Features
New Fortress Energy, Sri Lanka, and Planet Earth
By Dr. Asoka Bandarage
On September 17, New Fortress Energy (NFE), a US-based energy infrastructure company, signed a momentous legal agreement with the Government of Sri Lanka (GOSL). The signing apparently took place in the dead of the night, at 12.06 a.m., and the foreigner who came for the signing swiftly returned to the US on a flight at 2 a.m.
The back-door deal allows NFE to build a terminal for liquefied natural gas (LNG, natural gas kept in a liquid form for ease of transport) off the coast of Colombo. It also enables NFE to purchase, for USD 250 million, the Sri Lankan Treasury’s 40 percent stake in West Coast Power (WCP), which owns the 310 MW Power Yugadanavi Plant in Kerawalapitya, a contributor to the national electricity grid. NFE would have the right to build a new LNG terminal aiming to increase output to 700 MW, with a target of 350 MW by 2023. NFE will initially supply an estimated 1.2 million gallons of LNG a day to the GOSL, with expectations of significant growth as new power plants become operational.
This complex deal, involving a floating LNG terminal (also known as a Floating Storage Regasification Unit, or FSRU), power plants and energy sales estimated at six billion USD, is likely the largest contract the GOSL has ever made with a private company. It also threatens Sri Lanka with a loss of hundreds of millions of dollars and a serious compromise of the country’s energy security.
Interestingly, the Chairman and CEO of New Fortress Energy is Wes Edens, the American billionaire deemed the ‘new king of sub-prime lending’ by the Wall Street Journal in 2015 (and a ‘slumlord’ by community protesters in Milwaukee). He is also a big donor to the Democratic Party and a co-owner of the Milwaukee Bucks basketball team. Celebrating his deal with pandemic-ravaged, debt-ridden and economically desperate Sri Lanka, Wes Edens said:
“This is a significant milestone for Sri Lanka’s transition to cleaner fuels and more reliable, affordable power. We are pleased to partner with Sri Lanka by investing in modern energy infrastructure that will support sustainable economic development and environmental gains.”
Local Opposition
In Sri Lanka, however, the united trade union alliance, other mass organisations, as well as several Ministers and Members of the Parliament, are protesting the agreement. They are calling for its abrogation on grounds that it threatens national political, economic and energy security.
The Ceylon Electricity Board Engineers’ Union (CEBEU) is championing the resistance and points out that the agreement violates the government’s own National Energy Policy, approved in August 2019. The policy clearly states in strategy 3.1.2 that “considering the impact to the national energy security, operation of the first LNG terminal and LNG procurement shall be kept under state control.” The policy also states in 3.8.2 that the “procurement of plant, equipment, crude oil and other fuels as well as power purchase agreements and similar concessions, will be made through a streamlined competitive bidding scheme ensuring transparency and accountability.”
The CEBEU argues that the NFE’s ‘unsolicited proposal’ contradicts “the procurement policies and principles” of the National Energy Policy and the Sri Lanka Electricity Act. As CEBEU President, Saumya Kumarawadu explains, the signing of the NFE agreement during the ongoing bidding process has completely disrupted the transparent and formal procedures to procure an LNG terminal facility and pipelines through competitive offers from other parties, more favourable to Sri Lanka.
The CEBEU fears that the agreement would result in the Ceylon Electricity Board, the long-time provider of electricity to the country, losing its ability and mandate to supply the cheapest source of power under its least-cost operating guidelines. The CEBEU has extensively examined the pricing formulas for LNG supply in the NFE agreement, and considers them “very much disadvantageous to Sri Lanka.” They cite offensive conditions of the agreement, including:
- “Inclusion of very high Take or Pay (TOP) gas volumes than the actual minimum requirement of the country with strict conditions that NFE should be paid irrespective of whether the contracted volumes are consumed or not.
- Contract term initially for five years with almost definite compelled further extensions.
- Exclusive rights of supplying LNG to Sri Lanka electricity generation.
- NFE being granted all tax exemptions/benefits/investment incentives available under Sri Lankan law.”
Sri Lankan activists argue that under the NFE agreement, the supply of LNG may not be limited to just the electricity sector but could also extend to other sectors, such as transport and domestic usage, giving a foreign company enormous control over the country. As the CEBEU points out:
“The main aim of NFE is not the mere USD 250 million investment in shares of WCPL but the securing of multi-billion dollar LNG supply contract without a competition and with exclusive rights of supplying LNG to the whole country with an undefined extended duration beyond five years with massive controlling power on the country’s national security and energy security and with guaranteed exorbitant profits.”
Given the Asia-Pacific Strategy of the US to control the Indian Ocean, including strategically located Sri Lanka, local activists point out the dangers of complete dependence on the US for LNG supply to local power plants. Activists lament: “They [the U.S.] will not let us off the hook once they establish their foothold here. We are in deep trouble.”
A Press Release by the National Joint Committee of Sri Lanka of August 2, 2021, points out that the current GOSL was elected into office with a massive mandate to safeguard national resources and strategic assets from neocolonial exploitation.
The current economic crisis and external political pressure should not be excuses to sell the country for short-term political and economic expedience. This, of course, is the situation for many countries, not only Sri Lanka.
NFE and LNG in global context
NFE is a global company with an expanding “network of liquefied natural gas (LNG) terminals, power generation facilities and natural gas logistics infrastructure,” around the world. With operations in North America, Europe, the Caribbean, Central America, and Africa it has positioned itself to be the leader in the world’s transition to LNG and to “light the world.”
As in Sri Lanka, NFE presents its global LNG projects as “clean, cheap and safe alternatives to coal and oil.” However, activists (and energy experts critical of ‘greenwashing’) question its assumptions and practices. As the Natural Resources Defense Council (NRDC) points out in its report ‘Sailing to Nowhere: Liquefied Natural Gas is not an Effective Climate Strategy’, expansion of US-produced LNG “could have enormous environmental impacts and costs for decades to come.”
LNG production involves extensive use of hydraulic fracturing (‘fracking’), the process of injecting liquid at high pressure into subterranean rocks to force open fissures and extract oil or gas, and LNG processing can increase air pollution and contaminate water supplies, harming human and environmental health.
The fracking-driven expansion has transformed the US from a gas importer to a gas exporter, aggressively seeking overseas markets to sell its oversupply. While natural gas is considered a ‘bridge fuel’ towards sustainability, with lower carbon dioxide emissions than coal or oil, the extraction, processing, and transport of gas emits greenhouse gases, including through leaks and releases from wells, pipelines, storage and processing facilities. Methane, the principal component of the gas, is the second biggest driver of climate change, and gas production systems are the second largest emitters of methane in the US. The NRDC concludes that:
“…using LNG to replace other, dirtier fossil fuels, is not an effective strategy to reduce climate-warming emissions. In fact, if the LNG export industry expands as projected, it is likely to make it nearly impossible to keep global temperatures from increasing above the 1.5 degrees Celsius threshold for catastrophic climate impacts.”
The Public Accountability Initiative, a nonprofit organization that researches connections between corporate and government power, argues that “Financial firms like Wes Edens’ New Fortress Energy are critical players in propping up the fossil fuel industry, which is responsible for our current climate crisis.”
Ecological alternatives
Social and environmental activists also point out that, while NFE and other power companies seek to make huge profits from LNG, flooding energy markets in countries such as Puerto Rico and others in the Caribbean with ‘fracked gas’ will not build resilience. Instead, they call for localised renewable energy sources, such as rooftop and community solar and distributed microgrid technologies, which are more sustainable and more resilient to natural disasters such as earthquakes and hurricanes than centralised fossil-generated power.
Sri Lanka, like Puerto Rico, is an environmentally challenged island that needs to heed these warnings.
The recent environmental devastation, off the coast of Sri Lanka, caused by the explosion of the X-Press Pearl ship carrying toxic cargo, should provoke similar demands for action. For example, strict regulations on the maritime transport of toxic substances, including LNG, are desperately needed to avoid further disasters.
If the Democratic administration in the US is genuinely committed to mitigating climate change, it needs to move away from the global export of dangerous and controversial LNG. Instead, economically struggling countries and regions like Sri Lanka and Puerto Rico need to be allowed, with their sovereignty intact, to develop truly clean, safe, and cheap energy sources, such as solar and wind power, that uphold local and bioregional paths to environmental and human protection.
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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