Editorial -

Towards the end of the last century -- after nearly 40 years in business -- the Ceylon Petroleum Corporation (CPC) had an army of employees with no desks and no work; just on the pay-roll doing the political work of their patrons. In 2003, the then UNP Government tried to rectify all this. Whether it went about it the right way or not is always debatable, but the aim to change the status quo, and turn the CPC into an institution that was not a continuing drain to the public purse was not in doubt.

The UNP regime set about the process by part-privatising the white elephant. It decided to split the monolithic monster into three -- the CPC, the Indian Oil Corporation (IOC), and a subsequent third player.

After long and tedious negotiations supervised by PERC (the Public Enterprises Reform Commission) headed by none other than Dr. P.B. Jayasundera, the current Secretary to the Treasury (Secretary, Ministry of Finance) on January 28, 2004 agreement was reached on two grounds.

One was called the Sale and Procedure Agreement (which transferred one third of CPC's shares and its sheds around the country to IOC), and the other, the Common User Facility or CUF which gave IOC one third ownership of CPC's infrastructure like the Sapugaskande oil refinery

The price tag for IOC was put at US $ 80 million for both one-third shares. In addition, the IOC was arm-twisted by New Delhi -- on a request from Colombo -- to take over the 99 World War II oil tanks at Trincomalee even though it was not a commercially viable venture for it. This was meant to have strategic implications to check LTTE designs in the area, one of the moves of the then UNP Government that would have cost its leader Ranil Wickremesinghe the support of the LTTE at last November's Presidential elections.

In the meantime, as a result of different interpretations given to what was meant by a "subsidy", a dispute has arisen between LIOC(Lanka India Oil Corporation) and the Government, and while the matter is being re-negotiated, the Government has stopped paying LIOC, which in turn has stopped supplying fuel to the Sri Lankan public.The outstanding amount owed by the Government to LIOC has ballooned to US $ 80 million -- the same sum LIOC paid for the one third of shares of CPC.

Instead of going into some kind of arbitration proceedings, LIOC -- for reasons best known to it -- has agreed to re-visit the "Pricing Formula", in the 2004 Agreement possibly in a spirit of goodwill or due to intimidation, and the LIOC has agreed to advance the "Free Pricing" period with CPC that was to give a five year moratorium on under-cutting pieces.

Only the future will tell what consumers would have to pay when the "Free Pricing" comes into effect. It is estimated that petrol and diesel will go up by Rs. 10 a litre and kerosene by at least Rs. 20 a litre.

Now, this agreement reached with the Treasury has been kicked overboard by Prime Minister Ratnasiri Wickremanayake who had discussions with trade unions which were threatening strike action. The Secretary to the Treasury, who was present not only at the original PERC negotiations, but also the recent "Free Pricing" negotiations to break the deadlock with LIOC -- was also present.

What can be adduced from this is one of two things -- or maybe both. That the Treasury Secretary had to bow to trade union pressure or the Government does not know what on earth it is doing.

Petroleum Resources Minister A. H. M. Fowzie and Presideintial trade union advisor Bharatha Lakshman Premachandra are saying different things, with the Minister virtually accusing Mr. Premachandra of telling lies. The President, who should clear the air is apparently playing all things to all men.

The Prime Minister chairs a meeting with trade unionists and agrees to withdraw LIOC from the Trincomalee tank storage farms which is a subject in the realm of foreign policy, and the Foreign Ministry is scratching its head wondering what to do now.

Agreements are being reached, and tossed aside in gay abandon. The implications of this are that a document of the Government of Sri Lanka will not be worth the paper it is signed on as far as a foreign investor is concerned.

Best international business practices have been sacrificed at the altar of utter confusion at home, and the theory of "level playing fields" which a foreign investor would be seeking is dumped in the dustbin.

Our foreign investment at this rate will continue to be confined to massage parlours and laundered funds increasingly creeping in to purchase high value real estate and wobbly companies.

This trait of the Government's right hand not knowing what its left is doing has gone on for quite some time now. We hear different voices on war and on peace by a multitude of people given rank and title.

If these are meant to confuse the enemy, they are doing an excellent job, but the problem is they are confusing the friend even more.

The deafening silence on the part of LIOC makes one wonder if it is waiting to get the hell out of this chaotic country.