The judiciary and the executive appear to be heading for a standoff over further lowering of fuel prices as shortages countrywide created chaos this week.
Following Monday's order by a three-judge Supreme Court bench headed by Chief Justice Sarath N. Silva, the public, already burdened by the skyrocketing cost of living, awaited a further price drop. The Court had asked the Treasury to compute a formula where the tax and levies should not exceed 100% on the basis of a barrel of crude oil being US $ 56.5. This has brought a litre of petrol, now Rs 122 to just Rs 100, minimum selling price of a litre of petrol. With prices of crude at US 34 a barrel this week, according to this new formula, though the actual price of petrol should be further reduced, the Supreme Court has permitted the government to sell petrol at this minimum selling price of Rs. 100. However, there would be no change in the diesel price that currently stands at Rs 80 a litre.
This came after the Court received two different formulae from the Treasury Secretary. It accepted a formula which was calculated on the basis or the benchmark of US $ 56.5 per barrel and accordingly, said that price petrol should be fixed at Rs. 100 a litre. This is what the SC determination said:
"……we make a direction that the price of petrol be adjusted on the basis of the formula in Annex 'A' and that the selling price of petrol be reduced to Rs 100 per litre with effect from midnight on17.12.2008. An adjustment of the Excise Duty, Customs Duty, Port and Aviation Levy being an increase, should be effected in terms of Annex 'A' in the manner suggested by the Secretary."
The determination applied both to the state-owned Ceylon Petroleum Corporation (CPC) and the Lanka Indian Oil Company. The latter is a partnership between the Indian government-owned company, and the CPC.
Late on Friday night, heeding the SC determination, the LIOC announced that petrol would be sold with immediate effect at Rs 100 a litre. LIOC Managing Director Suresh Kumar said this was in response to the SC directive. He said his company had also conveyed the decision to reduce prices to its partner, the CPC. The LIOC imports its stocks from India and other sources. It does not obtain refined petroleum products from the CPC.
That welcome news was to receive wider public applause. However, the euphoria was short lived. Instead of obtaining petrol at a cheaper price, there was not one drop available. Just two days after the order by the Supreme Court, fuel stations countrywide had put up shutters. The CPC had directed its installations at Kolonnawa not to issue fresh stocks until further orders. On the other hand, distributors were also unwilling to buy petrol at the old price and sell it at a loss if there were reduced rates.
Hence, the Supreme Court's efforts to further alleviate the problems of the public were thwarted.
Significant enough, the Supreme Court held the view earlier that taxes and levies on petroleum products had been partly manipulated to cover up the scandalous hedging transactions. This was why it directed the Secretary to the Treasury to report to the SC last Monday on what exactly were the real taxes and levies for fuel products. After all, the SC through an earlier ruling on the hedging issue saved the government a staggering US $ 400 million (or over four billion rupees) by ruling that the amount not be paid.
The international consequences of such a move notwithstanding, the SC had thus saved for the government that amount and had only wanted a very small fraction of that be reduced from the cost of petrol. Moreover, this has also vitiated the government argument that consumers of petrol were largely a richer segment of the society. Therefore, it was claimed they were taking it from the rich to pay the poor. In reality, this was not the case. A majority of car users come from the middle class. Three wheeler-scooter taxis as well as taxis running on petrol are used even by poorer sections of society.
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| Want money for war: The president at an Army passing out ceremony at Diyatalawa yesterday. Pic by Sanka Vidanagama |
The delay in enforcing the Supreme Court order was to create some element of chaos. In many parts of the country, car owners were stranded on the streets without petrol. Vehicular traffic in trunk routes, particularly those linked to the City of Colombo and suburbs were largely deserted. As a result, business, during one of the dullest Christmas and New Year season's additionally engulfed by a global economic downturn, was further dampened. Major hotels said there was a marked drop of dine-in customers. Some have cancelled their New Year dances due to lack of corporate sponsorships. A European businessman, an investor in Sri Lanka, missed his flight. His driver who went to re-fuel turned up hours late to take him to the airport. He said he had gone from one fuel station to another, without success. A tourist couple had to spend one more night in a southern resort. The driver of the tourist car did not have petrol to drive them to Colombo. The last two instances are certainly not good news for those who so hoarsely promote foreign investment and invite tourists to this paradise isle.
The Supreme Court ruling figured at Wednesday evening's regular weekly Cabinet meeting. Varied opinions were expressed. Some wanted to know the basis on which the Supreme Court had made the ruling. Others were more critical and declared it would be difficult for them to govern if the SC continued to rule on removal of officials and reduction of prices among other matters. Surprisingly, in the debate, public concerns, the need to relieve the burden of the poor masses, appeared lost on their elected representatives.
A consensus emerged that the ministers should meet again to review the matter, once the government officially received the decision of the Supreme Court. Yet, no initiative appeared to have been taken to ensure that the public, whom the government served, was not inconvenienced by the creation of an artificial shortage. The only outcome was Police reminding fuel stations that in the light of the shortage, whatever stocks available should be retained for emergency use by them, the armed forces and others who were on a priority list.
The question of the government not being told, reportedly officially, about the Supreme Court ruling also raised some eyebrows. It was pointed out that Treasury Secretary Sumith Abeysinghe was present at the Supreme Court last Monday when the order was made. That was how the SC directed him to work out a pricing formula. Abeysinghe was also present at the special cabinet meeting on Thursday evening. He was to tell Ministers that a full text of the SC determination was not available then.
Against this backdrop, when the Cabinet met on Thursday night, it was announced officially that with the exception of eight ministers, others had been present. The Cabinet had met around 6.15 p.m. with Abeysinghe present. The discussion on the fuel prices was taken up only at 7.45 p.m., with Abeysinghe informing the Cabinet that he had not received a copy of the Court order. President Mahinda Rajapaksa had then said, "If it has not been received, there is nothing to be done. Let's discuss it next time". The Cabinet therefore postponed downward price revision on fuel products and to discuss further the matter when they 'receive a copy of the official determination of the Supreme Court'. This is whilst the Registrar of the Supreme Court had already sent to the Ceylon Petroleum Corporation and the Ministry of Finance the determination the Supreme Court made on Wednesday. The Sunday Times learnt that some ministers, and even President Rajapaksa, were strongly opposed to any further reduction of fuel prices.
Quite clearly, the additional profits they were drawing by selling fuel at a much higher value than the world market price were needed largely to fund the protracted military campaign against Tiger guerrillas and for other matters which the government says are "development activities." This was in marked contrast to previous public claims by government ministers that the benefits from any drop in fuel prices would be passed down to the consumer.
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| People need relief: The CJ at the Law College ceremony on Thursday. Pic by Janaka Galappathi |
Of course, that pious pronouncement was made when fuel prices were increased pointedly on the grounds that world market prices were rising, and had topped the US $ 100 per barrel range of crude. Now, with prices dropping drastically to less than US $ 40 a barrel, the government says the profits from selling oil at a much higher price was for the "war and development." That is at a time when no other effort has been made to cut down either on waste or the humongous levels of corruption. Neither have state backed tamashas ever been curtailed. Many new ones are being planned as if money was not a problem.
The government's mood over the issue, a clear sign that it is goading itself for a standoff with the judiciary, came in remarks Prime Minister Ratnasiri Wickremanayake made this week. He said the ongoing military campaign "to defeat terrorism" and the government's "march towards" development were facing a conspiracy to block state revenue. "Nobody could ever condone any moves to obstruct the collection of State revenue through taxation," he said without making any pointed reference to the SC determination. However, it was obvious that he was alluding to it.
Premier Wickremanayake was speaking at a ceremony at the Ministry of Defence where scholarships were awarded to 239 children of dead, missing or injured soldiers. Premier Wickremanayake's remarks no doubt are food for thought, and would no doubt have been echoing the President's thinking. Even before Monday's SC determination, President Rajapaksa had expressed similar sentiments, privately to those whom he met from time to time.
As the controversy was developing, Chief Justice Silva told students at Law College on Thursday: "the supremacy of the law will be maintained only if those who are in the legal profession support it. All of us have had contacts with all institutions of the law. If the institution is good, its products will also be of high quality. The supremacy of the law is also like that. I think there is high regard for the law in this country now, because we have made changes where it's necessary.
"We have responded through the law in various ways. None of these decisions was taken stubbornly. They were well thought out and pondered on. Now we are very happy that our decisions are respected by a majority of this country. The people of the country are keenly looking at the direction we're headed. This is not the effort of one person. This is the result of a collective effort by judges, lawyers and everyone in the legal profession."
Just last week, speaking at a function to mark the commissioning of the thermal power plant at Kerawalapitiya (Wattala), Rajapaksa said that although certain parties were undermining the government by resorting to Court action, the ultimate verdict would lie in the decision of the people who would either endorse or reject the policies of his government after six years at an election. He charged that "various factions are attempting to undermine the government by adopting diverse tactics such as terrorism and also bring down the government's revenue to make it bankrupt. The other means is to resort to Court action.
Rajapaksa made it clear his government could not rely on a 'pricing formula' which may prove detrimental to the people on the long term. Although prices would be low when the world prices dropped, they could shoot up beyond control. This would heap severe hardships on the people. He said it was his bounden duty to protect the people from what he called "such a dilemma." Of course Rajapaksa did caution that there could be decisions in the future, which would be respected, and complied with anyway.
The assertions by both Rajapaksa as well as his Prime Minister raise some fundamental questions. Firstly, if as Rajapaksa claims some parties are trying to undermine his government by going to courts, whose rulings he says "would be respected," it could be the best thing that could happen to the ruling party. The opposition, mainly the United National Party (UNP), has failed to play a vibrant enough role and generate public enthusiasm over any national issue. This is both in, and outside Parliament. The issue of fuel prices is just one outstanding example.
That is why civil society organisations and even UNP politicians have to seek recourse to the Supreme Court, the only remaining beacon of hope for the public at large. To say that any litigant who goes to court over a matter of public interest is attempting to undermine a government is no more than a joke. Laws to allow citizens of Sri Lanka to seek recourse to the highest courts in the land if they are wronged have been placed on the statutes by successive governments. It is those provisions of the law that, among others, paved the way for Mahinda Rajapaksa to become President. When Chandrika Bandaranaike Kumaratunga was the President, Rajapaksa as Prime Minister, was embroiled in a serious controversy over funds for tsunami rehabilitation in the now infamous Helping Hambantota project.
None other than President Kumaratunga saw to it that Lalith Weeratunga, now the President's Secretary was questioned by Criminal Investigation Department in a vigorous search for wrong doing.
It was the Supreme Court - and the Chief Justice -- that eventually ruled that the probe against Rajapaksa, then initiated behind-the-scenes by Kumaratunga, was invalid since it was based on sketchy newspaper accounts. Hence, going to courts to undo a wrong or to defend the public interest is by no means anti-government activity.
In recent months, the Supreme Court has un-earthed some major scandals of the past, from illegal privatisation of state enterprises to illegal lease of state lands by the high and the mighty, matters that no state agency has bothered to investigate.
Apart from these high-profile cases, corrupt provincial politicians engaged in forest cutting and sand mining are brought to book by the Supreme Court, when the government's law enforcement agencies have gone to sleep, or have been asked to go to sleep. Sadly, in a new culture anyone that is perceived or even imagined to be against the ruling establishment is branded anti-government.
In the same vein, Premier Wickremanayake's remarks -- about a conspiracy against the government and that that the prosecution of the war and other development activity cannot be carried out if taxes on fuel are lowered -- raise more questions than answers.
For any government, be it prosecution of a war or formulation of plans, they are based on monetary allocations planned and provided for. The question that begs answer is whether one has to wait until world prices of crude oil reach higher levels to increase local costs and profit by them for use to sustain a war and development. Is this proper planning and good economic management on which the prosecution of a costly war is based?
The Opposition would be not worth its salt if it is not to make maximum of the situation unfolding. Already, UNP's Kotte MP Ravi Karunanayake was claiming to be the hero who won for the public cheaper petrol prices. This is the bone that has got stuck in the government's throat more than the Supreme Court itself. Karunanayake is undoubtedly a red rag to the government.
Today, much is expected to be said at the Convention of breakaway Sri Lanka Freedom Party (SLFP) one-time front-liner Mangala Samaraweera's fledgling group where UNP and Opposition leader Ranil Wickremesinghe is to speak. Yesterday (Saturday) he was at Akuressa speaking to tea small-holders, another lot badly hit by the world economic meltdown with the world unable to purchase the volume of tea it once did.
With elections of some kind due next year, the Supreme Court restoring UNP's National Organizer S.B. Dissanayake back on the electoral register over-ruling a decision of the Elections Commissioner - pending a fuller inquiry by court, is another blow to the government. Dissanayake has already been picked as the UNP's chief ministerial candidate for the forthcoming Central Province elections. He will, no doubt, be a formidable candidate to lead the opposition in the central province.
On the other hand, an application by the UNP to forestall provincial elections until the Constitutional Council is constituted and a new Elections Commissioner is picked, was rejected by the Supreme Court. This application betrays two facets of the UNP. One is that it is wary of contesting these provincial elections. Reasons for this may be many, among them the lack of financial resources, and the fear that more defeats would impact on its chances at a parliamentary election. Secondly, it seems to be wary of the role of the incumbent Elections Commissioner.
The UNP asks why he is not even being retired, despite his very public request to the President on the day he announced the winner of the November 2005 election.
The Janatha Vimukthi Peramuna (JVP) is in a quandary on the petrol price issue. On the one hand it supports the government's war effort, but it keeps insisting it be an honest effort. Its front-liners are on record though saying that they support the Supreme Court order, and can even take to the streets if the decision is not implemented.
Despite the advances in the battlefield, albeit at some cost, the government's 'other war', on the economic front seems to be one that has few successes. The year therefore does not seem to be ending well for the Rajapaksa administration, and whether it augers well for the coming year, we will have to wait and see.
For now, it's a battle with the Judiciary that the country will want him to avoid. |
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