by Rajan Philips
If the 1980s were tumultuous, the 1990s were more transitional, even if not less tumultuous. In this ‘potted’ history, it is not necessary to recount all the details of the 1990s and the first decade of the new 21st century. Suffice it to focus on developments that have had a continuing influence on current events and the farce of 2021. The UNP and the JVP, which more or less came together in 1977, were gone by 1994, after seventeen years of assorted achievements. The UNP would never return to the same pinnacle of power that it seized in 1977. The JVP with a new generation of leaders transformed itself into a democratic political party with mixed results. The first half the decade saw the disintegration of the UNP under the weight of the presidential ambitions of three rival contenders – President Premadasa and his two younger challengers, Lalith Athulathmudali and Gamini Dissanayake. The LTTE took out every one of them in 1993 and 1994.
LTTE violence took off in the 1990s after the JVP had been finished off in the late 1980s. In a telling commentary on that period, Wikipedia lists the names of political leaders, parliamentarians, professionals and political activists who were killed by the JVP, the LTTE, other Tamil groups and the armed forces over three decades of violence. The 1990s began with the assassination of Prime Minister Rajiv Gandhi in 1991 and ended with the killing of TULF MP and Legal Academic Neelan Tiruchelvam in 1999. The old leadership of the TULF, with the exception of M. Sivasithamparam, had been wiped out in the late 1980s. That included TULF leader A. Amirthalingam, a consummate politician and parliamentarian, who started off as a fiery federalist and turned himself into a mellowed separatist.
As the 90s wore on, the LTTE asserted itself as the sole representative of the Tamils. It waged war against the state and its forces but not to capture the state of Sri Lanka but to establish a new state of Tamil Eelam. The JVP’s mission was different, but its ultimate objectives were never clear. Lacking the LTTE’s military prowess, it never seemed plausible that the JVP was serious about capturing state power through violent means. Politically, the JVP swung from its ultra-left attacks on a manifestly leftist government in 1971, to undertaking ultra-right attacks against the most rightwing government in Sri Lanka’s modern history. The left-right cleavage was not part of the LTTE vocabulary.
On the other hand, although it railed against the Indo-Sri Lanka Accord and the presence of Indian armed forces in Sri Lanka, the JVP scrupulously avoided taking potshots at the Indian Army. The LTTE, in contrast, cut its military teeth fighting the Indian army and found common cause with the Sri Lankan government under President Premadasa to fight a common enemy. There was even grudging admiration among sections of the Sinhalese for the LTTE’s choosing to take on the Indian Army. For the record, the Indian Army came to Sri Lanka on the invitation of one Sri Lankan President and left Sri Lanka at the request of the succeeding Sri Lankan President. Hardly the modality for an occupying force. War or peace, Sri Lanka was again left to its own devices.
Illusions of Peace
The second half of the 1990s and the first half of the next belonged to Chandrika Kumaratunga. Her presidency began with a bang of charismatic inspiration but petered through for want of a clear focus and purposeful efforts. Perhaps her singular failure was not single-mindedly moving to abolish the executive presidency as she was universally expected to do. She was also the first and, until Gotabaya Rajapaksa arrived on the scene 25 years later out of nowhere, the only person to become President without previously being a Member of Parliament. Her parliamentary inexperience, untrammeled access to presidential power, not to mention her political ego, all combined to vitiate the promise with which she had led the People’s Alliance to power.
With the benefit of hindsight, we might say that parliament started becoming inexorably poorer from thereon. It is far worse now, in 2021, and for many new reasons. And it has taken a JVP MP, in Dr. Harini Amarasuriya, to take a spirited stand in defense of parliament and parliamentary democracy in Sri Lanka – against presidential authority and media hypocrisy. The ironies of history, you might say, but more on it later.
Chandrika Bandaranaike Kumaratunga (CBK) deserves full marks for starting the peace process during her presidency, but she showed inexplicable naivete in choosing to rely on people from her social circles to take the lead in serious peace mediation. The LTTE was going to be a difficult peace-dance partner anyway, and it required much more than social brokering to make any headway. In the end, the LTTE almost succeeded in assassinating her during her election campaign for a second term in office in 1999.
The main irony of that period was the nasty competition between Chandrika Kumaratunga (leading the SLFP) and Ranil Wickremesinghe (leading the UNP) for leadership in the peace process. It was a total about-turn from previous decades when the two main Sinhalese parties fought one another over who was giving more concessions to the Tamil Federal Party, even though what was on offer was way less than what would be included much later in the 13th Amendment. In any event, the CBK-RW competition over peace turned out to be counter productive both to the peace process and to their respective political calculations.
It may not be wholly accurate to say that presidential politics was the main driver of the peace rivalry, but it is impossible to view the rivalry in isolation from presidential ambitions. All the constitutional changes proposed by the CBK government included provisions to protect her powers, which made it even easier for RW and the UNP to reject the proposals out of hand and even, in one instance, make a bonfire of them right in the well of parliament. As for Ranil Wickremesinghe, his obsession with becoming a President, or at least a presidential candidate one more time (after two attempts in 1999 and 2005), became quite obvious when he deliberately subordinated every initiative of the yahapalanaya government (2015-2019) to that single obsession.
Back during his rivalry with CBK over peace initiatives, Ranil Wickremesinghe stunningly turned to the LTTE to strike a counter peace partnership to CBK’s peace partnership with the TULF. I am not aware of any public recounting of the mediation that brought RW and the LTTE together in a peace initiative. But objectively, it fair to surmise that Ranil Wickremesinghe reached out to the LTTE as a counter to CBK’s peace alliance with the TULF. What was fairly well known throughout the JRJ presidency was that President Jayewardene cunningly kept not only the TULF but also the JVP from joining forces with the SLFP/Left opposition at that time. In the end, there was no ultimate benefit to anyone from JRJ’s Machiavellian politics. The presidential house he built so adroitly would be eventually lost to the UNP. Now it seems it is lost forever. And it will be for other more upstart aspirants as well.
As JRJ’s successor, President Premadasa took a different tack, reaching out to the LTTE to get the Indians out. We know how that tack or track ended. The TULF that was left hanging, or what was left of its depleted leadership, broke with the UNP and turned to Chandrika Kumaratunga and the People’s Alliance for a new kick at what had become the proverbial viable solution, while Ranil Wickremesinghe modified the Premadasa approach to re-engage the LTTE with Norwegian insurance. To their credit, Chandrika Kumaratunga and Ranil Wickremesinghe ‘fought’ over how to make better peace with Tamils, rather than about waging a more brutal war with the LTTE. They both admitted that the Sri Lankan state had failed in the building of its nation and were committed to creating a plural and inclusive polity. While their political spirits were willing their presidential flesh led them astray.
And their peace-fight was nasty. They could not work together even when they were forced to cohabit as President and Prime Minister between 2001 and 2004. Ranil Wickremesinghe, as Prime Minister, dashed everyone’s expectations of peace dividends by giving, not for the last time, free rein to corruption in government. For her part, and in what she would later admit to being among her more grievous mistakes, President Kumaratunga dismissed the Wickremesinghe government in 2004 (which she had the power to do under the pre-19A Constitution, unlike Maithripala Sirisena who flouted his own 19th Amendment in October 2018), dissolved parliament and won the parliamentary election in April 2004 with provisional support from the JVP.
The results of the April 2004 parliamentary election gave false hopes to President Kumaratunga and the JVP (that won 39 out of 105 UPFA seats in parliament, its highest on record), relegated Ranil Wickremesinghe to the opposition backwaters for the next ten years, and signaled the emergence of Mahinda Rajapaksa as the next presidential candidate from the true south. The country went through the tsunami devastation in December 2004, but that did not help the political leaders getting any wiser about working together. The Supreme Court abandoned President Kumaratunga when it rejected her bid to extend her second term by one year. Ranil Wickremesinghe even thought that Chief Justice Sarath Silva was helping him for not impeaching him earlier!
Those who had serenaded CBK during her rise lost no time in leaving as she declined. Mahinda Rajapaksa became the SLFP-UPFA candidate by acclamation. He reached a new agreement with the JVP. The unkindest cut of all was delivered by the LTTE to Ranil Wickremesinghe who thought that it would be a no contest. Mahinda Rajapaksa won the November 2005 presidential election by the squeakiest of margins, while Tamil voters in the north were ordered to stay home. Basil Rajapaksa’s familial prophesy that there will be a President from the south was finally fulfilled. But there were other dynamics at play.
Illusions of Restoration
In my last installment published two weeks ago (April 25), I alluded to Mahinda Rajapaksa becoming the presidential beneficiary of a new strand of Sinhala Buddhist nationalism fueled by the Jathika Chinthanaya school of thought. The school of thinking that JC advocated has not universally been accepted in Sinhalese political society. At one level, the electoral victories of Chandrika Kumaratunga (PA) and the partial successes of Ranil Wickremesinghe were moments of political pushbacks to the creeping influence of JC thinking. At another level, both the SLFP and the UNP were forced to come to terms with ‘JC forces’ and include them in their political alliances often on their (JC’s) terms.
The presidential system and proportional representation in parliamentary elections facilitated the emergence of alliance politics. The era of programmatic united fronts of political parties was gone. Serious political programs gave way to lawyerly Memorandums of Understanding. Multiple parties with bilateral/multilateral MOUs could come together under an umbrella alliance for contesting elections. The April 2004 parliamentary elections were the breakthrough election for the new Sinhala Buddhist nationalist organizations.
The Jathika Hela Urumaya (JHU), the most electorally successful offshoot from the JC school, won nine seats in the election, all won by Buddhist Monks. The JVP which had been courting JC ideologues and followers from the 1980s, was part of Chandrika Kumaratunga’s alliance (UPFA) and won 39 seats. It was the JHU that successfully challenged President Kumaratunga’s attempt to extend her second term limit in the Supreme Court in August 2005. JC’s political consummation came within months, with the victory of Mahinda Rajapaksa in the November presidential election. That it came with support from the not so hidden hand of the LTTE did not dampen the significance of the moment. Mahinda Rajapaksa was recognized as the most authentic Sinhala Buddhist political leader since independence.
In terms of political analysis, the victory of Mahinda Rajapaksa has been described as the restoration of the linkage between the Sri Lankan state establishment and the political hegemony of Sinhala Buddhist nationalism. The linkage had apparently been ruptured since July 1987 when JR Jayewardene and Rajiv Gandhi signed the Indo-Sri Lanka Accord. Looked at in another way, the state of Sri Lanka which has traditionally been accused of alienating the Tamil and Muslim minorities, would seemed to have found a way to alienate even the Sinhalese majority.
And the restoration that was apparently achieved with the victory of Mahinda Rajapaksa in 2005, has not turned out to be as consequential as anticipated. To wit, the Indo-Sri Lanka Accord and the Thirteenth Amendment that it created have survived two terms of Mahinda Rajapaksa presidency and may yet survive the first term of the Gotabaya Rajapaksa presidency. At the same time, a full restoration of the linkages between the state of Sri Lanka and all its ‘peoples’ will require a more sensitive and nuanced understanding as well as appreciation of the nationalist compulsions of the Sinhalese, Tamils and the Muslims. Anything less can be nothing more than a farce. (Next week: The farce of 2021).
War: We are not children
By Gwynne Dyer
“We appear to be witnessing a dramatic and childlike scenario,” said Pope Francis, in Bahrain, recently. “In the garden of humanity, instead of cultivating our surroundings, we are playing, instead, with fire, missiles and bombs, weapons that bring sorrow and death, covering our common home with ashes and hatred.”
It’s Pope Francis’s job to say things like that, and he does it with sincerity and grace. He condemned the “childlike” whims of “a few potentates” to make war, and everybody thought that sounded fine, although nobody mentioned any names. (Hint: the name of the chief offending ‘potentate’ of the moment starts with ‘P’.)
But here’s the question. Are you a child? Well, do you at least think like a child? Are you ignorant and powerless? Three times ‘no’?
Well, then, if you are a responsible adult, what did you do the last time your country went to war? (If you belong to the minority whose country hasn’t gone to war since you have been alive, you may skip this question – or just use your imagination.)
The reason war is always with us is not an endless supply of evil potentates with childlike whims. It is an endless supply of human beings, most of whom don’t even have evil in their hearts.What they do have, in full measure, is a basic culture, older than our species itself, that sees war as natural and necessary (at least when our side does it). There are sometimes clear aggressors and defenders, of course, but the roles swap around regularly and the game never stops.
Jean-Jacques Rousseau wouldn’t agree with me, but he only knew the most recent three thousand years of human history. We know about our distant pre-history, and we also know about our primate relatives (especially the chimpanzees), and that has taught us something very important. Human beings didn’t invent war. They inherited it.
In the mid-20th century, the belief that human beings lived in peace before the advent of civilisation began to crumble before the anthropologists’ evidence that warfare was chronic and almost universal among hunter-gatherers. We are all descended from hunter-gatherers.
Then, in the 1970s, primatologist Jane Goodall, studying chimpanzees in Tanzania, discovered that neighbouring chimp bands fought wars with each other. It was low-level war, conducted entirely by many-on-one ambushes, but later research revealed that the male death toll from war averaged 30% per generation, and sometimes entire bands were wiped out.
The reason for this may lie in evolutionary biology. The world has always been pretty full up, and when a given region’s food sources grow scarcer – a drought, a flood, a change in animal migration routes – some of the local inhabitants are going to starve.If you’re a territorial animal that lives in groups, then it pays off in the long run to whittle way at the population of the neighbouring groups. When a crunch time arrives, your more numerous group will be able to drive away, or kill off, the neighbouring band and use its resources as well as your own.
Chimps did not think this strategy up, or choose it. Neither did human beings. Many other group-living predators have the same strategy: lions, hyenas, wolves. Traits like aggressiveness will vary between individuals, but if aggression brings advantages, evolution will work in favour of it.
So here we are, a very long time later, stuck with a deeply embedded traditional behaviour that no longer serves our purposes well. In fact, it might even wipe us out. What can we do about it?
There’s no point in yearning for some universal Gandhi who will change the human heart. He doesn’t exist, and anyway it’s not hearts that need to change. It’s human institutions.
Actually, almost all the military and diplomatic professionals already know that. Even a lot of the politicians understand it, and in the past century – say, since about the middle of the First World War – a great deal of effort has gone into taming war and building institutions that can replace it.
That was what the League of Nations was about. It’s what the United Nations is about, and arms control measures, and international criminal courts to try people who start an aggressive war, starting with the Nuremberg trials in 1945. It’s a work in progress, but there has been a steep and steady decline in the scale and frequency of wars in the last 50 years.
The work is far from finished, and the return of great-power war – with nuclear weapons this time – is an ever-present risk. But nuclear war is not just a threat. It’s also a huge incentive to bring this ancient institution under control, and ultimately to abolish it.And a little prayer along the way probably wouldn’t do any harm.
IMF-led privatisation, land and resource grab in Sri Lanka
BY DR. Asoka Bandarage
On September 1, 2022, debt-trapped Sri Lanka reached a preliminary agreement with the International Monetary Fund (IMF) for a 48-month Extended Fund Facility of $2.9 billion, which hardly covers the country’s outstanding debt, nor its immediate survival needs. Nevertheless, IMF structural adjustment requires the country to meet its familiar debt restructuring conditions: privatisation of state-owned enterprises, cutbacks of social safety nets and alignment of local economic policy with US and other Western interests. There are already signs that these policies would be detrimental to the well-being of ordinary Sri Lankans and the sovereignty of the country and will inevitably lead to more wealth disparity and repeat debt crises.
The most important source of generating state revenue identified in the 2023 Sri Lanka budget is the privatisation of SOEs (State Owned Enterprises), a primary strategy of IMF structural adjustment and neoliberal economics. The 2023 Sri Lankan budget states:
“The government is currently maintaining 420 State-owned enterprises. 52 of these generate over Rs. 86 Billion in losses… A Unit has now been established at the Ministry of Finance with the specific task of restructuring SOEs. Initially, measures will be taken to restructure Sri Lankan Airlines, Sri Lanka Telecom, Colombo Hilton, Waters Edge, and Sri Lanka Insurance Corporation (SLIC) along with its subsidiaries, the proceeds of which will be used to strengthen foreign exchange reserves of the country, and strengthening the Rupee.”
The left-wing and nationalist Bandaranaike governments established many SOEs between the mid-1950s and the mid-1970s, many of them import substitution industries to replace foreign imports with domestic production. Many SOEs were privatised after the introduction of the Open Economy in 1977, and privatisation (or commercialisation) has continued steadily since then, with successive governments selling SOEs outright or turning them into Public Private Partnerships (PPP).
There are 55 strategic SOEs, 287 SOEs with commercial interests and 185 SOEs with non-commercial interests in Sri Lanka. The 55 strategically important SOEs are estimated to employ around 1.9 percent of the country’s labor force. The total state sector workforce is estimated to be about 1.4 million people, which accounts for over one in six of the country’s total workforce. Many Sri Lankans prefer to work for the government sector given job security, retirement and other benefits. There are concerns that “…privatisation can result in lower salaries and benefits as well as retrenchment and high employee turnover,” and that privatising SOEs that enjoy monopolies can result in “corporations making decisions based on profits rather than on public benefit.”
Unlike the private sector, many of the SOEs in Sri Lanka have powerful trade unions, with workers of different skills and professional levels, which have fought for workers’ rights and the country’s sovereignty for decades. Privatisation is likely to lead to the elimination of many trade unions, strikes and other forms of labor resistance. In October 2022, Ceylon Petroleum Corporation (CPC) workers held a protest strike against the proposed privatisation of the CPC. Similarly, 1200 union workers of the Government Press plant – also targeted for privatisation and cutbacks in wages, work conditions and jobs – went on strike in November 2022.
The CPC, a vital enterprise in the island’s oil supply and energy security, has been targeted for privatization under the IMF restructuring programme. Lanka India Oil Company (LIOC), China’s Sinopec, Petroleum Development Oman and Shell have expressed interest in this deal. It is important to note that, in the name of privatisation, the CPC is being handed over to state owned enterprises of powerful foreign countries. The parent company of LIOC is the Indian Oil Corporation Limited (IOC) which is owned by the Ministry of Petroleum and Natural Gas of India. Similarly, Sinopec Group is the world’s largest oil refining, gas and petrochemical conglomerate and is wholly owned by the Chinese state; and Petroleum Development Oman is owned by the Government of Oman, Royal Dutch Shell, Total Energies and Partex.
Parasites and Vultures of Privatization
Sri Lanka must take lessons from privatisation episodes in other parts of the world. According to a 2016 study, ‘The Privatising Industry in Europe’ by the Transnational Institute in Amsterdam, privatisation in Europe has failed to produce the expected revenue as only “profitable firms are being sold and consistently at undervalued prices.” The study notes that privatised firms are no more efficient than state-owned firms and that, under the rubric of privatisation, many European energy companies in Portugal, Greece and Italy, have been sold off to state-owned corporations from China. The Study also states that privatisation in Europe has “encouraged a growth in corruption, with frequent cases of nepotism and conflicts of interest” in Greece, Italy, Spain, Portugal and the UK.
We must also be vigilant for conflicts of interest in such large deals involving public money and wellbeing. For example, the financial and legal advisory firms Clifford Chance and Lazard have been hired by the Sri Lankan government to assist with IMF debt restructuring. The Transnational Institute Study lists Clifford Chance as part of a small group of privatisation advisory law firms, with annual revenues of more than a billion Euros, “reaping huge profits from the new wave of crisis-prompted privatisations.”
Lazard is reputed to be both “the number one sovereign advisory firm” and “the world’s largest privatisation advisory player.” Lazard’s operational global headquarters are in New York City, but the company is officially incorporated in Bermuda – always a warning sign when it comes to (lack of) financial ethics. In previous government advisory contracts, Lazard has taken advantage of its prominent position by involving itself not only its advisory services branch, but also its asset management branch. According to the Study, “Upon the Initial Public Offering (IPO) of important state companies, Lazard has on a number of occasions undervalued the price of a company, which has allowed its asset management branch to buy up the stock at low prices which have then been sold for considerable profit when stock prices soared.”
The practice of both advising on processes of privatisation and then profiting from that advice, raises ethical questions about Lazard. Questions are also raised about the entire global financial industry responsible for creating debt crises in the first place, and then finding devious ways to benefit from them, at the expense of debt-trapped countries.
Despite such serious concerns over privatisation, there is now an enormous push by local and international actors that the solution to Sri Lanka’s debt and economic crises is to privatise the remaining SOEs, and no doubt a select few profit greatly in the process.
A key local player in this is the Sri Lankan NGO, the Advocata Institute in Colombo, which is associated with the Mont Pelerin Society and the Atlas Network and their neoliberal agenda. Advocata is spearheading a major campaign to convince the public that privatisation of SOEs is the path to ‘reset Sri Lanka’ for solvency and prosperity. The ‘Great Sri Lanka Fire Sale’ of state owned enterprises and strategic assets is now on, with huge returns expected for colluding local and global financial and corporate elites and pauperisation for ordinary people.
One key state-owned resource at risk is land, such that commoditising state-owned land is a major aspect of privatisation in Sri Lanka. Not only the land, but water – indispensable for survival of life on Earth – is threatened by privatisation and commoditisation in Sri Lanka and around the world.
This is not new; privatising and commoditising state land for export production has been going on in Sri Lanka since the British colonial era. Although the more recent neoimperial US Millennium Corporation Compact agenda, initiated under George W. Bush in 2002, has not been officially signed by Sri Lanka, contemporary Sri Lankan governments have been advancing its agenda of privatising state land to prioritise export production over local food production, despite rising prices of imported food and the food crisis facing the country.
Two very important proposals in this regard have been slipped into the 2023 budget proposals without public discussion. Firstly, Clause 12.1 on ‘Lands for Agricultural Exports’ states:
“A vast amount of land belonging to Janatha Estate Development Board [EDB), Sri Lanka State Plantation Corporation (SPC), and Land Reform Commission (LRC) remains without being cultivated or productively utilized for a long time, ….. Accordingly, a programme will be devised to allow investors to productively utilise them in a manner to increase both the production and exports. Hence, it is expected that large parcels of unutilised/unproductively used lands will be leased out on long-term basis to grow exportable crops…”
Secondly, Clause 13.1 of the 2023 Budget on ‘Disposal of Government Lands’ states:
“…activities related to the disposal of government lands are carried out by District Secretaries/Government Agents through Divisional Secretaries/ Additional Government Agents…, , such duties were also allocated to Sri Lanka Mahaweli Authority and Land Reform Commission which were established for special requirements at a later stage…there are occurrences of discrimination and malpractice as …activities related to disposal of lands … Therefore…, a programme will be prepared during the next year to enable preliminary activities in relation to disposal of all government lands including the disposal of lands under the above two institutes only by the Divisional Secretaries.”
Nationalist members of Parliament and the Federation of National Organizations have criticised the move to place state land under Divisional Secretaries as a ploy for land grabbing, and that the move to deliberately privatise state land may have ‘irrevocable consequences.’ While recognising the need to reform the existing Land Reform Commission, they point out that solely empowering Divisional Secretaries would encourage partisan land distribution. The 2023 Budget seems to put the MCC Compact into effect although activists challenging the Compact have warned of a neocolonial agenda for a massive modern-day land grab, displacement and peasant pauperization.
There is great concern over the legitimacy of crucial land and other privatisation decisions taken by President Wickremesinghe as neither he nor his United National (UNP) Party have a mandate to do so from the people. The land, the ports and the state enterprises do not belong to politicians but to the people and to future generations of Sri Lankans. Clearly, there needs to be careful deliberation of alternatives before the IMF dictated ‘Great Sri Lanka Fire Sale’ is allowed to proceed.
(COURTESY ASIA TIMES)
A simple lesson in arithmetic on electricity sector
By Eng. Parakrama Jayasinghe
In February this year, I published an article titled, Sri Lankan Electricity Sector – The Headless Chicken (https://www.ft.lk/columns/Sri-Lankan-electricity-sector-The-headless-chicken/4-730564), and that was before Sri Lanka faced an unprecedented shortage of transport fuels, and long queues. The damage caused to the economy by diverting some 75% of the oil supplies to electricity generation is yet to be properly assessed. Therefore any observer including the smallest electricity consumer would agree with the above assessment, considering the sorry state that the once proud electricity sector has deteriorated to. This is by no means a sudden problem, but a repetition year after year even giving a new interpretation to what is meant by “Emergency Power”.
That Sri Lanka is subject to a dry spell every year from January to April does not require elaboration. However, the Ceylon Electricity Board (CEB) has chosen to ignore this reality and continues to do nothing to anticipate or mitigate the recurring problem year after year. Its solution has been to deploy costly emergency power generation, using imported oil. ignoring the very high cost of generation and as happened this year and the grave impact on the transport sector.
With the good fortune of more than usual rainfall, lasting beyond the southwest monsoon, the use of oil for power generation has been minimal over the past several months and the power cuts, too, have been limited to two hours per day. But, how long will that euphoria of ample hydro power last? Is there any possibility at all of the January to April dry spell not materialising?
The abyss facing us in a few short months
Maybe, Sri Lankans have already forgotten the miles long fuel queues. This story is set to be repeated in early 2023, too, with the Chairman of CEB, having already approved 100 MW of emergency power. In the meanwhile, the new long-term electricity generation plan (LTEGP 2023-2042 ) recently discussed at a public stake holder meeting proposes addition of 320 MW of emergency power now given a new name of “Short Term Supplementary Power”, nevertheless operated using expensive oil imported using the meager dollars resources, borrowed from increasingly reluctant lenders.
Sri Lanka paid a hefty sum in demurrages for the shipment of crude oil recently, which was lying in the out harbour for 56 days due to lack of dollars to pay for it. Where are the dollars coming from to pay for the proposed emergency power once the rains cease? The grave question of adequate supplies of coal to keep Norochcholai operational is hanging above us which will make the situation unbearable.These are the circumstances which prompted the tittle of this article.
The numbers game
The CEB is fond of pinning the blame on the government for the continual losses they make year after year, claiming that its income is based on tariffs determined by others, and they are inadequate to cover the costs. This is only part of the story. The average income to the CEB thereby was about Rs 16.50 per unit whereas the average cost of generation continued to increase and was of the order of Rs 23.00 per unit before Covid-19 and the subsequent economic meltdown. As such the CEB losses kept mounting, as shown in Tables 1 and 2.
The annual losses per unit borne by the consumers
The Accumulated loss over this 10 year period is Rs. 484 Billion, with the rare instance of marginal profit in the year 2015.All of these losses were covered by the Treasury or are accumulated as bad debts in the two state banks and the CPC. This in other words means that the consumers at all levels have in reality paid an additional amount for every unit consumed.
However, why didn’t the CEB, or the Ministry of Power and Energy, or even the Treasury ask why the cost of generation cannot be lowered?So, my first lesson in Arithmetic is this; if ‘A’ is the cost of generation and ‘B’ the income, and if A >> B resulting in a negative value for C being the loss, and if A cannot be increased at will, why not lower B?
The CEB’s answer would be to say that its proposals for adding more coal power which in their books is the cheapest source of electricity was not permitted. The fact that coal is to be imported with dollars and the rupee continued to be depreciated and we have no control on the price of coal, does not enter into their reasoning. This is to be expected as their long term generation plans are based on the assumption that the price of coal does not change and the rupee does not depreciate. With that kind of mindset it is futile to continue this discussion with the CEB. Obviously they are also blind to the vast strides made the world over, where by many cheaper options for power generation have now been commercialized. Is this driven by pure ignorance, or willful misinterpretation of the realities of the sector or just lack of competence of the CEB engineers making decisions, are the unanswered questions, but with the net result of the present calamity faced by the nation.
The role of the Ministry of Power and Energy and the Treasury
But what about their superiors in the Ministry of Power and the custodians of the public purse in the Treasury? Do they, too, lack the simple knowledge in evaluating this equation and asking the obvious questions? In fact, I would lay the greater blame on the Ministry and the Treasury, for permitting the CEB to perpetrate this deception year after year, with total disregard for the interest of the country and its people. This blame is not limited to the present admiration, but must be laid at the feet of all previous regimes who also turned a blind eye on this problem for whatever reason.
The net result of this collective lack of accountability and blatant violation of responsibilities has been the current disaster and the even greater disaster waiting to unfold shortly. The disaster that would occur in early 2023, as the price of coal has sky rocketed and the best price quoted in the recent tender was $ 325 per ton. As such the line on coal has now got to be removed from the category of low cost generation in the CEB projection. (See Tables 03 and 04)
The Relative Costs prevailing prior to 2020 shown above clearly shows that even then the cheapest option was RE. This is the historical data before Sri Lanka faced the current crisis. However, it is interesting to see below the analysis of actual cost of coal power issued by the PUCSL in 2020. The myth of cheap electricity has been clearly debunked. Matters have worsened since then. The estimates revealed at the recent TV programme are shown below. The recent news items in Economy Next (22nd Nov 2022) tells the true story
” CEB loses Rs 108 bn up to August 22″
(See Table 05) With both escalated purchase prices of oil and coal the true cost of coal power would now reach over Rs 65 /kWh and that of oil over Rs 120/kWh, the prognosis for the next year is indeed alarming. Of the many NCRE options, which averaged only Rs 14.81 , well below the average income of the CEB, the true cause of this alarming loss is clear from the above chart.
It is time for the next lesson.
It is quite on the cards that the CEB loss will exceed Rs. 150 Billion for the year 2022. Thus based on the expected generation less than 15,000 GWhThe loss per kWh = 150,000,000,000/ 15,000,000,000 = Rs 10.00
This is not included in the monthly electricity bill even after the increased consumer tariff.So who bears this cost? You guessed it. The consumers including those consuming a mere 30 units a month and up to those consuming 3000 units a month in equal measure.
What awaits us round the corner?
In this light it was a breath of fresh air to note that Sri Lanka managed even for a few days with very little oil based generation in the past months, courtesy of the weather gods. However, this euphoria will be short lived and the rains are already dwindling. The damage is worsened by the fact that the cost of generation using oil and coal has reached such levels , so that any right minded admiration would shut down such plants immediately and seek whatever sustainable means of bridging the gap. (See Table 06)
Estimated generation cost for year 2023
These numbers are generally in line with those presented in the TV programme where the cost was predicted as Rs 900 Billion.So I dare not perform the next calculation of the loss per kWh which the consumers will have to bear albeit indirectly. That is unless something rational is done without any further delay.
The options available
Fortunately for Sri Lanka we have ample means of doing so, which does not result in continuous drain of Dollars and has the benefit of many other economic advantages. More details of these options have been submitted to the officials who hopefully would advise their political masters of the lack of any other alternative. This is where the third lesson in arithmetic becomes important. It was revealed that based on the current projections the total cost for the CEB in year 2023 is estimated as Rs 900 Billion. They cannot hope to get even 50% of that even with the recent 75% increase in consumer tariff resulting in a projected loss of over Rs. 450 Billion.
Who will bear this cost? What will that do to our balance of payments and the parity rate if it is also to be funded by the treasury? We will be entering a positive feed back loop in financial terms, the result of which the CEB engineers talking about stability of systems should understand.But what are those who are expected to mange the energy sector and more importantly the treasury which has blindly covered all the massive losses incurred by the CEB in past will at least now take some decisive actions.
Having wasted many years by obstructing the development of the Renewable Energy Sector, the options for any short term interventions are now limited to the Roof Top Solar systems. It is on record that with the help of the Surya Bala Sangraamaya which provided some degree of safety against those hellbent on disrupting it, some 650 MW of roof top solar has been now grid connected. Even now adding a further 100 MW at least in the next six months is technically possible if the authorities can do another simple sum in Arithmetic. (See Table 07)
It is seen that the average cost of generation would now be around Rs 62.00 per unit, if the present price of coal and oil stays and the rupee does not deteriorate any further. Also considering that what is even more important to consider is the availability of FOREX for the import of coal and oil, the decision on the tariff payable for the Roof Top solar, being the only short term solution should be against the cost of generation using coal and oil.
In this regard the industry experts have made detailed submissions that, under prevailing financial and economic considering the viable tariff to attract any investor to this sector would be Rs 50.00 – Rs 60.00 per unit based on size of installation. Naturally this could come down as hopefully the Sri Lankan economy improves in the coming years. But can we afford to wait till then. The alternative is to use emergency power costing more than double. So the simple question to be asked is , which number is higher?
Cost of Solar RT of Rs 50.00 per kWh or Cost of Coal of Rs 65.00 per kWh, (If we manage to buy some coal, which too is in doubt), and Cost of Solar RT of Rs 50.00 per kWh or Cost of Oil of Rs 120.00 per kWh Isn’t there any one at the CEB, PUCSL, or the Ministry of Power or The Ministry of Finance who can do these simple sums?
Unless there is some sanity even at this late hour to realize that the CEB must secure it energy by focusing on the facilitation of the indigenous, renewable sources of energy, which does not depend on imported fuels of any kind, Sri Lanka is rushing towards a disaster on unimaginable proportions in a few short months. Don’t be surprised if a further consumer tariff increase is round the corner and worse still the possible resumption of the petrol and diesel queues before long.
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