Features
Are we to buy our solar energy with dollars?
By Eng. Parakrama Jayasinghe
Email : parajayasinghe@gmail.com
A Presidential Press release, dated 13th June 2021; clearly defines the policy on our Energy Sector. The direction indicated is congruent with the presidential policy declaration “Vision for Prosperity and Splendour”. This is not a moment to vacillate and get embroiled in personal or political agendas. The situation in the country is much too precarious with the Covid-19 raging and the spectre of the impact of Climate Change haunting us. The foreign reserves are falling, impacting the rupee and the cost of living. The agitation and indiscipline on the streets, in the midst of a Pandemic are signs of the social and economic instability creeping in. Sri Lanka can overcome the crisis but it needs sound leadership to mobilise and motivate the people to utilise its own resources in a prudent and fair manner.
A country, endowed with talented and educated human resources, abundant sun, wind, fertile soil and water. All these are valuable assets when it comes to opting to renewable energy. Renewable energy will not bring millions to individual businessmen but will give them sound incomes. However, a very large number of people will be become prosumers, that is those actively contributing to producing energy and at the same time using the generated energy themselves. The excess will be sold to the national grid as already practiced by the Solar Roof Top systems.
In this way, the country will save a large amount of foreign exchange, the environment will benefit as no fossil will be used and the consumers will benefit as they will be also producers and earning money as a result. There will also be a change in the economic scenario as power generation will be decentralised. The character of the Ceylon Electricity Board will be totally changed, from being a loss-making “Colossus” to becoming a sophisticated research and development unit servicing the entire country with training and back0-up facilities. Singapore has very successfully graduated to this system.
The President, in a recent progress review meeting, left no room for the interpretation of his Policy Target of reaching 70% of Renewable Energy for Electricity Generation by 2030 (unfortunately diluted down from the original 80% RE) that his vision is for Renewable Energy and there should be no attempts to misinterpret this by calls for so called “Clean Energy”. There is no such clean energy outside the realm of renewable energy and no fossil fuel can be given that distinction.
This national target has to be formalized now by a Cabinet decision and gazetted; otherwise, the President’s policy could very well be surreptitiously overturned.
Pursuing this goal, the contributions of various forms of indigenous sources of renewable energy have to be harnessed. Of these, Solar Energy holds pride of place with the progress made in recent years, particularly by Roof Top Solar PV systems , aided by the most visionary provision of the Surya Bala Sangraamaya which has to date reached a level of over 350 MW installed and many more in stages of implementation. The most challenging target set by the President however, would call for development of other larger installations both ground mounted and floating in the coming years.
The Ministry, as well as the CEB, have been working on several such projects with a 100 MW Solar Park in Siyambaladuwa for which the required land has already been earmarked and a proposed 150 MW Solar park in Pooneryn to follow shortly.
It is under these circumstances that I am compelled to raise alarm bells as noted in the title of this Paper. Are we to buy our Solar Energy in Dollars?
My article A Fresh Look at Solar Energy -Devoid of preconceptions and bias for and against.(https://island.lk/devoid-of-preconceptions-and-bias-for-and-against/) highlighted the many aspects of this most valuable resource, that mother nature has endowed on us in Sri Lanka and the need for most careful plans and programmes to gain the best advantage to Sri Lanka ,
The objective should be broader than the mere addition of energy to the grid. This would contribute to the national economy much more than what is given by the amount of electricity generated, by way of highlevel employment, development of local entrepreneurs and possibility of upstream and downstream integration not to mention the savings in foreign exchange.
With the current moves to implement the 100 MW Solar Park in Siyambaladuwa, it is most important that the other relevant issues are given due consideration.
Looking at the larger picture
The President’s goal of 80 RE as expressed in the “0Vision for Prosperity and Splendour” is based on a number of far reaching concepts. The reduction of Sri Lanka’s dependence on imported fossil fuels and thereby ensuring the future energy security, is the most apparent and noteworthy goal. But along with it should come the additional spin off benefits which would accrue, whether specifically stated or not. Only by ensuring these spin-off benefits, while reaching the primary goal, that the “Splendour” of the vision would be achieved.
I am repeating here these important principles which should not be lost sight of at this critical juncture, and the opportunity be lost forever. These principles to ensure that Sri Lanka truly achieves future energy security and the additional advantages are
* The energy industry must at least now strive to become a National Industry. The competency of our entrepreneurs and technologists this is already well proven.
*The entrepreneurship in the energy sector should be viewed as a major potential contributor to the growth of the GDP, not a mere service in ensuring the energy supply for other sectors in the economy to grow.
*The development of Renewable Energy resources and services is a significant avenue of developing employment opportunities.
*The reduction of the drain on foreign exchange by eliminating the continued use of imported fossil fuels.
*In case of bioenergy the added advantage of multiple spin off benefits to the rural economy, with the added advantage of being a source of firm power, with no drain of foreign exchange
The challenge now is to ensure that the adherence to these principles is held as sacrosanct in the efforts to develop the larger solar and wind projects in the pipe line.
The Pitfalls to be avoided.
I am addressing these remarks on the Siyambaladuwa 100 MW solar project in particular, but similar consideration must be given for any other such solar and wind projects too.
The desire for the CEB to have large power plants in one location is acceptable from their point of view. However, both Wind and Solar Projects have the advantage that any size of project conceived however large, consists of a large number of solar panels currently reaching over 500 watts per panel and a discrete number of wind generators, which too have now reached capacities of 5 MW each. Therefore, the packaging of the number of individual units for a particular project is made purely on economic considerations.
What is important to realize is that such considerations must take into account, the principles outlined above to gain the greatest advantage to the country, which unfortunately seems to be glossed over by the planners, for various reasons. A holistic view in a national perspective would highlight the immense direct financial value and other economic and social benefits and energy security on one hand and the potential dangers in overlooking these on the other hand.
Let us look at the Siyanbaladuwa project as the example before any unwise decisions are made.
The project capacity – 100 MW installed
Targeted Grid Substation – Moneragala
Land Acquisition – Already made
Sri Lankan entrepreneurs and engineers have already proven their capacity of developing projects up to 10 MW. Therefore the logical policy should be to plan this project to be awarded to ten local entrepreneurs, to handle packages of 10 MW, properly structured and managed by the CEB, by National Competitive Bidding, so that the tariff would be in Sri Lanka rupee terms considering that we don’t have to pay for our sunshine. And there would be no drain on foreign exchange except for the initial one-time expenditure on import of the necessary equipment and a limited amount for any minimal spares imports only. The local entrepreneurs and the lending institutions and even the smaller investors in the stock exchange have shown their eagerness to contribute to this form of national venture. So, there is no validity in any argument on the availability of funds or the technical capabilities.
The alternative would be to invite foreign participation, usually couched in arguments of lack of adequate expertise, which as shown above are not tenable in the present situation, and the lure of so called ” Foreign Direct Investment ” and inward flow of Dollars at this critical juncture. But the question must be asked is, in how many such projects approved by the BOI, how much funds were sourced from the local banks limiting the credit available for the local entrepreneurs. The most blatant example is the Korean Investor in the Thulhiriya Textile Mill, who vanished leaving a multibillion loan unsettled for a local bank.
In the present situation the conditions are even worse. Let us assume that the investor would bring in the total capital required. Which may be assumed as US $ 100 Million for the 100 MW by one or more foreign investors. It is clear that they would have the advantage of the currently depleted cost of funds in the global market, which is not available for the local competitors in an open international tender. However, it is certain that the foreign investor in exchange would demand a Dollar Linked Tariff. Using an estimated final tariff of US $ 0.07/kWh, the following interesting numbers emerge.
(See image 1)
So against a dubious inflow of $ 100 Million we would be sending out 260 % , all of which other than the initial capital could have been retained in Sri Lanka. Moreover, with the ever depreciating rupee, this amount of dollar would be costing us much more in rupee terms. Let us be generous to assume that the a mere 3% depreciation of the rupee annually. Therefore this drain would amount to a colossal Rupees 75.8 Billions over the 20 year project life including cost of spares. .
Against this, for an initial foreign exchange cost of US $ 80,000,000 for a group of local companies the entire expenditure over the project period would be Initial capital on US$ . 80,000,000 plus the Import component of spares during project period @ 1.5 % of capital per year. If this is also adjusted @ 3% Depreciation per year the total foreign exchange drain is Rs 23.06 Billion only, against the Rs 75.8 Billion mentioned above.
These differences are illustrated in the chart below. (See images 1 and two)
This is the basis for my question in the title of this article. We will by spending in Dollars for the use of our own sunshine, which we could harness ourselves for a similar or lower cost in rupees and also ensure the much desired energy security and reduction of drain on foreign exchange.
The folly of a similar nature was permitted during the Mahaweli Project downstream development. The project packaging was done in a manner to exclude the local contractors and the awards were made to foreign companies. However, the actual work was done by local contractors on sub contracts very competently. But their experience still remains unaccepted for prequalification of the larger scale of projects. Many decades after, such monumental follies need not be repeated. We must not make the mistake of falling, during daytime, into the pit that we fell into at night, as the local saying goes.
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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