Features
Mess in energy sector
By Eng. Parakrama Jayasinghe
parajayasinghe@gmail.com
Over the years, I have published articles, originally addressing particular segments of the energy sector, in the hope of some sanity emerging in the sector in the broader interest of the consumers and Sri Lanka in general. But, of late, I have tried to focus on the entire sector, which is vital to the national interest by the very nature of the Sri Lankan energy scene and its ramifications that are unfolding. A major flaw in the thinking and actions of the energy authorities is their inability to understand that the Energy Sector is not limited to Electricity, but spans a much wider scope. Focusing on individual segments is a recipe for disaster, which has been proven more than once and are staring in our faces right now.
A few of these articles are listed below, which is only a small fraction of all I have published:
CEB wants to be a follower of old technology – August 2018
Losses due to blockage of RE Projects
– February 2020
The Origin and Way out of the Energy Crisis
– April 2019
The Sri Lankan Energy Sector – A Mill Stone –
August 2023
The focus on particular aspects individually, which is the present practice, is not logical for a visionary and sustainable development and maintenance of this vital sector of the economy. The responsibility of the two major sectors of Electricity and Petroleum being under a single Minister has not yielded the desired outcome.
I feel obliged to provide some justification for the events that led to my conclusion and the validity of my title for this article, to pre-empt the loud objections that are bound to be levelled against me, by those whose noses would burn in recognizing their culpability of taking Sri Lanka to this abyss.
A cost reflective electricity tariff?
The massive hike in consumer tariff in February 2023 was the most socially-insensitive proposal. Fortunately, it was corrected somewhat in the July revision. But everyone is apprehensive about what will happen in January 2024. This massive hike, touted as a cost-reflective tariff, obviously at the behest of the IMF, was supposed to be an essential adjustment to make CEB financially independent of the annual rescue moves by the Treasury (read rescue by the consumers, who have been carrying this burden indirectly year after year). But did this happen?
We see news reports on the CEB demanding further tariff hikes immediately, purportedly to avert losses for the current year, too, amounting to 50 Billion rupees or more. So, who will be held responsible and accountable for this highway robbery?
The answer is obvious, judging by the past practices. Who should be held responsible for running up a financial deficit of near a trillion rupees over the past decade, all of which were passed on to the public with no one held accountable or made to feel any slightest pain of their own?
Continued dependence on Emergency Power
One may think the need for dependence on expensive emergency power occurs only in case of emergencies. But whoever heard of adding emergency power as a component of future energy plans? What price the least-cost option being the primary principle of the 20-year-long-term generation plan? If that is the only solution that can be offered by the planners or the designers, they lack competence to continue to serve in such positions. Even more damaging is the fact that those who are supposed to govern the sector, both at the CEB and at the Ministry, accept such retrogressive and damaging solutions to meet the national electricity demand, which is predicted many years in advance. A substantial amount of emergency power, at highly enhanced cost, has been approved by the Cabinet and even by the PUCSL for the year 2024 already. Obviously, no one is demanding nor the CEB is offering any viable alternative. The easy solution has been to pass the burden of the added cost on to the public, as has been done for years in the past. Uninterrupted supply of electricity 24/7 irrespective of cost?
The unprecedented power crisis in early 2022 made Sri Lankans realise the dangers of over dependence on imported resources for energy. The two major streams of energy demand ground to a halt for want of foreign exchange to pay for imports. In parallel, even the kitchen fires went out due to lack of LPG. Everyone had to accept the many hours of power cuts and long queues for fuel. The efforts of the government to mitigate the crisis must be appreciated. But the consumers are burdened with tariff hikes as the price.
However, the role of any responsible government and those in authority on the entire energy sector, regardless of which Ministry they serve under, should be much more visionary and proactive, at least to minimize this danger in the short term and then eliminate it entirely in the medium term.
The developments in the energy sector, worldwide, and the much-delayed recognition of the bounty that mother nature has bestowed on Sri Lanka, should have been the greatest incentive for this process to be expedited. The fact that on some days Sri Lanka was powered with zero dependence on oil-based generation and much-reduced use of coal as well as the drain on exchange for import of transport fuels saw a significant reduction was the best driver for a government with the longer term interests of the country at heart to initiate and follow that path. The people would have come to terms with a two-and-a-half-hour power cut and the rationing of fuel longer if they had been convinced that there was plan to achieve energy security. (See figure 1)
However, the Ministry of Power and Energy, or the state institutions under it, does not seem to have recognised this as their responsibility or has chosen to ignore it entirely. Instead, its actions appear to be driven purely by a political agenda. The present practice of ensuring an uninterrupted electricity supply by using the most expensive option of oil-based power, and removing all controls on supply of transport fuels with no consideration of costs, both in rupees and even more prodigal expenditure of dollars that we don’t have, is deplorable.
The public is to face a heavier burden, going by the media reports appearing, which predicts a loss of over Rs 50 Billion for the CEB, in 2023, in spite of the massive hike in consumer tariff. The increase in the country’s foreign debt due to this kind of expenditure is not yet known.
Is Sri Lanka helpless?
In spite of the many problems and difficulties, one area where Sri Lanka has been endowed with ample resources is energy. While issues of costs and lack of funds and technologies prevented harnessing this bounty in the past, the circumstances have changed in our favour during the past decade or so. While some enterprising individuals and companies came to the forefront and practically demonstrated this viability, several state organisations with monopoly rights and the lack of governance by the Ministries and the government have landed Sri Lanka’s energy sector in the present sorry state. It is being claimed in some quarters that Sri Lanka cannot raise the funds for renewable energy projects and does not have the technical capability to develop them. But this is an untruth aimed at bringing in foreign entities to the sector. Even a 100 MW solar plant consists of about 175,000 of individual solar panels, a pair of panels with capacity 1 kW being viable as a unit. There is absolutely no reason to lump them together to capacities over say 10 MW just to shut out the local entrepreneurs and technology companies and add the long transmission lines as an added infrastructure requiring more investments by the state. In case of wind power, the unit size has grown up to about 5.0 MW only. The success of the Suryabala Sangramaya, which has already led to the development of over 700 MW of solar energy to the grid is a case in point. That source alone could provide 5,000 MW of generation capacity and 7,000 GWh of energy to the national grid, if the CEB takes it upon themselves to champion it rather than finding excuses to deter the potential “prosumers”. ([RJ4])
There is a need to attract foreign investments and tap the many green funds already available. But these must be done on our terms. Any attempt to pay dollars for the supply of electricity for our consumption cannot be accepted under any circumstances.
Are we to buy our solar energy with dollars?
It is feared that this is what may have been agreed with the Indian investor for the project in Mannar and Purnaryn, the agreements on it being totally in violation of the provisions of the Electricity Act. But all state officials are bending over backwards to help this company; they are even obstructing the processing of projects nearby by local developers.
(Sri Lankan energy sector as millstone around nation’s neck
https://island.lk/sri-lankan-energy-sector-as-millstone-around-nations-neck/)
These resources are sufficient to meet our renewable energy needs forever and earn foreign exchange. The much-talked about power link to India is technically and financially viable, provided it is designed and executed to meet Sri Lanka’s interests and not as part of the ongoing privatization programme. The government’s move to hand over large tracts of lands to foreigners cannot be accepted under any circumstances.
Under these bleak conditions the award of the 100 MW solar project in Siyambalanduwa to two local companies provides a ray of hope. As we proposed some time ago, it should have been a 4 x 25 MW system, which could have been funded locally.
It is time Sri Lankans insisted that the energy sector remain an indigenous industry geared to develop its own indigenous renewable resources so as to ensure long-term national energy security and also to be a major driver of economic growth. Our capability to do so has already been proven. (See Figure 2)
It is the duty of all chambers of commerce and industrial associations and most importantly for the media to highlight this without delay, before our resources are handed over to foreigners just for the benefit of the few individuals or companies.
The recent court ruling on the Solar Project in Vavuniya exposes the mismanagement and misuse of powers by the two state institutions mandated to develop the sector, rather than obstructing it. The company concerned deserves praise for its perseverance and eventual success of the legal battle.
One may also recall that the CEB has blocked the development of all renewable energy projects from 2016, citing a lacuna in the Electricity Act of 2009, amended in 2013. This did not deter them from allowing the Indian company to develop 500 MW wind and solar without any tender procedures.
Let us hope that the above judgement and some favourable changes seen in the management hierarchy of the CEB would lead to the much-desired paradigm shift in the mindset and actions of those mandated to serve the country and not individual interests.
Conclusion
We have ample indigenous renewable energy resources to meet all our energy needs, and surplus can be used to earn foreign exchange.
At a recent public lecture, the newly appointed General Manager of CEB, presented the essential elements that should be observed in a proper Energy Market…
Freedom of Choice
Economic Efficiency
Social Equity
Transparency
We hope that he will have the courage and strength to ensure that these principles are adopted in the CEB that he now heads.
I have confined my comments to the electricity sector. The bigger culprit, which is the transport energy, needs a separate analysis. Meanwhile, the readers are requested to refer my previous below.
https://www.bioenergysrilanka.lk/transport-policy-and-vision-for-the-future/[RJ5]
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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