Features
Whither Sri Lanka’s energy sector, lifeblood of national economy ?
By Eng Parakrama Jayasinghe
parajayasinghe@gmail.com
It was in February this year, that I pointed out that the Sri Lankan energy sector is a headless chicken.
https://www.ft.lk/columns/Sri-Lankan-electricity-sector-The-headless-chicken/4-730564
Looking at the mile long queues for all forms of energy, petrol, diesel, kerosine and LPG, where the citizens are wasting away their lives and in some cases losing their lives, it is quite clear that the situation has even worsened since then. When the above article was written there were no such queues except the LPG shortage. But the writing was on the wall , leading Sri Lanka to the present abyss hitherto never experienced by us.
The tragedy being that, even now there is absolutely no solution being proposed, by the government, except going all over the world begging for dollars and oil. Under these circumstances , it is very important to look back at the past actions, not over the years and decades , when the seed for this tragedy were laid, but the totally insane decisions in the past few months , which totally ruined the Sri Lankan economy as well as the social fabric covering the entire spectrum of the citizenry. The current actions of the government which is limited to seek means of surviving on a day to day basis, does not inspire any confidence that, Sri Lanka can emerge from this ruinous mess if ever.
What will happen tomorrow?
I raised this question in February this year.
Quote “In this back ground the people are aghast to witness the drama being enacted, with the ministers blaming each other and the Central Bank insisting there is no problem in releasing the Dollars necessary to import the oil. The fact remains that there already has been power cuts. It is a question of when rather than if, there would be more power cuts. Much hope is pinned on the recommencement of generation with the third unit at Norochcholai. There is no guarantee for how long all three units would be in operation considering the past history of this power plant, bringing us back to square one”. unquote
The reality as it turned out is much worse. Not only two of the coal power plants will be out of service one after the other for some three months, we are living on tenterhooks as to how much reliance we can place on both operating units will deliver us the electricity without breaking down , even at the present enormous cost. The arrival of the monsoons helped to alleviate the problem to some extent until the first of the units was shut down for maintenance. Till then there were some happy days in May when Sri Lanka was able to manage without any private oil based power plants and minimal usage of those owned by the CEB
Unfortunately those days were minimal and we have reverted to the disastrous oil based generation as illustrated in the two charts below , down loaded from the CEB web portal. (See Figures 1 and 2)
This brings me to the point at issue. What did cause the present impossible situation with respect to transport fuels , leaving aside for a minute the issue of LPG and Kerosene?
The primary problem is of course the blind dependence on imported fossil fuels for our energy needs. While there were no viable alternatives for transport fuels in the past, this is certainly not so in case of the power generation. However, this has been the subject of many of previous articles both mine and many other right thinking people of all levels. What is needed now is to examine the immediate ill-conceived past decisions and actions and hopefully try and avoid the continuation of such, if we are to retrieve a semblance of order in the transport energy sector , which is crippling the entire country.
Having endured repeated economic disasters caused by the CEB year after year, by manipulating the overdependence on the oil based power, in the dry months of January to April, they have brought the country to its knees literally this year. This is by siphoning off what little available oil supplies as well as the dollars spent on importing same during these months as shown below. (See Table)
*Estimated on the basis of 0.28 liters/kWh
** 6000 litre Loads
Evaluated based on CEB Statistics
The number of bowser loads of oil issued by the CPC is mentioned as about 800 per day, in various press conferences. It is seen that on some months the CEB has mopped up over 75% of this scarce resource , just to pretend that they are able to minimise the power cuts of their own making. Even though the amount of oil includes partly, furnace oil and heavy oil, they too consume dollars which could have been used for import of diesel essential particularly for transport.
While the ministers and the government in general are also to be blamed for this situation , leaving the decision making to the CEB, which has absolutely no compunction in driving the country to bankruptcy, They have already done this by running up a loss of over Rupees One Trillion over the last decade and are well on the way to adding a further trillion this year and next alone. The net effect has been the disaster we are experiencing now. Under these circumstances it is inescapable that the CEB would need immediate restructuring with strict conditions of accountability and adequate competition which has proved to be of immeasurable value in the telecom sector. The worst aspect of the current total mindless prodigal waste is that this is mostly impacting the balance of payments due to the immense amount spent on import of oil and coal for power generation. If not for this lopsided decision of trying to keep the lights burning, without any consideration of the great impact it would make on the transport sector, the present crisis would have been much milder.
This once more highlights the point I made in my last article , that Sri Lanka’s Energy sector is truly a “Headless Chicken” without any vision or direction and most damagingly no accountability. No one seems to be able to critically evaluate the sectors which must receive priority for the allocation of the dwindling foreign exchange. It takes only the minimum amount of intelligence to decide that the priority should be for those sectors which have some chance of earning back the foreign exchange spent. Obviously, even that level of intelligence cannot be expected from our leaders as seen in the handling of all other sectors as well. Under these conditions it would be too much to expect them to have even looked at the electricity consumption by the different sectors as shown below.
Fig 3. Share of Electricity Consumption Amongst Sectors ( CEB Statistics)
Only a part of the consumption by the Industrial sector and may be a fraction of the bulk sales could be expected to meet these criteria.
The Domestic + General sectors consuming over 60% of electrcity are not contirbuting directly to the economy or export earnings
But the government’s interest may have been to provide lights at any cost to the other sectors for political expediency, ignoring the havoc it would create, if they had even thought about it.
It is 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 May. However, that euphoria was short lived and as seen in the second chart , where the generation has reverted back to the unfathomably mindless behaviour with oil based generation contributing over 33 % of the total. 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.
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.
On the other hand depriving the transport sector of the only fuels they are 100% depended on, is totally inexcusable and has already caused irreversible damage. One would say that this lapse is the single most damaging cause for the total loss of confidence on the government by all segments of the people as evidenced by the recent survey by a research group.
The purpose of this article is to draw the attention of the new Minister of Power and Energy , who fortunately has the responsibility for power supply as well as supply of transport fuels, to critically examine the above situation and try and arrest and hopefully reverse the current disaster , as early as possible and salvage what little we can of the economy and the well being of the people.
As such the following realities which are obvious and we hope that the Minister will make the urgently choices based on them, however hard they are if we are to see a resolution of the transport fuel crisis.
The limited oil supplies should be directed to trasnport sector as prority , the lack of which has direct negative impast on production as well as transport of esential goods directly affecting social life and well being.
The use of 82% of oil by private vehicles is unsutainable
Busses and trains carrying 50% of the passengers using only 5% of oil must be kept supplied without shortage.
Clear priority needs to be given to industries and other sectors which earn foreign exchange
The CEB engineers have been so kind as to warn us that there will be more hours of power cuts if adequate diesel and furnace oil are provided so that they can add few billions more to the loss. We can only hope that they would condescend to earn their living at least now, by facilitating the fast track development of the renewable energy sources for power generation, instead of trotting out lame excuses.
May the Minister have the courage to declare that Sri Lanka would no longer operate any oil based power plants , except perhaps those which can operate on furnace oil and naphtha, produced by our own refinery , for which the supply of crude oil must be treated as a priority for many reasons.
Say no to LPG !
In the total energy scenario, or shall I say today’s ‘polim’ culture, the LPG queues take much more prominence than the relative percentage of energy mix . Naturally being so close to the day to day needs of cooking energy, the emotions are running high. Fortunately a ready alternative is available and has been addressed in a different article accessible on https://www.bioenergysrilanka.lk/an-opportunity-behind-the-lpg-crisis/ It only requires minimal intervention by the state by promoting the offered solutions as an alternative to staying in long queues without any guarantee of receipt of a cylinder of LPG.
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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