Features
Making a crisis into a golden opportunity
Electricity instead of fossil fuel for transport vehicles
by Engineer Parakrama Jayasinghe
Far reaching proposals for the future of our Energy Sector has been published with the Presidential Press Release dated June 13, 2021. The direction indicated is congruent with the presidential policy declaration “Vision for Prosperity and Splendor “. With the Covid 19 crippling the economy, the country is becoming even more conscious that innovative thinking and decisive action has to be introduced to meet the challenges. The foreign reserves are falling resulting in the depreciation of the rupee and bringing with it a rising cost of living to levels endangering the social and economic stability of the country. Sri Lanka is fortunate enough to have the natural resources, human resource and the resilience to cope, but a determined yet humble approach and firm policies, accompanied with unstinted hard work and discipline is needed.
In the strategy for a workable holistic Energy policy, not limited to electricity, the transport sector will need the maximum attention. Please refer to the two links of the Island newspaper given below for detailed information, where this subject was dealt with earlier.
The state of finances in the CEB and the CPC
The finances in both these state owned enterprises are highlighted in the Press Release. It is evident that if left unchecked, it could very well lead to drag down the two state banks that over the years have bankrolled these two institutions.
There is no dispute that the CEB, is bleeding the national economy, but while the debate would continue as to how this can be corrected, the much more dangerous and tragic situation has got less attention. That is the tremendous drain on foreign exchange due to the complete dependence on imported fossil fuels for our transport. Sri Lanka spent some 7.5 Billion Dollars for the import of oil back in 2010. But although the import bill in dollar terms came down to Four Billion Dollars by 2020, the rupee equivalent remains at Rs 760 Billion, due to the continued depreciation of the rupee which appears to be inexorable. The trap mankind and Sri Lanka in particular has fallen into, remains just that, a trap, in which we wallow without making any attempt to escape.
Whereas, electricity which provides only 11% of our primary energy needs, fortunately has some contribution from our own indigenous sources of energy, down to 35% now from a high of 95% in the 1990s. However, the transport sector is 100 % dependent on imported oil. The faint silver lining if I may say so, of the Covid pandemic affecting the whole world, kept the oil prices low and gave some measure of relief to the beleaguered rupee up to now. But looks like the honeymoon is over with the oil prices on an upward trend already past $ 60. The highly volatile nature of the world market price of crude oil or any other fossil fuel over which Sri Lanka has absolute no control is shown below.
Isn’t it pure insanity to make plans and forecasts for transport, a most important national need, based on such a variable and uncontrollable input? This viewed along with the change in parity rate, which with minor fluctuations is on an inexorable upward trend, tells the story. Fortunately, we are now offered an alternative which was not available even a few years ago.
Are we ready to accept this challenge ?
I contributed an article back in March 2020, when the oil prices were quite low, down below $ 30 per barrel, suggesting not to be complacent and make plans for a paradigm shift in the Transport Policy and make use of this opportunity. It did not receive any attention from the authorities.
The whole world is moving away from the use of petrol and diesel for transport. Even General Motors which killed the first Electric Car in the early 1960s, has plans to go all electric by 2025. So have all the major automobile manufacturers and governments with firm plans to totally electrify the transport within this decade itself. The International Energy Agency (IEA) has predicted that all vehicles manufactured will be electric by the year 2035.
Does it make sense that Sri Lanka allows to set up a factory for the manufacture of petrol driven vehicles ignoring these world trends? There are also moves to spend 2.5 Billion dollars to construct a refinery in Hambantota. Also plans are underway to double the capacity of the refinery at Sapugaskanda. These decisions would have been highly appropriate and visionary moves, if taken and implemented at the right time, which was at least a decade ago.
The world has changed drastically during this past decade, particularly in the energy sector and the transport vehicle technologies.
The over-dependence on imported sources of energy in the recent decades, would definitely lead to problems of supplies, even if we have the funds to pay for them. In the meanwhile, what is important to the Sri Lankan economy and the consumers is the price per liter in Sri Lanka Rupee terms, which will continue to go up, irrespective of the world market price in US Dollars.
The huge import bill on oil itself is largely responsible for the continuing depreciation of the rupee to a very large extent, now exceeding over 6% annually. The recent price hike of the petroleum fuels is therefore not unexpected.
Although the Yahapalana government effectively scuttled the baby steps being taken for the electrification of the light vehicle fleet, the advent of the Covid -19 pandemic has at least led to the wise decision to curtail the import of vehicles, making a virtue of necessity.
It is recommended that once the import ban is lifted only electric vehicles and perhaps for some years hybrid vehicles should be permitted to be imported with strict controls to limit the imports to the bare necessity.
However, it must also be noted that the last energy policy published by the previous government in August 2019, includes a target of reaching 25% electrification of the light vehicles by 2023. A good enough starting point.
Why Electrify Transport?
No doubt Sri Lanka has a back to the wall battle at this point of time, due to the double whammy of increased price of oil and the depleted rupee, to try and reduce the dependence on imported oil, purely on financial considerations at present. But there are very valid scientific, environmental and commercial reasons why electrification of the transport system is the wise and obvious way for the future.
As already mentioned all the major automobile manufactures have plans for total departure from the use of Internal Combustion Engines (ICE) using petrol or diesel in their future vehicles. As such before too long Sri Lanka would have to depend on the laggards who will continue with the ICE engines and face the many problems that would ensue, such as higher costs and lack of spares supply etc.
However, the ground reality of the great efficiency of converting the energy input to useful energy to drive the vehicle forward which is as high as 85% for an electric vehicle, is the most important factor that justifies the changeover. This has to be compared to the mere 15% efficiency of conversion for a petrol or diesel engine driven vehicle. The reality of gaining from this wonderful boost of efficiency was denied until now till the cost and durability of batteries and the overall cost of the electric vehicles came down to the present values. This change has been rapid and continues on the downward trend.
We in Sri Lanka have the added advantage of being able to use solar energy, which does not cost anything other than the initial installation cost, to charge the vehicles, instead of spending valuable foreign exchange to import the fossil fuels. The author has adopted this strategy and would highly recommend this option to all EV owners.
The Way Forward
The starting point of course is a firm national policy, made mandatory for compliance. Even the institutions under line Ministries often ignore such policies in their day to day programs. Therefore if at this late stage, Sri Lanka takes the following steps, it will convert a Crisis to an Opportunity.
1. Review the policy statement “4.5 Enhancing Self Reliance Section 5f” in the National Energy Policy Gazette No 2135/61 of August 9, 2019, as a national target and assign responsibilities of achieving this target to the relevant agencies. And expand same, to a time bound target of 100% electrification of transport.
2. Remove the punitive duty rates imposed on the import of Electric Vehicles which came in to force on April 1, 2019. These nearly doubled the price of the EVs coming into the country destroying the small growth seen till then. Follow the example of other countries including India, in providing subsidies for purchase of/conversion to EVs for the 2 W and 3 W segments
3. Remove the punitive duties and taxes on the import of deep cycle batteries, imposed on the erroneous notion of protecting local battery industry, which does not manufacture any deep cycle batteries, suitable for EVs and r Solar Energy storage
4. Continue the ban on import of all vehicles at least for three years more. After that allow only electric vehicles or hybrid vehicles
5. Initiate an immediate program to convert existing ICE vehicles to EVs with suitable incentives
The following chart points to the pot of gold at the end of the rainbow if the last recommendation is acted upon. Based on a target of converting at least the existing fleet of light vehicles by year 2030 to EVs, the potential savings by reducing the petrol imports is huge.
The June 13, 2021 Press Release from the Presidential Office makes very interesting reading. It appears that the penny has dropped at last on the sensible actions to be taken in the future. If the Government is to walk the talk, the first action to take while implementing the recommendations above is to cancel any plans to expand the capacity of the Sapugaskanda Refinery using our funds or even loans. If any foreign investors plan to put up any new refineries using their funds without any guarantees of purchase by Sri Lanka, or any other incentives, that could be considered.
The many ways that this change could benefit the Sri Lankan economy, environment and health is far too many to be included here. But even without such detailed analysis, anyone with common sense can readily understand the timeliness and the value of embarking on this change without any further delay.
I am pleased to end this revised article with a hope of a new dawn.
Eng. Parakrama Jayasinghe
Council member
Bio Energy Association of Sri Lanka
Solar Industries Association of Sri Lanka
Sri Lanka Forum for Sustainable Consumption and Production Forum
E Mail: parajayasinghe@gmail.com
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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