of the government’s restrictions.

Last year President Rajapakse ordered the Central Bank to provide massive concessionary funds—a total of 230 billion rupees—to big businesses. Other financial facilities and more tax concessions were also handed out. Most corporate taxes, for example, were reduced to 14 and 18 percent, the lowest rates in South Asia.

Last December, Rajapakse told a Ceylon Chamber of Commerce conference that investors should “take up the opportunities” provided by the coronavirus pandemic.

Early last year the government, backed by the trade unions, gave businesses the right to retrench workers arbitrarily, ignoring the country’s existing, but limited, labour laws. Under the banner of dealing with the pandemic, employers were also allowed to impose wage cuts, increase workloads and slash working conditions.

Announcing his limited lockdown measures on August 20, Rajapakse called on the population to be prepared to make “more sacrifices.” Government ministers are already campaigning for the salaries of about 1.4 million of state sector workers to be cut by 50 percent.

Last week, the cabinet of ministers announced that they would donate a month’s salary to the COVID-19 Health Care and Security Fund. The “donation,” which has been embraced by government and opposition Samagi Jana Balavegaya MPs, is a media stunt by the ministers who receive more in perks than their monthly salaries. It is a public relations exercise in preparation for the slashing of state employees’ salaries.

The government has said it would provide 2,000 rupees for low-income families to cover the two-week lockdown. This is not even enough for one meal a day during the lockdown.

While big business is thriving, working people are being impacted by increasing prices for essential items. Inflation rates have been climbing since January and, on a year-on-year basis, were 6.1 percent in June and 6.8 percent in July. Food inflation was 11 percent in July, with non-food items 3.2 percent.

The Rajapakse government, which confronts falling foreign reserves—it only has enough for two months of imports—has banned the import of many essential food items and other goods.

Sri Lanka, according to a recent global survey by the Institute of Development Studies , is fourth in a list of countries—after Syria, Nigeria and Ethiopia—where basic food is the least affordable.

Last week, Health minister, Keheliya Rambukwella issued a gazette announcing a maximum price for 60 essential medical drugs. Ceylon Private Pharmacy Owners ’ Association president Chandika Gankanda, however, told the media that the gazette was used to increase the price of many drugs by 9 percent. The drugs listed in the gazette include painkillers given for those infected with COVID-19 or suffering with diabetes and high blood pressure.

Mired in huge foreign debts and falling export income, the Rajapakse regime has turned to the International Monetary Fund (IMF) and received a loan of about $800 million under the bank’s $650 billion program for member states.

Ajit Nivard Cabraal, the state minister for money and capital markets, jubilantly declared last week, that “the inflows we predicted are coming one by one,” adding that a $300 million loan was also being provided by China.

The IMF has insisted that any country receiving its loans must implement “restructuring programs” to overcome its economic difficulties. In other words, these loans will be paid for by even more ruthless austerity attacks on the working class and the poor by the Rajapakse government.



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Post-war reconciliation: Lanka ready to accept support of int’l partners

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UN-Prez tells UNGA

President Gotabaya Rajapaksa yesterday (22) declared his readiness to engage all domestic stakeholders, and to obtain the support of international partners and the United Nations, in the post-war reconciliation process.

Addressing the 76th UNGA, President Rajapaksa said that it was his government’s firm intention to build a prosperous, stable and secure future for all Sri Lankans, regardless of ethnicity, religion, or gender. “However, history has shown that lasting results can only be achieved through home-grown institutions reflecting the aspirations of the people.

The following is the full text of President’s speech: “The COVID-19 pandemic has had a devastating impact on humanity. I sympathise deeply with all who have lost their loved ones during the pandemic. I thank frontline healthcare and essential workers around the world for their dedication and commend the World Health Organisation for its crisis response.

I also greatly appreciate the rapid advances made by the scientific and medical communities in devising vaccines and treatment protocols to combat the virus.

At the same time, we must recognise that the challenges surrounding production, distribution, deployment and acceptance of vaccines must be overcome urgently if the spread of dangerous new virus strains is to be prevented.

Ensuring that everyone, everywhere, is vaccinated is the best way out of the pandemic.

Although still a developing nation, Sri Lanka has been very successful in its vaccination programme.

We have already fully vaccinated nearly all those above the age of 30.

Everyone over the age of 20 will be fully vaccinated by the end of October.

We will start vaccinating children over 15 years of age in the near future.

The rapid progress of vaccinations was enabled by coordinated efforts between healthcare workers, Armed Forces and Police personnel, Government servants, and elected officials.

In collaboration with the WHO, Sri Lanka is establishing a Regional Knowledge Hub to facilitate exchange of lessons learnt from COVID-19 and support countries to recover better.

Sri Lanka also benefitted greatly from financial and material support provided by bilateral and multilateral donors to manage the pandemic.

I thank these nations and institutions for their generosity.

The increased global cooperation visible during this ongoing crisis is greatly encouraging.

However, there is still more to be done.

Mr. President,

The economic impact of the pandemic has been especially severe on developing countries.

This has placed the implementation of the 2030 Agenda for Sustainable Development Goals at considerable risk.

It is vital that more initiatives including development financing and debt relief be adopted through international mechanisms to support developing nations and help them emerge from this uncertain situation.

Sri Lanka too has suffered greatly due to the pandemic.

In addition to the tragic loss of life, our economy has been deeply affected.

The lockdowns, together with general movement restrictions, reduced international travel, and slower global growth have affected nearly all sectors of our economy.

Tourism, one of Sri Lanka’s highest foreign exchange earners and a sector that supports nearly 14% of the population, has been devastated.

This industry, together with small and medium businesses in many other sectors, received Government support through interest moratoriums and other financial sector interventions.

Daily wage earners and low-income groups were also supported through grants of cash and dry rations during lockdowns, adding significantly to state expenditure.

In addition to their immediate impact, these economic repercussions of the pandemic have limited the fiscal space available to implement our development programmes.

Mr. President,

As devastating as the consequences of the pandemic have been to humanity, the world faces the even greater challenge of climate change in the decades to come.

As emphasised in the recent report by the Intergovernmental Panel on Climate Change, the unprecedented effect of human activity on the health of the planet is deeply worrying.

Addressing the grave threats posed by climate change and the loss of biodiversity requires decisive and urgent multilateral action.

As a climate-vulnerable country, Sri Lanka is deeply aware of the dangers of climate change.

Sri Lanka’s philosophical heritage, deeply rooted in Lord Buddha’s teachings, also emphasises the vitality of preserving environmental integrity.

It is in these contexts that Sri Lanka is a Commonwealth Blue Charter Champion and leads the Action Group on Mangrove Restoration.

Through the adoption of the Colombo Declaration on Sustainable Nitrogen Management, which seeks to halve nitrogen waste by 2030, Sri Lanka has also contributed to global efforts to reduce environmental pollution.

Having participated virtually in the Pre-Summit held in April, I trust that the United Nations Food Summit later this month will result in actionable outcomes to promote healthier, more sustainable, and equitable food systems globally.

Such outcomes will be crucial to human health as well as to the health of our planet.

Sustainability is a cornerstone of Sri Lanka’s national policy framework.

Because of its impact on soil fertility, biodiversity, waterways and health, my Government completely banned the use of chemical fertilisers, pesticides, and weedicides earlier this year.

Production and adoption of organic fertiliser, as well as investments into organic agriculture, are being incentivised.

I appreciate the encouragement received from many global institutions and nations for our efforts to create a more sustainable agriculture in Sri Lanka.

The conservation of our environment is one of our key national priorities.

We aim to increase forest cover significantly in the coming decades.

We are also working to clean and restore over 100 rivers countrywide, and to combat river and maritime pollution.

We have also banned single use plastics to support ecological conservation.

Sri Lanka recognises the urgent need to reduce use of fossil fuels and support decarbonisation.

Our energy policy seeks to increase the contribution of renewable sources such as solar, wind and hydropower to 70% of our national energy needs by 2030.

Mr. President,

Sri Lanka welcomes the support of the international community as it engages in the task of reviving its economy and carrying out its national development programme.

We intend to make full use of geostrategic location and our robust institutions, strong social infrastructure, and skilled workforce, to attract investment and broaden trade relationships.

My Government is focusing on extensive legal, regulatory, administrative and educational reforms to facilitate this, and to deliver prosperity to all our people.

Sri Lanka has enjoyed universal adult franchise since pre-Independence.

The democratic tradition is an integral part of our way of life.

My election in 2019 and the Parliamentary election in 2020 saw Sri Lankan voters grant an emphatic mandate to my Government to build a prosperous and stable country, and uphold national security and sovereignty.

In 2019, Sri Lanka experienced the devastation wrought by extremist religious terrorists in the Easter Sunday attacks.

Before that, until 2009, it had suffered from a separatist terrorist war for 30 years.

Terrorism is a global challenge that requires international cooperation, especially on matters such as intelligence sharing, if it is to be overcome.

Violence robbed Sri Lanka of thousands of lives and decades of prosperity in the past half century.

My Government is committed to ensuring that such violence never takes place in Sri Lanka again.

We are therefore acting to address the core issues behind it.

Fostering greater accountability, restorative justice, and meaningful reconciliation through domestic institutions is essential to achieve lasting peace.

So too is ensuring more equitable participation in the fruits of economic development.

It is my Government’s firm intention to build a prosperous, stable and secure future for all Sri Lankans, regardless of ethnicity, religion, or gender.

We are ready to engage with all domestic stakeholders, and to obtain the support of our international partners and the United Nations, in this process.

However, history has shown that lasting results can only be achieved through home-grown institutions reflecting the aspirations of the people.

Sri Lanka’s Parliament, Judiciary and its range of independent statutory bodies should have unrestricted scope to exercise their functions and responsibilities.

Mr. President, Excellencies, Distinguished Delegates.

If, in keeping with the theme of our General Debate today, we are to truly build resilience through hope, we must all strive towards the common good.

It is the role of the United Nations to facilitate this by treating all sovereign states, irrespective of size or strength, equitably, and with due respect for their institutions and their heritage.

I request the United Nations and the international community to ensure the protection of the Buddhist heritage of Afghanistan.

I call on the member states of this august Assembly to work together in a spirit of true cooperation, generosity, goodwill, and mutual respect to foster a better and more sustainable future for all humanity.”

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Acquisition of Yugadanavi power plant and right to build new LNG terminal: US firm says agreement finalised

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US based energy firm, New Fortress Energy Inc. on Tuesday (21) announced that it had executed a definitive agreement with the Sri Lankan government for New Fortress’ investment in West Coast Power Limited, the owner of the 310 MW Yugadanavi Power Plant based in Colombo, along with the rights to develop a new LNG Terminal off the coast of Colombo.

Issuing a press release, New Fortress Energy Inc., said as a part of the transaction, New Fortress will have gas supply rights to the Kerawalapitya Power Complex, where 310 MW of power is operational and an additional 700 MW scheduled to be built, of which 350 MW is scheduled to be operational by 2023.

Given below is the statement: “New Fortress will acquire a 40% ownership stake in WCP and plans to build an offshore liquified natural gas (LNG) receiving, storage and regasification terminal located off the coast of Colombo. New Fortress will initially provide the equivalent of an estimated 1.2 million gallons of LNG (~35,000 MMBtu) per day to the GOSL, with the expectation of significant growth as new power plants become operational.

“The 310 MW Yugadanavi Power Plant currently has a long-term power purchase agreement to provide electricity to the national grid that extends through 2035. This power plant consists of General Electric turbines and is configured to run on natural gas in a combined cycle.

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

“The Kerawalapitya Power Complex is the foundation of the baseload power that serves the country’s population of 22 million people. Delivering cleaner and cheaper fuels to Sri Lanka will support the country’s growth for years to come.”

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Sri Lanka a dumping ground for toxic burnt oil from ship engines !

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By Ifham Nizam

Environment Minister Mahinda Amaraweera has questioned some Central Environmental Authority (CEA) officials for permitting more than 20 individuals to collect waste burnt out oil from ships without having facilities to purify it.

However, it was claimed that most of those individuals were backed by some senior politicians and the Authority didn’t have any say.

The Minister has decided to conduct a comprehensive investigation into the toxic waste oil racket through the Presidential Special Investigation Division.

Amaraweera said the racket had been going on for a long time. “This racket is causing a huge amount of foreign exchange loss to the country and causing huge environmental damage,” he added.

Accordingly, steps would be taken by the Presidential Investigation Division to stop the racket and investigate the huge amount of money that has changed hands, the Minister said.

“After the President returns from his visit to New York, I will hold discussions with him and submit a factual report on the amount of money lost to the country in dollars through this racket,” Minister Amaraweera said.

The CEA has so far issued 27 permits for the disposal of waste fuel oil. However, only four companies have the facility to refine it. About 20,000 to 25,000 tonnes of burnt out waste oil are shipped into the country annually. But the country has capacity to refine only 4,800 tonnes a year by licensed companies. It is not clear what happens to the remaining 15,200 tons of waste oil.

The Minister said that issuing licences to companies and individuals who did not have fuel refining facilities was wrong.

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