Features
IS THE CHAIRMAN OF THE PUBLIC UTILITIES COMMISSION OF SRI LANKA A HERO OR VILLAIN?
By Sanjeewa Jayaweera
Currently there is an ongoing tussle between the Power & Energy Minister Kanchana Wijesekera (KW) in one corner and Janaka Ratnayake (JR), the Chairman of the Public Utilities Commission of Sri Lanka (PUCSL), in the other. As a result, the Minister is on his own, whilst JR is supported by the CEB Engineers Union, CEB Trade Union Alliance, Electricity Consumers Association and pretty much the rest of the country!
It is over the proposed electricity tariff increase effective January 2023. The Minister is on record that if the country is to enjoy an uninterrupted power supply in the forthcoming year, then a significant rate increase is required. That the increase in tariff is being proposed just a few months after a substantial rise, along with an increase in direct and indirect taxes and hyperinflation, is a justifiable cause for concern.
However, what is being forgotten is that there was no tariff increase between 2014 and August 2022 despite the rise in costs. The two-state banks have funded those losses placing a great deal of stress on those banks vis-a-vis their depositors. I have also read that the Independent Power Suppliers have not been paid around Rs. 150 billion for power supplied.
None of those criticizing the proposed tariff increase today demanded a cost-reflective charge in the intervening years. Those who were members of the PUCSL during the period 2014 and August 2022 stand guilty of dereliction of their duty. I believe the Act requires the PUCSL to adjust the tariff yearly according to the cost incurred by the Ceylon Electricity Board (CEB). No doubt, they succumbed to political pressure exerted by those in power and did not discharge their duties as an independent regulator.
To the credit of the minister, he is championing a cause that will not make him popular. Quite a contrast from those who have previously held that portfolio.
A quote that sums up our predicament “Electricity is something that people cannot live without in the modern day. Without it, life will be so much more difficult and slow. Therefore, people need to learn how to value electricity and learn how to produce it from renewable sources (Carolyn Anderson). See Table 1
Yes, we have all gotten used to flicking a switch, and getting our electricity. At least, that was the case in Sri Lanka until the beginning of 2022. Even poorer households are used to having electricity on demand, whether to light a bulb in the evening or watch television for entertainment. But, of course, any power interruption angers people. Those who govern us and are responsible for making challenging and, at times, unpopular decisions pandered to our wishes to keep us happy. So whenever hydro-power was insufficient, the CEB was asked to provide uninterrupted power using expensive fossil fuel. But, unfortunately, the incremental cost of such generation was not recovered from the consumers. So as consumers ( domestic and commercial), we got used to bad habits.
Now that the chickens have come home to roost due to the economic Armageddon we are in and the need to introduce a cost-reflective power charge is causing significant heartburn. I am not underestimating the financial challenges that a tariff increase will cause for most domestic and commercial consumers. However, we also need to sit back and reflect on whether, as citizens of an impoverished nation, we have a right to demand uninterrupted power at below cost.
There is a trust deficit in the government, or should I say there is absolutely no trust! For example, the minister has said that a unit of electricity will cost Rs. 56.90 if the CEB is to supply uninterrupted power in 2023. However, projected cost invariably involves various assumptions. For example, if CEB assumes that rainfall will be less than what we have been blessed with in the last two years, it is a fair assumption.
However, the minister must be blamed for not sharing the assumptions made by the CEB in a public document. Had he done so, it would have enabled various independent power experts like Dr Tilak Siyambalapitiya and others to confirm that the projected tariff accurately reflects the cost. Suppose the revised tariff is proven excessive at the end of the year, there can be a refund made to the consumers, or the following year’s increase can be reduced, or indeed the surplus is used to settle the bank loans and the independent power supplier dues. Ultimately CEB customers should not expect the state bank depositors to bear the loss.
I have reproduced the CEB bill that has analyzed the charge levied to my residence based on the consumption of 299 units in a particular month. According to the CEB, I have been charged Rs. 7,391.17 over the cost. But, unlike certain parliamentarians, I settle my bills in full.
I now realize that in addition to paying a significant amount as income tax every year, paying for private health and educating children privately, I am also being asked to subsidize many customers of the CEB.
Whilst I subscribe to the view that the better-off need to pay taxes to support the less well-off, this responsibility appears to be overburdening some of us. I, therefore, support the statement made by the minister that all consumers, including places of worship, are charged a uniform rate of RS. 56.90 per unit, and the government makes a cash transfer to those entitled to a subsidy due to their lower income. However, I am sure many will not be entitled to the cash transfer and will still need to pay the higher rate. It is certainly not an easy discussion, but ultimately we can no longer continue to operate state enterprises at a loss. See Table II
I cannot understand why Buddhist temples and Christian churches have demanded a lower rate. Driving around, you observe many temples and churches that are excessively illuminated, contributing to the wastage of electricity. Similarly, hotels badly impacted by the revision of tariffs are also significant electricity users. Unfortunately, architects and owners of hotels have not designed their properties with energy conservation as an essential operational requirement.
What of the actions of the Chairman of the PUCSL? Is it his duty to consider the fairness of the tariff as applicable to religious institutions and the poorer segment of the population as opposed to ensuring that the tariff is in line with the cost of supplying electricity by the CEB?
There is no doubt in my mind that JR thrives on publicity through the media. Last year in the period leading up to the lengthy power cuts, there was confusion concerning the duration of power cuts, as pronounced by the CEB Engineers and the Chairman of the PUCSL.
When the Chairman of the PUCSL publicly contradicted the CEB engineers, the consumers were confused and unable to plan their activities, not knowing the exact length of the power interruption. However, after a few days, the CEBEU pronouncement proved to be correct, and there was a lingering doubt about whether the confusion was a result of the protocol as to who was authorized to announce the duration of the cuts as opposed to the actual duration of the power cut.
On a lighter note, many a joke is being made of the attire of JR, which includes a waistcoat which is now pretty uncommon even in countries where it originated. Is it part of his everyday attire, or only for media conferences?
As an independent regulator, I believe that the PUCSL needs to deal with facts concerning the cost of electricity generation and not indulge in political rhetoric.
The Ceylon Electricity Board Engineers Union (CEBEU) and The Ceylon Electricity Board (CEB) United Trade Union Alliance have also been at the forefront of criticizing the revision of rates. However, their actions can be deemed to be hypocritical.
The CEB Engineers have been criticized for lengthy delays in approving the connection to the grid of solar-generating power panels for both commercial and residential customers. Given the low-cost option of generating solar power, there is no justifiable reason for such delays.
The recent disclosure and publication of the monthly wage bill of the CEB should be an eye-opener as to how consumers are being made to pay for a wage bill that seems outrageously excessive. In addition, some of the costs need an explanation. For example, despite the CEB being significantly overstaffed, the monthly overtime bill is approximate Rs. 660 million, and the monthly reimbursement of loan interest is around Rs. 180 million. What it represents is anybody’s guess. See Table III
As is the case in most problematic issues bedevilling our country, there is no simple or logical explanation. Yet, when trying to identify the culprits, the politicians head the list for lacking in vision and not taking difficult and unpopular decisions to ensure that electricity is priced on a cost-reflective basis and investments for increased generating capacity on the least cost basis are made timely.
Former President Sirisena canceled the setting up of a coal power plant which had been in the planning stage for five years with no apparent alternative. The decision was as wrong as banning the use of chemical fertilizer. We are paying dearly for both mistakes.
We, the electorate, are to blame for continuously electing incompetent politicians lacking in visionary leadership. The trade unions, particularly the CEBEU, are to blame for holding the country to ransom by the threat of industrial action and preventing much-needed reforms.
As I write this article, there is a news item stating that the President has asked for a report from the Chairman of Sri Lankan Airlines and the Chairman of the Ceylon Petroleum Corporation as to why bonuses were paid despite both organizations posting significant losses. The sad irony is that the taxpayers of this country ultimately bear these costs. Unfortunately, it seems that being profligate with others’ money for personal popularity is the norm in our country.
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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