Editorial

What?

Published

2 years ago

2024/09/14

Saturday 14th September, 2024

The Cabinet of Ministers is playing Santa these days in a bid to shore up President Ranil Wickremesinghe’s chances in the ongoing presidential race. Its latest gimmick is the announcement of substantial PAYE tax reductions, which are to take effect from April 2025. The Cabinet has said the proposal to grant tax relief has the blessings of the IMF, which, we thought, was against tax cuts.

The Cabinet, headed by President Wickremesinghe, is in overdrive to announce relief measures and make as many election promises as possible ahead of the forthcoming presidential election. Its ulterior motive is not difficult to discern, and it will be interesting to see the Election Commission’s reaction. The Cabinet has also undertaken to increase the public sector salaries and pensions. Restrictions on vehicle imports, too, will be lifted from February 2025, the Cabinet has said.

Curiouser and curiouser! A couple of months ago, President Wickremesinghe, the Finance Ministry and the Cabinet insisted that a demand for public sector pay hikes could not be granted for want of funds and in view of the IMF’s stringent bailout conditions.

They stood their ground amidst workers’ protests, which were crushed. State Minister of Finance Shehan Semasinghe went on record as saying that pay hikes that trade unions demanded for state employees would require an extra Rs. 275 billion, and the value added tax would have to be jacked up from 18% to 22% to meet that demand. The Finance Ministry panjandrums and Minister Bandula Gunawardena peddled the same argument, which received wide publicity. Now, the Cabinet says it is possible to grant public workers pay hikes, and, at the same time, reduce taxes! It finds itself in a contradiction—a huge one at that.

President Wickremesinghe would have the public believe that the economic crisis is far from over, and they will have to brace for more austerity measures if the country is to come out of it; that uphill task will be attainable only under his stewardship.

Hence his warning that it will be a huge mistake for the public to elect anyone else as President next week. But he and the Cabinet are now making pledges to increase salaries, provide subsidies and relief, do away with import restrictions and reduce taxes as if the economic crisis were a thing of the past. They must be asked whether a country facing an economic crisis can afford to carry out such election pledges.

Interestingly, the Cabinet has said that for the proposed tax relief to be granted, the Inland Revenue Act will have to be amended. Reading between the lines, one will discern the subliminal message the Cabinet has conveyed; the public will have to elect Wickremsinghe as President and vote for his party or independent group to ensure that the promised tax relief becomes a reality.

Whatever the Cabinet and the President promise, out of their sheer desperation to garner votes in a tight presidential race, state revenue will have to be raised substantially to slash personal income taxes, increase the public sector salaries and enhance social welfare.

How does the Cabinet propose to meet the revenue targets set by the IMF while decreasing taxes? IMF Senior Mission Chief Peter Breuer said in June that Sri Lanka had to increase state revenue to the region of 15% of GDP in 2025. Are the proposed PAYE tax reductions a ploy to prepare the ground for the implementation of the much-dreaded imputed rental tax and increase other taxes after the presidential and parliamentary elections? The IMF and Sri Lankan politicians know more than one way to shoe a horse.

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Editorial

When dirty coal leaves farmers in tears

Published

8 hours ago

2026/03/26

Sahan Weerasooriya

Thursday 26th March, 2026

Coal is not an agricultural output, as is public knowledge, and therefore how on earth it can bring tears to farmers’ eyes, one may ask. But in Sri Lanka dirty coal has not only worsened air pollution in areas surrounding the Norochcholai power plant but also caused untold hardships to farmers across the country, especially in rice-growing areas, besides causing huge losses to the state coffers.

The government has managed to break the back of the fuel-queue problem for all intents and purposes, with the help of the QR-regulated quota system coupled with odd-even rationing. Long queues are seen only in the areas where filling stations have run out of stocks. However, paddy farmers have been left high and dry, without diesel for harvesting; they complain that filling stations in their areas have not received diesel supplies for several days, and they have to pay as much as Rs. 20,000 for harvesting an acre of paddy because diesel is available only on the black market. This situation has come about mainly because huge amounts of diesel are being diverted to the oil-fired power plants to meet a shortfall in electricity generation at the coal-fired Norochcholai power plant due to the use of substandard coal.

The Opposition has claimed that about 800,000 barrels of diesel are supplied to oil-fired power plants to meet the Norochcholai generation shortfall caused by substandard coal daily. This abnormal increase in thermal power generation, due to corruption in the government ranks, has resulted in tremendous pressure on the country’s diesel supplies that could otherwise have been used for transport and agricultural purposes. If the government had cancelled the current coal tender immediately after the first shipment of coal was found to be substandard, and the engineers of the Norochcholai power plant began to complain of a sharp drop in power generation due to the low-quality of coal, it would have been able to save about Rs 8 billion straightaway and prevented further losses due to an increase in the amount of diesel used for power generation. Instead, it chose to retain the current coal supplier under a cloud at the expense of the public, the state coffers and the country’s diesel reserves.

Now, the paddy farmers are unable to gather their harvest and prepare their fields for the next cultivation season, and the Ceylon Electricity Board is seeking a massive power tariff hike to recover losses due to burning diesel to cover the Norochcholai supply gap. The Opposition has repeatedly pointed out in Parliament that the electricity supply shortfall due to dirty coal imports often increases up to 176 MW. Power and energy experts have warned of possible power cuts due to a diesel shortage.

The government has jacked up fuel prices in such a way that one wonders whether it is trying to cover the losses caused by its coal racket and increases in electricity generation costs due to its overreliance on diesel power plants. Cabinet Spokesman Dr. Nalinda Jayatissa claimed at Tuesday’s media briefing that the fuel pricing formula had not been used to work out the current petroleum price increases. He went so far as to claim that the world oil prices had not increased according to any formula. However, Ceylon Petroleum Corporation Managing Director Dr. Mayura Nettikumarage told the media later in the day that fuel pricing formula had been used to determine the fuel price hikes. The pricing formula was introduced to ensure that fuel prices would be cost reflective. So, going by Minister Jayatissa’s claim, the question is why the government has not used the pricing formula to calculate fuel prices. Has it resorted to price gouging?

The JVP-NPP government has sought to use the global energy crisis as an excuse to cover up its coal racket, which has caused a power crisis, but the resentful public will not buy into its false claims and keep quiet. True, the Middle East conflict has caused a global energy crisis, and taken its toll on Sri Lanka’s petroleum reserves and fuel prices. However, we would have faced the current power crisis even if Trump and Netanyahu had behaved, without attacking Iran and plunging the world into chaos.

The previous government blundered by cutting corrupt deals, enabling its leaders and cronies to enrich themselves, mismanaging the economy, causing scarcities, and testing the people’s patience. Its leaders had to outrun angry mobs baying for their blood. When the wolf is at the door, popular support for governments drops to the floor, and people take to the streets. Unless the JVP-NPP government makes an immediate course correction, without defending the corrupt and aggravating the woes of the public, the day may not be far off when its leaders, too, have to showcase their athleticism, if any, and show their pursuers a clean pair of heels each—perish the thought! One may recall that it was irate paddy farmers who fired the first volley at the previous government. They are again on the warpath, demanding diesel and fertiliser.

Editorial

Crisis: Guidelines no silver bullet

Published

1 day ago

2026/03/25

Sahan Weerasooriya

Wednesday 25th March, 2026

The JVP-NPP government is slow on the draw whenever it responds to emergencies. Its long response time stood in the way of disaster mitigation in the immediate aftermath of the landfall of Cyclone Ditwah, which triggered a series of adverse weather events, claiming 638 lives and destroying more than 6,100 houses. Its delayed response also prevented the country from adopting emergency measures to manage its meagre fuel reserves immediately after the eruption of the latest Middle East conflict. Instead of reintroducing the QR-based fuel quota system at the first sign of trouble to prevent panic buying and stockpiling, it kept on issuing fuel to the market while hoarders were having a field day. Worse, it has taken three long weeks to issue energy saving guidelines to the state sector, which is bursting at the seams, with one public official for every 15 citizens. Curtailing waste in the state sector is half the battle in reducing national power and energy consumption substantially.

The Commissioner General of Essential Services has directed all state institutions to adopt the following measures to save energy: reducing fuel used for official travel, limiting physical meetings and using online platforms for that purpose, minimising paper and physical document transfers, reducing the use of air-conditioning, limiting elevator use, expanding online services, keeping offices closed outside working hours and monitoring energy saving. Essential as these measures may be, they cannot be considered a silver bullet. Much more needs to be done.

It has been estimated that if every vehicle in the state owned fleet saves one litre of fuel per day, Sri Lanka could reduce fuel use by about 92,000 litres daily. However, it is doubtful whether state employees will cooperate to reduce fuel consumption. The only way to ensure that they will use less fuel, in our view, is to reduce fuel allocation for the public sector. Many developing countries, such as Pakistan, have taken action to curtail energy demand. They have opted for nationwide austerity measures while Sri Lanka has focused more on conservation guidelines to the public sector and reducing commuting fuel use.

There is a pressing need for Sri Lanka to adopt drastic austerity measures to survive the worsening energy crisis. It ought to emulate Pakistan, which has halved fuel allocations for the state sector for two months, taken 60 percent of government vehicles off the road, suspended fuel allowances for ministers, reduced fuel allocations for state officials by 50 percent, and limited official protocol convoys to only one security vehicle.

The JVP/NPP politicians came to power, promising to use public transport. They ought to fulfil that pledge and set an example to others at this hour of crisis. Why can’t they travel in buses and trains at least until the current energy crisis is over? After all, the people’s representatives in some developed countries, such as the Netherlands, Denmark, Sweden, the United Kingdom, Germany and Finland, travel in buses and trains or cycle to work. Why can’t the self-proclaimed Marxist leaders in a country like Sri Lanka lead simple lifestyles like their capitalist counterparts in the Global North?

Most of all, while seeking public cooperation to save electricity and energy, the government must ensure that those who caused a sharp decrease in electricity generation at the Norochcholai power plant complex by procuring low-grade coal are brought to justice. The Opposition alleges a daily generation shortfall up to 170 MW due to the use of substandard coal at Norochcholai. This reduced efficiency has forced other power plants to burn diesel to cover the gap. Huge amounts of diesel are used by oil-fired power plants daily to meet the shortfall in electricity generation at Norochcholai, increasing pressure on the diesel supplies that could otherwise be used by the transport sector.

Unfortunately, the government politicians, including President Anura Kumara Dissanayake, have circled the wagons around Energy Minister Kumara Jayakody and his officials responsible for substandard coal imports, making one wonder whether the entire JVP has benefited from the coal racket.

Editorial

Gloom, doom and a ray of hope

Published

2 days ago

2026/03/24

Sahan Weerasooriya

Tuesday 24th March, 2026

The global energy crisis has taken a turn for the worse due to the Middle East conflict. International Energy Agency Executive Director Fatih Birol has issued a dire warning. If the Iran war persists, the world will face a mega energy crisis, whose economic impact will be far worse than those of the two oil crises in the 1970s, taken together, he has said, noting that today the world economy is losing about 11 million barrels of oil a day whereas it lost only five million barrels of oil each per day during the two crises in the 1970s. No country will be safe. However, the predicament of the developing nations, such as Sri Lanka, will be even worse, for their governments increase fuel prices in geometric progression when world oil prices rise in arithmetic progression, so to speak.

At this rate, a global recession may not be far off, economists have warned. Economies across the world are already screaming. But US President Donald Trump, who at the behest of Israeli Prime Minister Benjamin Netanyahu, started the current Middle East conflict, acts whimsically, and a credible endgame is conspicuous by its absence. It is doubtful whether he even has a well-thought-out military strategy. He orders airstrikes on Iran and keeps on pouring taxpayers’ money into an endless war, which may cost Americans more than a trillion dollars eventually, Prof. Linda Bilmes, a Harvard expert, has told The New York Times.

War is synonymous with destruction. In fact, it is hell, as American Civil War General W. T. Sherman famously said. Wars are said to have rules of engagement, but in reality, they are fought according to Rafferty’s rules. The US has used atomic bombs, napalm, Agent Orange, white phosphorus, etc., and carried out numerous massacres besides destroying critical infrastructure in other countries in a bid to win wars. Israel resorted to indiscriminate airstrikes and an equally devastating ground assault in Gaza in retaliation for the Hamas terror attacks. Therefore, the US and Israel should have anticipated fierce resistance and no-holds-barred retaliation from Iran when they carried out unprovoked attacks on that country. It was obvious from the beginning that Iran would shift the theatre of its military action to the economic front to pressure the US and Israel to stop attacks. It has done so with a devastating impact on the global economy. Not that it is totally blameless, but it is the US and Israel that conjured up a casus belli to start the current war and drove Iran to retaliate violently.

Those who started the Middle East war ought to stop it instead of asking Iran to declare a ceasefire, if the global economy is to be saved by reopening vital energy routes in that region. They will only aggravate the situation if they try to reopen the Hormuz Strait militarily. They have already made a series of military miscalculations. Israel and other US allies in the region have Iranian missiles and Kamikaze drones raining down on them. Iran is extending the range and capability of its missiles.

The US and Israel are obviously facing a situation they did not bargain for. They may have thought they would be able to bomb Iran into submission in a day or two and engineer a regime change. Their plan has gone awry. They expected the Iranian civilians to come out and overthrow the beleaguered government, but nothing of the sort has happened.

The best way to reopen the Hormuz Strait for international navigation and help overcome the global economic crisis is for the US and Israel to stop attacks immediately and let the neutral world powers negotiate with Iran, which has shown willingness to soften its stand. Now that Trump and Netanyahu have bragged that they wiped out Iranian nuclear facilities in the first few days of attacks, why they do not stop the war is the question.

It was reported at the time of going to press that President Trump had suspended planned strikes on the Iranian power grid for five days in view of “very good and productive conversations” with Tehran. One can only hope that this window for diplomacy will lead to de-escalation and an enduring ceasefire.