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The Petroleum Bill – its quiet passage and disquieting politics

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by Rajan Philips

The Petroleum Products (Special Provisions) (Amendment) Bill had a quiet passage in parliament with a majority of 60 votes, 77 for and 17 against. What is disquieting is that only 94 of the 224 MPs (excluding the Speaker) were in parliament for the vote on a Bill on petroleum products, the mismanagement of which turned the country upside down in a matter of months this year. The Bill itself is not some masterpiece of legislation to foster proper management of the petroleum sector, but a simple seeming amendment to the Petroleum Products (Special Provisions) Act No. 33 of 2002. It underscores the point that in the absence of real infrastructure and supporting policy regime, there is no legislative, regulatory or constitutional way out of the crisis in the petroleum sector or any other economic sector.

The legal purpose in both the principal enactment in 2002 and the new amendment is to enable the granting of licenses to entities outside the Petroleum Corporation “to import, export, sell, supply or distribute petroleum.” While the 2002 law vested the licensing power in the “Energy Supply Committee” established under the Energy Supplies Act (No. 2, 2002), the new Amendment transfers that responsibility to a (new) committee appointed by the Cabinet of Ministers. The Amendment also redefines the subject Minister by the words “the Minister” instead of “the Minister in charge of the subject of Power and Energy,” as it was in the original Act.

The Bill was challenged before the Supreme Court over the constitutionality of some of its provisions and the whole Bill itself. The Court held that the Bill itself in one respect and some of the provisions were indeed inconsistent with the constitution but suggested changes to the Bill to remove the inconsistency and the necessity for a two-thirds majority in parliament and even a referendum. Parliament has now passed the bill into law presumably including the changes suggested by the Supreme Court.

Media reports have been calling the amendment as a law to “liberalize the petroleum sector,” obviously taking the cue from the Minister of Power and Energy, Kanchana Wijesekera, who said in parliament that the new Amendment “will allow global suppliers to enter as retail operators, eliminate the monopoly of the Ceylon Petroleum Corporation (CPC) on Jet Fuel and liberalize energy sector.” There is nothing in the eight clauses and four pages of the new Amendment that is not already in the main Act that is going to cause global suppliers to drop everything and rush with petroleum products to cashless Sri Lanka. If at all the new Amendment might be used to create the path of least obstacles to local petroleum wheeler dealers by replacing one obscure committee with another. This aspect of the Bill came up in the hearing before the Supreme Court.

Petroleum Saga

In an earlier article (July 24) I alluded to the saga of the petroleum industry – from pre-nationalization to nationalization in 1961, selective privatization thereafter, and the shift from CPC monopoly to CPC-LIOC duopoly – being a crucial case-study backdrop to the current fuel crisis. Any such case-study should be an exercise in political economy and not constitutional interpretations. Tragically, however, for all the political tumults about the supply and delivery crisis of petroleum products there has not been any corresponding ‘agitation’ in parliament either at the level of soliciting and securing up-to-date information on the supply and status of petroleum products, or at the level having some serious discussion about the petroleum crisis, its causes and potential solutions.

While no one in parliament is showing any serious interest in these matters, it is left to the Supreme Court to step in to fill the void. But filling the void is not solving the crisis and it is not in the business of the solve anything. Nonetheless, the Court’s ruling on the amending bill provides a good summary account of the “existing legal framework” for the regulation (I would add ‘and deregulation’) of the petroleum sector, beginning with the Ceylon Petroleum Corporation Act, No. 28 of 1961.

The current Minister who is now claiming that his new law will eliminate the monopoly of the Ceylon Petroleum Corporation, should know from the Supreme Court ruling (if he is not directly familiar with the CPC Act) that the 1961 law that nationalized the petroleum industry has always included provisions permitting the supply or distribution of petrol, kerosene, diesel oil or furnace oil by non-CPC entities with the approval of the Minister or CPC Board of Directors.

These provisions were not utilized by governments not because, as was suggested during the Court hearing, the CPC Act did not ‘contemplate’ regulatory measures for their application but because no government until after 1977 contemplated using them for the import, supply or distribution by non-CPC entities. This included both the governments of the Left and the Right. In fact, it was the UNP government of Dudley Senanayake that entrenched the monopoly of the CPC by building a new refinery in Sapugaskanda with the capacity to meet virtually the entire domestic demand for petroleum products by importing and refining crude oil from Iran.

Legal Labyrinth

Contemplation, if any, to use non-CPC sources for the supply and distribution of petroleum products began after 1977 with the changes in economic direction and philosophy, under a different UNP government led by PM turned President, JR Jayewardene. His government enacted the Petroleum Products (Regulation and Control of Supplies) Act No. 34 of 1979 to provide for the regulation and control of the distribution and use of petroleum products. Nothing much came out of it, and the JRJ government, as I wrote earlier, baulked from making a serious and considered decision about the petroleum sector (or the electricity sector) – whether to continue the CPC monopoly, ‘liberalize’ the whole sector, or selectively ‘unbundle’ it to create a healthy blend of both public and private sector involvement.

The next set of laws came after more than 20 years, in 2002, when Ranil Wickremesinghe was Prime Minister, co-habiting with President Chandrika Kumaratunga. There were three pieces of Legislation – the Energy Supply Act, the Petroleum Products Act and the Public Utilities Commission of Sri Lanka Act, all enacted in 2002. The Energy Supply Act was enacted to purportedly deal with the emerging energy crisis in the country, and the Act enabled the creation of a new Committee, the Energy Supply Committee, but it also provided for the of regulation of “activities of persons engaged in the importation, exportation, storage, distribution and supply of petroleum and petroleum products.”

However, the Energy Supply Act was in operation only for a period of two years from March 2002 to March 2004, and would seem to have died with the sacking (through dissolution of parliament) of the peace-process government of Ranil Wickremesinghe by President Kumaratunga. At the same time, the Petroleum Products Act that was also enacted in 2002 by the Wickremesinghe government has survived his alternations in and out of power and, according to the Supreme Court, has provided “a more empowered regulatory regime over the petroleum industry.”

The Court ruling suggests that the Petroleum Products Act (PPA) “sought to regulate the downstream petroleum sector by removing the monopoly of the CPC and providing for the issue of licences subject to prescribed conditions.” With respect and in policy parlance, the PPA legislation actually sought to achieve the opposite: to deregulate the petroleum sector! Pertinent to the new amendment to the PPA legislation, the latter provided for the licences for the import, export, sale, supply or distribution of petroleum products to be issued by the Minister on the recommendations of the Energy Supply Committee. The latter committee would somehow seem to have survived the demise of its enabling legislation. As I have indicated at the outset, the new Amendment is replacing the Energy Supply Committee by a new Committee.

A word on the Public Utilities Commission of Sri Lanka (PUCSL) Act to round off this legal labyrinth, and the underlying overlapping of vested interests. The intended purpose of the Commission (and the Act) is to provide “a framework for the regulation of public utilities industries, which originally included (in the Act’s schedules) only the Electricity Industry and the Water Service industry. The Petroleum Industry was added to the PUCSL list four years later, in 2006, just after Mahinda Rajapaksa became the new President.

As the Court duly noted in its ruling, it was unclear “during the hearing whether there was agreement amongst parties on whether the PUCSL did exercise any regulatory power in terms of the PUCSL Act over the petroleum industry.” And the Court concluded that “the PUCSL does not have any power of regulation over the petroleum industry merely upon it being included in the Schedule to the PUCSL Act.”

What next?

The question now is what difference is the new amendment going to make to the operation of the petroleum sector? The Minister might think that he now has a freer hand to break the monopoly of the Ceylon Petroleum Corporation and get non-CPC entities to import and supply petroleum products for local distribution. If the Minister, or the government, wants to really end the monopoly of the CPC, even though there is no monopoly now anyway, it must bite the bullet and privatize the CPC. That way whoever is willing to take over the CPC can use its infrastructure the same way the CPC used the infrastructure of the multinational oil companies after nationalization. In trying to create a parallel system besides the CPC, the government is only leading the country into the worst of both (public and private) worlds. The same way the JRJ government destroyed the bus industry and the school system. Very soon there might be an international university on climate change headed by a new Jennings from Norway!

As for falling into the worst of both worlds, the Supreme Court ruling has laid down the markers to indicate where things easily go wrong. The Court held that in three areas the new Bill was inconsistent with the Constitution and suggested changes. First, the Court directed the new Committee to be restructured to include two additional Ministry Secretaries similar to the Energy Supply Committee. Second, it struck Clause 7, a deeming provision that made any previous act by the Energy Supply Committee legal and unchallengeable in courts. Third, the Court held the whole Bill inconsistent with the Constitution insofar as new Committee was kept outside the purview of Bribery Act. The Court directed the Bill to be changed to include the Committee as a Scheduled Institution under the meaning of the Bribery Act.

Why was it excluded from the purview of the Bribery Act in the first place? The answer is because the real intent behind half-baked attempts at licensing is to create the path of least obstacles to local importers and their foreign suppliers. Even with privatization, it is the responsibility of the government to ensure that proper processes are in place for setting criteria and standards, for competitive bidding, and for the granting of licenses and contracts. That has not been the case at all in Sri Lanka, starting from 1977 and made worse after 2010.

Specific to the petroleum sector, the legislative changes in 2002 under Ranil Wickremesinghe and in 2006 under Mahinda Rajapaksa leaves one to opine if, after all, Mahinda Rajapaksa was continuing from where Ranil Wickremesinghe left. Is it now the other way around? And is national politics now reduced to the two trying to rise together via Ekwa Negitimu? Not to mention, as has been reported, the long distance conversations between Ranil Wickremesinghe and Basil Rajapaksa to consummate a no-contest electoral marriage between the UNP and the SLPP.



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Federalism and paths to constitutional reform

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Chelvanayakam (R) and S. W. R. D. Bandaranaike shaking hands.

S. J. V. Chelvanayakam: Visionary and Statesman

S. J. V. Chelvanayakam KC Memorial Lecture Delivered at Jaffna Central Collage on Sunday, 26 April, by Professor G. L. Peiris – D. Phil. (Oxford), Ph. D. (Sri Lanka); Rhodes Scholar, Quondam Visiting Fellow of the Universities of Oxford, Cambridge and London; Former Vice-Chancellor and Emeritus Professor of Law of the University of Colombo.

I. Life and Career

Had Mr. Chelvanayakam been with us today, he would no doubt be profoundly unhappy with the state of our country and the world.

Samuel James Velupillai Chelvanayakam was born on 31 March, 1898, in the town of Ipoh, in Malaya. When he was four years of age, he was sent by his father, along with his mother, for the purpose of his education to Tellippalai, a traditional village at the northern tip of Sri Lanka, or Ceylon as the country was then called, in close proximity to the port of Kankesanturai. He attended three schools, Union College in Tellippalai, St John’s College Jaffna and S. Thomas’ College Mount Lavinia, where he was a contemporary of S. W. R. D. Bandaranaike, with whom he was later destined to sign the Bandaranaike-Chelvanayakam Pact.

He graduated in Science as an external student of the University of London, in 1918. In 1927, he married Emily Grace Barr-Kumarakulasinghe, daughter of the Maniyagar, or administrative chief for the area, appointed by the colonial government. He had four sons and a daughter. His son, S. C. Chandrahasan, worked closely with me during my time as Foreign Minister on the subject of repatriation of refugees from India. Chandrahasan’s wife, Nirmala, daughter of Dr. E. M. V. Naganathan, was a colleague of mine on the academic staff of the University of Colombo.

Mr. Chelvanayakam first contested the Kankesanturai constituency at the parliamentary election of 1947. His was a long parliamentary career. He resigned from his parliamentary seat in opposition to the first Republican Constitution of 1972, but was re-elected overwhelmingly at a by-election in 1975. He died on 26 April, 1977.

There are many strong attributes which shine through his life and career.

He consistently showed courage and capacity for endurance. He had no hesitation in resigning from employment, which gave him comfort and security, to look after a younger brother who was seriously ill. As his son-in-law, Professor A.J. Wilson remarked, he learned to move in two worlds: a product of missionary schools, he was a devout Christian who never changed his religion for political gain. He was, quite definitely, a Hindu by culture, and never wished to own a house in Colombo for fear that his children would be alienated from their roots.

Gentle and self-effacing by disposition, he manifested the steel in his character by not flinching from tough decisions. Never giving in to expediency, differences of principle with Mr. G. G. Ponnambalam, the leader of the All Ceylon Tamil Congress, of which Mr. Chelvanayakam was a principal organiser, led him to break away from the Congress and to form a new party, the Ilankai Tamil Arasu Kachchi, or the Federal Party.

During the disturbances in March and April, 1958, he was charged in the Magistrate’s Court in Batticaloa and sentenced to a week’s imprisonment. He was also subject to house arrest, but he never resorted to violence and used satyagraha to make his voice heard. When, in 1961, he was medically advised to travel to the United Kingdom for surgical treatment, he had to be escorted to the airport by the police because he was still under detention. Although physically frail and ailing in health during his final years, he lost none of the indomitable spirit which typified his entire life.

II. Advocacy of Federalism: Origins and Context

At the core of political convictions he held sacrosanct was his unremitting commitment to federalism. A moment of fruition in his life was the formation of the Federal Party, Ilankai Tamil Arasu Kachchi, on 18 December, 1949.

Contrary to popular belief, however, federalism in our country had its origin in issues which were not connected with ethnicity. At its inception, this had to do with the aspirations, not of the Tamils, but of the Kandyan Sinhalese. The Kandyan National Assembly, in its representations to the Donoughmore Commission, in November, 1927, declared: “Ours is not a communal claim or a claim for the aggrandizement of a few. It is the claim of a nation to live its own life and realise its own destiny”.

Mr. S. W. R. D. Bandaranaike, soon after his return from Oxford, as a prominent member of the Ceylon National Congress, was an ardent advocate of federalism. He went so far as to characterise federalism as “the only solution to our political problems”. With Thomas Hobbes in his famous work, The Leviathan, he conceived of liberty as “political power broken into fragments”. Bandaranaike went on to state in a letter published in The Morning Leader on 19 May, 1926: “The two clashing forces of cooperation and individualism, like that thread of golden light which Walter Pater observed in the works of the painters of the Italian Renaissance, run through the fabric of civilisation, sometimes one predominating, sometimes the other. To try and harmonise the two has been the problem of the modern world. The only satisfactory solution yet discovered is the federal system”.

Federalism had a strong ideological appeal, from a Marxist-Leninist perspective. The constitutional proposals, addressed by the Communist Party of Ceylon to the Ceylon National Congress on 18 October, 1944, go very far indeed. They envisioned the Sinhalese and the Tamils as two distinct “nations” or “historically evolved nationalities”. The high watermark of the proposals was the assertion that “Both nationalities have their right to self-determination, including the right, if they so desire, to form their own separate independent state”.

These proposals received further elaboration in a memorandum submitted to the Working Committee of the Ceylon National Congress by two leading members of the Communist Party, Mr. Pieter Keuneman and Mr. A. Vaidialingam. Their premise was set out pithily as follows: “We regard a nation as a historical, as opposed to an ethnographical, concept. It is a historically evolved, stable community of people living in a contiguous territory as their traditional homeland”.

The Soulbury Commission, which arrived in the country in December, 1944, had no hesitation in recognising that “The relations of the minorities – the Ceylon Tamils, the Indian Tamils, Muslims, Burghers and Europeans, with the Sinhalese majority – present the most difficult of the many problems involved in the reform of the Constitution of Ceylon”.

They took fully into account the apprehension expressed by the All Ceylon Tamil Congress that “The near approach of the complete transfer of power and authority from neutral British hands to the people of this country is causing, in the minds of the Tamil people, in common with other minorities, much misgiving and fear”.

III. Constitutional Provisions at Independence

The Souldbury Commission, like the Donoughmore Commission before it, was not friendly to the idea of federalism, principally because of their commitment to the unity of the body politic. Opting for a solution, falling short of federalism, they adopted the approach that, if the underlying fear related to encroachment on seminal rights by capricious legislative action, this anxiety could be convincingly assuaged by enshrining in the Constitution a nucleus of rights placed beyond the reach of the legislature.

The essence of the solution, which commended itself to the Soulbury Commission, was a carefully crafted constitutional limitation on the legislative competence of Parliament, encapsulated in Article 29(2) of the Independence Constitution. The gist of this was incorporation of the principle of non-discrimination against racial or religious communities by explicit acknowledgement of equal protection under the law.

The assumption fortifying this expectation was the attribution of an imaginative role to the judiciary in respect of interpretation. It was lack of fulfillment in this regard that precipitated a setback which time could not heal. Judicial attitudes, including those of the Judicial Committee of the Privy Council, which constituted at the time the highest tier of the judicial hierarchy, were timid and diffident.

When the Citizenship Act of 1948, by means of a new definition, sought to deprive Tamils of Indian origin of the suffrage, no protection was forthcoming from the courts on the ground of impermissible discrimination. This refusal of intervention was premised on an implausibly narrow construction of the word “community”, in that, according to the Courts’ reasoning, in the landmark case of Kodakkan Pillai v. Madanayake, Indian Tamils were not identifiable as a community distinct from the larger community of the Tamils of Ceylon. It is hard to disguise the reality that this was, at bottom, a refusal to deal with the substantive issues candidly and frontally.

The resulting vulnerability of minority rights, which judicial evasion laid bare, was a major contributory cause of the erosion of confidence on the part of minority groups. This mood of suspicion and despair, arising from an ostensibly weak method of protection of human rights, presaged ensuing developments.

IV. Further Quest for a Constitutional Solution

Chelvanayakam

The central theme of this lecture, in honour of a statesman who was an epitome of restraint and moderation, is that the deterioration of ethnic relations, which culminated in a war of unrivalled savagery over a span of three decades, was progressive and incremental. There was no inevitability about the denouement. It was gradual and potentially reversible. At several crucial points, there was opportunity to arrest a disastrous trend. These windows of opportunity, however, were not utilised: extremist attitudes asserted themselves, and polarisation became the outcome. This trajectory was, no doubt, met with dismay by far-sighted leaders of the calibre of Mr. Chelvanayakam.

The formation of the Federal Party was a turning point. With Mr. S.J.V. Chelvanayakam, King’s Counsel, as founder-president, and Dr. E.M.V. Naganathan and Mr. V. Navaratnam as joint secretaries, the party embarked on a journey which marked a radical departure from the conventional thinking of the past. This was plain from the text of seven resolutions adopted at the national convention of the party held in Trincomalee in April, 1951. The foundation of these resolutions was the call to establish a Tamil state within the Union of Ceylon, and the uncompromising assertion that no other solution was feasible.

The path was now becoming manifest. The demand up to now had been for substantial power sharing within a unitary state. This was now giving way to a strident demand for the emergence of a federal structure, destined to be expanded in the fullness of time to advocacy of secession.

Although standing out boldly as a landmark in constitutional evolution, the Federal Party resolutions did not carry on their face the hallmark of finality or immutability. The call of the Tamil leadership for secession yet being some years away, the ensuing decades saw further attempts by different governments to resolve the vexed issues around power sharing.

The first of these was the Bandaranaike-Chelvanayakam pact, signed by the Prime Minister and the leader of the Federal Party on 26 July, 1957. There was an air of uneasy compromise surrounding the entire transaction. This was evident from the structure of the pact, which, as one of its integral parts, contained a section not reduced to writing in any form, but consisting of a series of informal understandings.

The essence of the pact was the proposed system of regional councils which were envisaged as an intermediary tier between the central government and local government institutions. This did break new ground. Not only did the pact confer on the people of the North and East a substantial measure of self-governance through these innovative councils, including in such inherently controversial areas as colonisation, irrigation and local management, but territorial units were conceived of as the recipients of devolved powers. Of particular significance, the regional councils were to be invested with some measure of financial autonomy. The blowback, however, was so intense as to compel the government to abrogate the pact.

The next attempt, eight years later, was by the United National Party, which had vehemently opposed the Bandaranaike–Chelvanayakam Pact. This was the Dudley Senanayake–Chelvanayakam Pact, signed between the leader of the United National Party, at the time Leader of the Opposition, and the leader of the Federal Party. It differed from the Bandaranaike–Chelvanayakam Pact, both contextually and substantively.

As to context, it was signed on 24 March, 1965, on the eve of a parliamentary election, to ensure for the United National Party the support of the Federal Party. A disheartening feature was the plainly evident element of duplicity. Once in government, the Prime Minister’s party showed little interest in implementing the pact. Within three years, the Federal Party left the government, and its representative in the cabinet, Mr M. Tiruchelvam QC, Minister of Local Government, relinquished his portfolio.

Substantively, the lynchpin of the pact was a system of district councils, but there was entrenched control of these bodies by the central government, even in regard to action within their vires. This was almost universally seen as a sleight of hand.

Despite the collapse of these efforts, room for resilience and accommodation had by no means disappeared. Nowhere is this better exemplified than in the events which led up to the drafting and adoption of the “autochthonous” Constitution of 1972. This involved the historic task of severing the centuries-old bond with the British Crown and bringing into being the Republic of Sri Lanka.

One of the Basic Resolutions, which eventually found expression as Article 2 of the new Constitution, characterised Sri Lanka as a unitary state. The Federal Party proposed an amendment that the word “federal” should be substituted for “unitary”. Mr. V. Dharmalingam, the spokesman for the party on this subject, in his address to the Constituent Assembly, on 16 March, 1971, showed flexibility by declaring that the powers of the federating units and their relationship to the centre were negotiable, once the principle of federalism was accepted. Indivisibility of the Republic was emphatically articulated, self-determination in its external aspect being firmly ruled out.

There was no reciprocity, however. Mr. Sarath Muttettuwegama, administering a sharp rebuke, declared: “Federalism has become something of a dirty word in the southern parts of this country”. The last opportunity to halt the inexorable march of events was spurned.

The pushback came briskly, and with singular ferocity. This was in the form of the Vaddukoddai Resolution adopted by the Tamil United Liberation Front at its first national convention held on 14 May, 1976. The historic significance of this document is that it set out, for the first time, in the most unambiguous terms, the blueprint for an independent state for the Tamil nation, embracing the merged Northern and Eastern Provinces. The second part of the Resolution contained the nucleus of Tamil Eelam, its scope extending beyond the shores of the Island. The state of Tamil Eelam was to be home not only to the people of the Northern and Eastern Provinces, but to “all Tamil-speaking people living in any part of Ceylon and to Tamils of Eelam origin living in any part of the world who may opt for citizenship of Tamil Eelam”.

The most discouraging element of this sequence of events was the timid and evasive approach adopted by prominent actors at crucial moments. The District Development Councils Act of 1980 presented a unique opportunity. Disappointingly, however, the Presidential Commission, presided over by Mr. Victor Tennekoon QC, a former Chief Justice and Attorney General, lacked the courage even to interpret the terms of reference as permitting allusion to the ethnic conflict. Despite the persevering efforts of Professor A.J. Wilson, son-in-law of Mr. Chelvanayakam, and a confidant of President J.R. Jayewardene, and Dr. Neelan Tiruchelvam, the majority of the members were inclined to adopt a narrow, technical interpretation of the terms of reference. The setting of the legislation was one in which Tamil formations, such as the Tamil United Liberation Front, were struggling to maintain their moderate postures in an increasingly polarised environment, with pressure from radical elements proving almost irresistible.

The whole initiative paled into insignificance in comparison with a series of tragic events, including the burning of the Jaffna library during the run-up to the District Development Council elections in the North and the calamitous events of Black July 1983. Policymakers, at a critical juncture, had, once again, let a limited opportunity slip through their fingers.

The next intervention occurred in the sunset years of the United National Party administration. This was the Parliamentary Select Committee on the ethnic conflict, known after its Chairman as the Mangala Moonesinghe Committee, appointed in August, 1991.

The Majority Report made a detailed proposal which was intended to serve as the basis of a compromise between two schools of thought—one stoutly resisting any idea of merger of the Northern and Eastern Provinces, and the other demanding such merger as the indispensable basis of a viable solution. An imaginative via media was the concept of the Apex Council, which formed the centrepiece of the Majority Report. It adopted as a point of departure two separate Provincial Councils for the North and the East. This dichotomy would characterise the provincial executive as well: each Provincial Council would have an Executive Minister as the head of the Board of Ministers. However, over and above these, the two Provincial Councils together would constitute a Regional Council for the entire North-East region. Although presenting several features of interest, as a pragmatic mediating mechanism, the proposal did not enjoy a sufficiently broad support base for implementation. (To be concluded)

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Procurement cuts, rising burn rates and shipment delays deepen energy threat

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Norochcholai power plant

Coal crisis far worse than first feared

Sri Lanka’s coal supply crisis is significantly deeper than previously understood, with senior engineers and energy analysts warning that a dangerous combination of reduced procurement volumes, rising coal consumption and shipment delays could place national power generation at serious risk.

Information reviewed by The Island shows that Lanka Coal Company (LCC) had originally planned to secure 2.32 million metric tons of coal for the relevant supply period to meet generation requirements at the Lakvijaya coal power complex.

Following procurement discussions, the final arrangement was to obtain 840,000 metric tons from Potencia, including a 10 percent optional quantity, and 1.5 million metric tons from Trident, equivalent to 25 vessels.

However, subsequent decisions resulted in the cancellation of four Potencia shipments, reducing that supplier’s volume to 627,000 metric tons. This brought the total expected procurement down to 2.16 million metric tons, creating an immediate 160,000 metric ton deficit, even before operational demand is considered.

“This is a major shortfall in any generation planning model,” a senior engineer familiar with coal operations said. “When stocks are planned to the margin, a reduction of this scale can have serious consequences.”

Power sector sources said the deficit becomes more critical because coal consumption rates have increased by more than 10 percent, meaning larger volumes are now required to generate the same electricity output.

“In simple terms, the system is burning more coal for less efficiency,” an energy analyst told The Island. “That means the real shortage may be substantially larger than the paper shortage.”

Experts attributed the higher burn rate to ageing equipment, maintenance constraints and operating inefficiencies at the Norochcholai plant.

A third concern has now emerged in the form of shipment delays and possible unloading constraints, raising fears that even contracted supplies may not arrive in time to maintain safe reserve levels.

“If vessel schedules slip or unloading is disrupted, stocks can fall very quickly,” another senior engineer warned. “At that point, the country has little choice but to shift to costly thermal oil generation.”

Such a move would sharply increase electricity generation costs and place additional pressure on public finances.

Analysts said the convergence of three separate risks — procurement reductions, higher-than-expected consumption and delivery uncertainty — had created a serious energy planning challenge.

“This is no longer a routine procurement issue,” one industry observer said. “It has become a national power security issue.”

Calls are growing for authorities to disclose current coal inventories, incoming vessel schedules and contingency measures to reassure the public and industry.

With electricity demand expected to remain high and hydro resources dependent on rainfall, engineers caution that delays in addressing the coal gap could expose the country to avoidable supply disruptions in the months ahead.

By Ifham Nizam

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Lake Gregory boat accidents: Need to regulate water adventure tourism

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Gregory’s Lake

LETTER

The capsizing of two boats in Lake Gregory on 19 April was merely an isolated incident. It has come as a stark and urgent warning that a far more serious tragedy is imminent unless decisive action is taken without delay.

Mayor of Nuwara Eliya, Upali Wanigasekera has publicly stated that stringent measures have been introduced to prevent similar occurrences. However, it must be noted that such measures are unlikely to yield meaningful results in the absence of a comprehensive regulatory framework governing Inland Water Adventure Tourism (IWAT) in Sri Lanka.

For decades, this sector has operated without any regulation. Despite repeated calls for reform, there remains no structured legal mechanism to oversee operational standards, safety compliance, or accountability. Consequently, there is chaos particularly in critical operational aspects of this otherwise vital tourism segment.

The situation in Lake Gregory is not unique. Other prominent inland tourism destinations, such as Kitulgala and Madu Ganga, face similar risks. Without urgent intervention, it is only a matter of time before a major calamity occurs, placing both local and foreign tourists in grave danger.

At present, there appear to be no enforceable legal requirements governing:

*  The fitness for navigation of vessels

*  Mandatory safety standards and equipment

*  Certification and competency of boat operators

The display of permits issued by local authorities is often misleading. These permits function merely as revenue licences and should not be misconstrued as certification of compliance with safety or technical standards.

Furthermore, local authorities themselves appear constrained. The Nuwara Eliya Mayor is reportedly limited in his ability to enforce meaningful improvements due to the absence of legal backing. Compounding this issue is the proliferation of unauthorised operators at Lake Gregory, functioning with minimal oversight.

Disturbingly, there are credible concerns that some boat operators function under the influence of intoxicants, while enforcement authorities appear to maintain a lackadaisical stance. The parallels with the unregulated private transport sector are both evident and alarming.

In the absence of a proper legal framework, any victims of such incidents are left with no recourse but to pursue lengthy and uncertain claims under common law against individual operators.

The Minister of Tourism, this situation demands your immediate and personal intervention.

A robust regulatory framework for Inland Water Adventure Tourism must be urgently introduced and enforced. This should include licensing standards, safety regulations, operator certification, regular inspections, and strict penalties for non-compliance.

Failure to act now will not only endanger lives but also severely damage Sri Lanka’s reputation as a safe and responsible tourist destination.

The time for incremental measures has passed. What is required is decisive policy action.

Athula Ranasinghe
Public-Spirited Citizen

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