Features
Sri Lankan energy sector as millstone around nation’s neck
By Eng Parakrama Jayasinghe
parajayasinghe@gmail.com
Any economy thrives on a reliable and affordable supply of energy. This is a truism that no one has contested ever since the advent of the Industrial Revolution, when the modern form of energy elevated the human kind from the limitations of human and animal power. However, Sri Lanka has adopted a parochial view of this vital field with the authorities concerned jealously guarding the monopoly status they have carved out for themselves, both in the electricity sector as well as petroleum sector. They seem to think their duty is to meet the energy demand by whatever means with scant regard to sources of energy or the immense cost to the national economy.
The monopoly status enables them to continue this ill-conceived and short-sighted practice with dire consequences to the economy and all Sri Lankans, who are compelled to bear the burden of the cost of all the misdeeds and downright erroneous decisions of those responsible.
The CEB alone has suffered losses amounting to Rs 500 Billion over the past decade or so.Under the IMF not to incur any more losses, the government has jacked up tariffs.
So, the expectation was that the CEB would stop incurring losses in time to offer a clean balance sheet to facilitate the restructuring of it.But to one’s surprise, the media reports that this year too, CEB will run at a loss of a whopping Rs 50 Billion.
So, I believe that the titles and comments in my previous articles are quite appropriate. Some of them are given below:
Sri Lankan Electricity Sector – The Headless Chicken (15 Feb 2022) https://www.ft.lk/columns/Sri-Lankan-electricity-sector-The-headless-chicken/4-730564 A simple lesson in arithmetic on electricity sector (05 Dec 2022) https://island.lk/a-simple-lesson-in-arithmetic-on-electricity-sector/
The CEB produces its long-term electricity generation plan (LTEGP) with a time horizon of 20 years implemented in two-year phases, but none of its objectives has become a reality so far. Of course, they will blame the government for not providing necessary funds, without ascertaining the reasons for their failure and the impracticability of a time horizon of 20 years in view of the clear evidence seen year after year.
Something else has cropped up recently—agitations by farmers in the South due to lack of water for their paddy cultivation and the Minister of Power refusing to release water from the Samanalawewa reservoir.
The CEB has forgotten its oft-repeated excuse for lack of better management of the hydro resource, claiming that the first priority of the reservoir water is for cultivation. This should have been evident from the prior warning issued by the Dept of Meteorology in April.
The occurrence of the El Nino phenomenon every 5-7 years is nothing new. Thus, it should at least be reflected in the LTEGP over several years with particular strategies to counter it in time with short term and long-term plans.
What did the CEB do to face this situation since the country experienced the unprecedented power cuts in 2022, not for lack of generation capacity but lack of funds including foreign currency to pay for fuel imports? We did not see any concerted effort to develop already proven indigenous RE resources.
But the interesting question here is why this sudden additional crisis, particularly affecting the southern farmers? While it is the southern region farmers who are affected by a scarcity of water for irrigation, the power authorities warn that only the southern region will have to face 3-to4-hour power cuts, if more water is released. Doesn’t Sri Lanka have a highly integrated national grid and widely distributed and interconnected set of generators which should form a common pool?
Isn’t there some element that is not being disclosed here? There has been a long-delay in the construction of a transmission line from Polpitiya to Hambantota, depriving the CEB of flexibility in using such facilities. It has now been revealed that the mere 600m-long section over a tea estate has been holding up the completion of this 150 km power line. Where is the accountability of the CEB or the Ministry?
The 100 MW Solar park in Siyambalanduwa, which has been on the drawing board for many years, if implemented, would have added a substantial amount of low-cost renewable energy to the national grid, thus enabling the release of water of Samanalawewa for agricultural use.
The 2022 debacle should have prompted the CEB and the Ministry of Power and Energy to realise that the way forward was the rapid addition of RE to the grid, for which the private sector was ready and waiting.
The target of 70% RE contribution by 2030 still remains only a buzzword with no evidence of any pragmatic strategies or actions to reach this goal. In contrast, Nature itself has shown the feasibility of this goal, which was achieved albeit for a few days in 2022, seven years ahead of schedule, as shown below. (See figure1)
Any prudent energy minister, if not the planners at CEB, should have viewed this as a good omen for reaching the target of 70% RE with immense value to the economy, balance of payment, energy security and environment as well as to the prestige of the country. There is absolutely no shortage of RE resources in the country and our own entrepreneurs and engineers have demonstrated the commercial viability of harnessing all the diverse sources of such energy at no cost to the utility. There is no other country in the world where nature has bestowed such bounty.
But in sheer contrast both the CEB and the Ministry have allowed the deterioration of the energy mix to 70% fossil fuels with disastrous consequences we face now, the depth of which is carefully hidden from the people. (See Figure 2)
It does not require much intelligence to fathom that all these moves are designed to perpetuate the use of fossil fuels introduced around 1995 with most dubious terms of contract and total lack of foresight of the consequences for the future, obviously for the benefit of a few and certainly not in the interest of the nation.
It is most interesting to note the number of issues surfacing at this point of time
(a) The refusal to release water for the farmers
(b) The warnings of power cuts in the South
(c)The decision to use inordinate amount of oil for power generation over the first five months of the year, cited as needed to maintain the myth of no power cuts, as the prime demand of the people, who had got themselves adjusted to face limited power cuts, fully understanding the long term disadvantages of dependence on imported fossil fuels
(d) The lack of any information about the cost of using oil, which obviously scuttled any chance of the CEB covering the cost of generation even after the two tariff hikes
(e) The long delay in announcing a viable feed in tariff for Non-Conventional Renewable Energy (NCRE), as distinct from the major hydro power , which developed entirely by the private sector , demonstrated a remarkable growth until the debacle of huge depreciation of rupee and massive hike in interest rates badly affected such growth, and the apathy of the authorities. The tariff once announced after a two-year delay proved to be totally unbankable due to conditions imposed.
(f) Most of all, the attempt to continue the use of “Emergency Power” at massive cost using imported oil. The recent advertisement is evidence of this. Sri Lanka may be the only country in the world where there is a permanent need for “Emergency Power: year after year. It is now euphemistically called “Supplementary Power” Whom are they trying to bluff? The cost of oil -based power now costs over Rs 100.00 per unit and the Supplementary Power would cost at least Rs 135.00 per unit and mostly in foreign currency.
(g) The 14-month long delay in settling the dues to the RE developers who nevertheless continued to provide the much-needed low cost power to the national grid. However, the money and Forex needed to import oil and coal has been found by whatever means
(h) The release of large extents of lands and project approvals to the Indian Company, Adani, in total violation of the Electricity Act and without any competitive tenders. This is the ploy used by CEB to block RE projects over seven years in spite of the clear provisions for declared Feed in Tariff (FIT) for NCRE projects under the SLSEA Act of 2007.
(i) It is not yet clear what is the applicable tariff for ADANI and whether it would be paid in FOREX, which would be a clear travesty of natural justice vis-a-vis local developers.
(j) The disappearance of the Expression of Interest (EoI) received for development of RE Projects up to 50 MW capacity. It was reported that projects of cumulative capacity 600 MW were received and there was a modicum of transparency and competitive tender process.
The bottom line is clear
All these actions and manipulations could lead to achieve one single objective in spite of all declarations and protestations to the contrary. The ever-increasing demand for energy and increasing cost of inputs and services would raise expectations of many to tap that pot of gold. There is no harm at all in such expectations and entrepreneurs benefiting by transparent and fair means within the constraints of safeguarding national interests, economically, financially and environmentally, not to mention the energy security.
It would also be found that use of Renewable Energy Technologies which depend on natural elements of Solar and Wind does not present opportunities for such manipulations, nor does supply chain of fuelwood from small farmers can be exploited. As such, all activities so far are likely to result in the following:
(a) Discouraging any local developers of renewable energy, who were making very good progress contributing to the national energy supply and demonstrating most satisfactory technical competence. Some have even successfully ventured abroad.
(b) Closing the opportunity to local relatively modest indigenous investment by allowing foreign investors to develop large projects which will block the access to available transmission infrastructure and grid stations. This is reportedly already happening. It must be emphasized that all RE projects consist of a large number of small units, with even wind plants being limited to about 5 MW each. There is no reason technically or financially to aggregate them to large projects and pretend that local entrepreneurs or banks cannot fund them and put them out of their reach.
(c) The rooftop solar PV sector is devoid of any of these issues, except the reluctance and lethargy of the CEB to facilitate its rapid development, which may require only minor improvement of the grid infrastructure in some areas. This is the best way to meet the short-term energy deficits without resorting to expensive “Supplementary Power “. Perhaps, the reason for such reluctance is evident here.
(d) The slowdown of the rapid deployment of RE projects particularly the Roof Top Solar was due to the heavy depreciation of the rupee and the massive hike in bank interest rates. However, the government is blind to the opportunity of tapping many concessionary funds for low cost funding to finance the RE sector. These could also help them to develop the transmission infrastructure needed to absorb the RE generated. Such development should logically match the feasible RE development by local developers first and not to venture in to the projects proposed under the LTEGPs which never materialise
What Sri Lanka needs most urgently is for the national interest to be the driving force in the power and energy sector. Will the restructuring of CEB help achieve this objective?We expect the Minister of Power and Energy to act fast and deliver this urgent service to Sri Lanka instead of making mere tweets and declarations.
by Dr Gotabhya Ranasinghe
Senior Consultant Cardiologist
National Hospital Sri Lanka
When we sought a meeting with Hon Dr. Ramesh Pathirana, Minister of Health, he graciously cleared his busy schedule to accommodate us. Renowned for his attentive listening and deep understanding, Minister Pathirana is dedicated to advancing the health sector. His openness and transparency exemplify the qualities of an exemplary politician and minister.
Dr. Palitha Mahipala, the current Health Secretary, demonstrates both commendable enthusiasm and unwavering support. This combination of attributes makes him a highly compatible colleague for the esteemed Minister of Health.
Our discussion centered on a project that has been in the works for the past 30 years, one that no other minister had managed to advance.
Minister Pathirana, however, recognized the project’s significance and its potential to revolutionize care for heart patients.
The project involves the construction of a state-of-the-art facility at the premises of the National Hospital Colombo. The project’s location within the premises of the National Hospital underscores its importance and relevance to the healthcare infrastructure of the nation.
This facility will include a cardiology building and a tertiary care center, equipped with the latest technology to handle and treat all types of heart-related conditions and surgeries.
Securing funding was a major milestone for this initiative. Minister Pathirana successfully obtained approval for a $40 billion loan from the Asian Development Bank. With the funding in place, the foundation stone is scheduled to be laid in September this year, and construction will begin in January 2025.
This project guarantees a consistent and uninterrupted supply of stents and related medications for heart patients. As a result, patients will have timely access to essential medical supplies during their treatment and recovery. By securing these critical resources, the project aims to enhance patient outcomes, minimize treatment delays, and maintain the highest standards of cardiac care.
Upon its fruition, this monumental building will serve as a beacon of hope and healing, symbolizing the unwavering dedication to improving patient outcomes and fostering a healthier society.We anticipate a future marked by significant progress and positive outcomes in Sri Lanka’s cardiovascular treatment landscape within the foreseeable timeframe.
by Fr. Emmanuel Fernando, OMI
Jesuit Fr. Aloysius Pieris (affectionately called Fr. Aloy) celebrated his 90th birthday on April 9, 2024 and I, as the editor of our Oblate Journal, THE MISSIONARY OBLATE had gone to press by that time. Immediately I decided to publish an article, appreciating the untiring selfless services he continues to offer for inter-Faith dialogue, the renewal of the Catholic Church, his concern for the poor and the suffering Sri Lankan masses and to me, the present writer.
It was in 1988, when I was appointed Director of the Oblate Scholastics at Ampitiya by the then Oblate Provincial Fr. Anselm Silva, that I came to know Fr. Aloy more closely. Knowing well his expertise in matters spiritual, theological, Indological and pastoral, and with the collaborative spirit of my companion-formators, our Oblate Scholastics were sent to Tulana, the Research and Encounter Centre, Kelaniya, of which he is the Founder-Director, for ‘exposure-programmes’ on matters spiritual, biblical, theological and pastoral. Some of these dimensions according to my view and that of my companion-formators, were not available at the National Seminary, Ampitiya.
Ever since that time, our Oblate formators/ accompaniers at the Oblate Scholasticate, Ampitiya , have continued to send our Oblate Scholastics to Tulana Centre for deepening their insights and convictions regarding matters needed to serve the people in today’s context. Fr. Aloy also had tried very enthusiastically with the Oblate team headed by Frs. Oswald Firth and Clement Waidyasekara to begin a Theologate, directed by the Religious Congregations in Sri Lanka, for the contextual formation/ accompaniment of their members. It should very well be a desired goal of the Leaders / Provincials of the Religious Congregations.
Besides being a formator/accompanier at the Oblate Scholasticate, I was entrusted also with the task of editing and publishing our Oblate journal, ‘The Missionary Oblate’. To maintain the quality of the journal I continue to depend on Fr. Aloy for his thought-provoking and stimulating articles on Biblical Spirituality, Biblical Theology and Ecclesiology. I am very grateful to him for his generous assistance. Of late, his writings on renewal of the Church, initiated by Pope St. John XX111 and continued by Pope Francis through the Synodal path, published in our Oblate journal, enable our readers to focus their attention also on the needed renewal in the Catholic Church in Sri Lanka. Fr. Aloy appreciated very much the Synodal path adopted by the Jesuit Pope Francis for the renewal of the Church, rooted very much on prayerful discernment. In my Religious and presbyteral life, Fr.Aloy continues to be my spiritual animator / guide and ongoing formator / acccompanier.
Fr. Aloysius Pieris, BA Hons (Lond), LPh (SHC, India), STL (PFT, Naples), PhD (SLU/VC), ThD (Tilburg), D.Ltt (KU), has been one of the eminent Asian theologians well recognized internationally and one who has lectured and held visiting chairs in many universities both in the West and in the East. Many members of Religious Congregations from Asian countries have benefited from his lectures and guidance in the East Asian Pastoral Institute (EAPI) in Manila, Philippines. He had been a Theologian consulted by the Federation of Asian Bishops’ Conferences for many years. During his professorship at the Gregorian University in Rome, he was called to be a member of a special group of advisers on other religions consulted by Pope Paul VI.
Fr. Aloy is the author of more than 30 books and well over 500 Research Papers. Some of his books and articles have been translated and published in several countries. Among those books, one can find the following: 1) The Genesis of an Asian Theology of Liberation (An Autobiographical Excursus on the Art of Theologising in Asia, 2) An Asian Theology of Liberation, 3) Providential Timeliness of Vatican 11 (a long-overdue halt to a scandalous millennium, 4) Give Vatican 11 a chance, 5) Leadership in the Church, 6) Relishing our faith in working for justice (Themes for study and discussion), 7) A Message meant mainly, not exclusively for Jesuits (Background information necessary for helping Francis renew the Church), 8) Lent in Lanka (Reflections and Resolutions, 9) Love meets wisdom (A Christian Experience of Buddhism, 10) Fire and Water 11) God’s Reign for God’s poor, 12) Our Unhiddden Agenda (How we Jesuits work, pray and form our men). He is also the Editor of two journals, Vagdevi, Journal of Religious Reflection and Dialogue, New Series.
Fr. Aloy has a BA in Pali and Sanskrit from the University of London and a Ph.D in Buddhist Philosophy from the University of Sri Lankan, Vidyodaya Campus. On Nov. 23, 2019, he was awarded the prestigious honorary Doctorate of Literature (D.Litt) by the Chancellor of the University of Kelaniya, the Most Venerable Welamitiyawe Dharmakirthi Sri Kusala Dhamma Thera.
Fr. Aloy continues to be a promoter of Gospel values and virtues. Justice as a constitutive dimension of love and social concern for the downtrodden masses are very much noted in his life and work. He had very much appreciated the commitment of the late Fr. Joseph (Joe) Fernando, the National Director of the Social and Economic Centre (SEDEC) for the poor.
In Sri Lanka, a few religious Congregations – the Good Shepherd Sisters, the Christian Brothers, the Marist Brothers and the Oblates – have invited him to animate their members especially during their Provincial Congresses, Chapters and International Conferences. The mainline Christian Churches also have sought his advice and followed his seminars. I, for one, regret very much, that the Sri Lankan authorities of the Catholic Church –today’s Hierarchy—- have not sought Fr.
Aloy’s expertise for the renewal of the Catholic Church in Sri Lanka and thus have not benefited from the immense store of wisdom and insight that he can offer to our local Church while the Sri Lankan bishops who governed the Catholic church in the immediate aftermath of the Second Vatican Council (Edmund Fernando OMI, Anthony de Saram, Leo Nanayakkara OSB, Frank Marcus Fernando, Paul Perera,) visited him and consulted him on many matters. Among the Tamil Bishops, Bishop Rayappu Joseph was keeping close contact with him and Bishop J. Deogupillai hosted him and his team visiting him after the horrible Black July massacre of Tamils.
Sri Lanka-Singapore Free Trade Agreement
By Gomi Senadhira
senadhiragomi@gmail.com
“You might tell fairy tales, but the progress of a country cannot be achieved through such narratives. A country cannot be developed by making false promises. The country moved backward because of the electoral promises made by political parties throughout time. We have witnessed that the ultimate result of this is the country becoming bankrupt. Unfortunately, many segments of the population have not come to realize this yet.” – President Ranil Wickremesinghe, 2024 Budget speech
Any Sri Lankan would agree with the above words of President Wickremesinghe on the false promises our politicians and officials make and the fairy tales they narrate which bankrupted this country. So, to understand this, let’s look at one such fairy tale with lots of false promises; Ranil Wickremesinghe’s greatest achievement in the area of international trade and investment promotion during the Yahapalana period, Sri Lanka-Singapore Free Trade Agreement (SLSFTA).
It is appropriate and timely to do it now as Finance Minister Wickremesinghe has just presented to parliament a bill on the National Policy on Economic Transformation which includes the establishment of an Office for International Trade and the Sri Lanka Institute of Economics and International Trade.
Was SLSFTA a “Cleverly negotiated Free Trade Agreement” as stated by the (former) Minister of Development Strategies and International Trade Malik Samarawickrama during the Parliamentary Debate on the SLSFTA in July 2018, or a colossal blunder covered up with lies, false promises, and fairy tales? After SLSFTA was signed there were a number of fairy tales published on this agreement by the Ministry of Development Strategies and International, Institute of Policy Studies, and others.
However, for this article, I would like to limit my comments to the speech by Minister Samarawickrama during the Parliamentary Debate, and the two most important areas in the agreement which were covered up with lies, fairy tales, and false promises, namely: revenue loss for Sri Lanka and Investment from Singapore. On the other important area, “Waste products dumping” I do not want to comment here as I have written extensively on the issue.
1. The revenue loss
During the Parliamentary Debate in July 2018, Minister Samarawickrama stated “…. let me reiterate that this FTA with Singapore has been very cleverly negotiated by us…. The liberalisation programme under this FTA has been carefully designed to have the least impact on domestic industry and revenue collection. We have included all revenue sensitive items in the negative list of items which will not be subject to removal of tariff. Therefore, 97.8% revenue from Customs duty is protected. Our tariff liberalisation will take place over a period of 12-15 years! In fact, the revenue earned through tariffs on goods imported from Singapore last year was Rs. 35 billion.
The revenue loss for over the next 15 years due to the FTA is only Rs. 733 million– which when annualised, on average, is just Rs. 51 million. That is just 0.14% per year! So anyone who claims the Singapore FTA causes revenue loss to the Government cannot do basic arithmetic! Mr. Speaker, in conclusion, I call on my fellow members of this House – don’t mislead the public with baseless criticism that is not grounded in facts. Don’t look at petty politics and use these issues for your own political survival.”
I was surprised to read the minister’s speech because an article published in January 2018 in “The Straits Times“, based on information released by the Singaporean Negotiators stated, “…. With the FTA, tariff savings for Singapore exports are estimated to hit $10 million annually“.
As the annual tariff savings (that is the revenue loss for Sri Lanka) calculated by the Singaporean Negotiators, Singaporean $ 10 million (Sri Lankan rupees 1,200 million in 2018) was way above the rupees’ 733 million revenue loss for 15 years estimated by the Sri Lankan negotiators, it was clear to any observer that one of the parties to the agreement had not done the basic arithmetic!
Six years later, according to a report published by “The Morning” newspaper, speaking at the Committee on Public Finance (COPF) on 7th May 2024, Mr Samarawickrama’s chief trade negotiator K.J. Weerasinghehad had admitted “…. that forecasted revenue loss for the Government of Sri Lanka through the Singapore FTA is Rs. 450 million in 2023 and Rs. 1.3 billion in 2024.”
If these numbers are correct, as tariff liberalisation under the SLSFTA has just started, we will pass Rs 2 billion very soon. Then, the question is how Sri Lanka’s trade negotiators made such a colossal blunder. Didn’t they do their basic arithmetic? If they didn’t know how to do basic arithmetic they should have at least done their basic readings. For example, the headline of the article published in The Straits Times in January 2018 was “Singapore, Sri Lanka sign FTA, annual savings of $10m expected”.
Anyway, as Sri Lanka’s chief negotiator reiterated at the COPF meeting that “…. since 99% of the tariffs in Singapore have zero rates of duty, Sri Lanka has agreed on 80% tariff liberalisation over a period of 15 years while expecting Singapore investments to address the imbalance in trade,” let’s turn towards investment.
Investment from Singapore
In July 2018, speaking during the Parliamentary Debate on the FTA this is what Minister Malik Samarawickrama stated on investment from Singapore, “Already, thanks to this FTA, in just the past two-and-a-half months since the agreement came into effect we have received a proposal from Singapore for investment amounting to $ 14.8 billion in an oil refinery for export of petroleum products. In addition, we have proposals for a steel manufacturing plant for exports ($ 1 billion investment), flour milling plant ($ 50 million), sugar refinery ($ 200 million). This adds up to more than $ 16.05 billion in the pipeline on these projects alone.
And all of these projects will create thousands of more jobs for our people. In principle approval has already been granted by the BOI and the investors are awaiting the release of land the environmental approvals to commence the project.
I request the Opposition and those with vested interests to change their narrow-minded thinking and join us to develop our country. We must always look at what is best for the whole community, not just the few who may oppose. We owe it to our people to courageously take decisions that will change their lives for the better.”
According to the media report I quoted earlier, speaking at the Committee on Public Finance (COPF) Chief Negotiator Weerasinghe has admitted that Sri Lanka was not happy with overall Singapore investments that have come in the past few years in return for the trade liberalisation under the Singapore-Sri Lanka Free Trade Agreement. He has added that between 2021 and 2023 the total investment from Singapore had been around $162 million!
What happened to those projects worth $16 billion negotiated, thanks to the SLSFTA, in just the two-and-a-half months after the agreement came into effect and approved by the BOI? I do not know about the steel manufacturing plant for exports ($ 1 billion investment), flour milling plant ($ 50 million) and sugar refinery ($ 200 million).
However, story of the multibillion-dollar investment in the Petroleum Refinery unfolded in a manner that would qualify it as the best fairy tale with false promises presented by our politicians and the officials, prior to 2019 elections.
Though many Sri Lankans got to know, through the media which repeatedly highlighted a plethora of issues surrounding the project and the questionable credentials of the Singaporean investor, the construction work on the Mirrijiwela Oil Refinery along with the cement factory began on the24th of March 2019 with a bang and Minister Ranil Wickremesinghe and his ministers along with the foreign and local dignitaries laid the foundation stones.
That was few months before the 2019 Presidential elections. Inaugurating the construction work Prime Minister Ranil Wickremesinghe said the projects will create thousands of job opportunities in the area and surrounding districts.
The oil refinery, which was to be built over 200 acres of land, with the capacity to refine 200,000 barrels of crude oil per day, was to generate US$7 billion of exports and create 1,500 direct and 3,000 indirect jobs. The construction of the refinery was to be completed in 44 months. Four years later, in August 2023 the Cabinet of Ministers approved the proposal presented by President Ranil Wickremesinghe to cancel the agreement with the investors of the refinery as the project has not been implemented! Can they explain to the country how much money was wasted to produce that fairy tale?
It is obvious that the President, ministers, and officials had made huge blunders and had deliberately misled the public and the parliament on the revenue loss and potential investment from SLSFTA with fairy tales and false promises.
As the president himself said, a country cannot be developed by making false promises or with fairy tales and these false promises and fairy tales had bankrupted the country. “Unfortunately, many segments of the population have not come to realize this yet”.
(The writer, a specialist and an activist on trade and development issues . )
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