Columns

• Urgent move to counter campaign by new pro-Rajapaksa party; organisers told to work towards target of 5 million membership
• In the afterglow of the two-thirds majority for Budget, the UNP focuses on big economic projects; still leaning on China with the West giving little

By Our Political Editor

A major effort has been launched by President Maithripala Sirisena to place the Sri Lanka Freedom Party (SLFP) on a virtual ‘war footing’.This time, the objectives are multi-pronged. Among the more important one is to gear the party for next year’s local government and provincial elections. Adding a sense of urgency in this regard is the need to counter the Sri Lanka Podujana Peramuna (SLPP), the new political party associated with former President Mahinda Rajapaksa. Another is to consolidate the party’s clout so it would be in a more unassailable position in dealing with its partner in governance, the United National Party (UNP), on issues that arise from time to time.

This, in essence, is the message he delivered to some 168 SLFP organisers during a dinner meeting on Friday, November 11, at the Janadipathi Mandiriya. The number included serving ministers and parliamentarians.
President Sirisena said that the organisers should strive to increase the SLFP membership to five million, a tall task. This was his response to claims last week by SLPP convenor and former minister Basil Rajapaksa that the new party has launched a countrywide drive for one million members. The SLPP has also begun appointing organisers at the electoral level.

“Mamath inney pakshaya hadanakang. Balamuko (I am also waiting till the new party is organised. Let us see),” he asserted. Sirisena then declared that while travelling towards the right, he could also signal and turn left – whether he knew this was an old cliché that former Yugoslav President Marshal Josip Broz Tito used to describe the Non Aligned Movement. The Sirisena remark became the talking point both in SLFP and UNP circles in the past week with questions raised on what he meant. Was it in jest or were there any undertones in it?

President Sirisena in Parliament yesterday for the Committee Stage of the Budget debate, where the allocations for his office were taken up. He is seen having a lively chat with Prime Minister Ranil Wickremesinghe.

Sirisena told the SLFP organisers that ‘Joint Opposition’ members should be invited to join their party, viz., the SLFP. It will not only bring more unity but make it stronger. He urged the organisers to spend more time in their electorates, see to the needs of the people and address their shortcomings.

Initial preparations for the local polls are now under way. Provincial Councils and Local Government Minister Faiszer Musthapha wants to ensure polls to the Pudukudyiruppu and Maritimepattu Pradeshiya Sabhas (in the Mullaituvu District) are held together with all others. Polls to these two bodies, were to be held on March 17, 2011, but had to be put off time and again due to the need for the removal of land mines and the non-completion of resettlement of displaced people. Musthapha has noted that notifications published calling for nominations remain valid and have not been cancelled. A necessity has arisen, he says, to change it due to the death of prospective candidates and those who came within the Under 35 years category, but have now exceeded that age.

Musthapha wants the Legal Draftsman’s Department to formulate a draft Bill to incorporate provisions to cancel the existing nominations, refund the deposits they placed (with a legally prescribed interest) and enable the conduct of fresh nominations. He wants these elections to be held “under mixed system of elections based on ward systems.” In his memorandum to ministerial colleagues, he has, however, not explained what this mixed system is.

If Sirisena is now focused on building a stronger SLFP while countering the SLPP, he was also forced to play the role of peacemaker at the weekly ministerial meeting last Tuesday. It was held in Committee Room 3 in the Parliament complex in view of the ongoing budget debate. Two Muslim ministers – Rauff Hakeem (City Planning and Water Supply) and Rishad Bathiuddin (Industry and Commerce) had a pitched verbal duel.

It was all over a Cabinet Memorandum by Bathiuddin on the “Export of Ferrous and Non-Ferrous Metal Scraps and Ingots.” He has been pushing for this for more than three months. His memorandum has been the subject of study by a cabinet subcommittee.

Both, Ministers Hakeem and Lakshman Kiriella (Higher Education and Highways) made a strong plea earlier to ensure (i) the need to have sufficient quantities of scrap metals, especially Copper, Brass and Lead for the small scale Brassware Manufacturing Industry, (ii) the export of scrap metals by various means may deprive the genuine local Brassware Manufacturers of obtaining their raw materials; and (iii) the necessity to ban the export of such materials, at least for a certain period of time, is essential to safeguard the interests of the Local Brassware Manufacturers. Ministers had then agreed to discuss the matter further before arriving at a final decision.

When the matter came up for discussion again last Tuesday, Kiriella and Hakeem, who are MPs from the Kandy District, where brassware manufacturing is well-known, declared that there were more than 2,000 manufacturers who needed those ferrous and non-ferrous metals. They had made representations to both of them that their industries would have to be closed down depriving employment to those working. Hakeem was also to point out that unscrupulous exporters were even now filling used car batteries with lead and exporting them. Yet, Bathiuddin was adamant to obtain approval.

Arguments came to a head when Bathiuddin charged that Hakeem had told a public meeting in the last that the former was ‘making money.’ Hakeem flatly refuted the allegation and declared that he had not made it a ‘political issue.’ He had only acted on the representations made to him by his constituents. He said his, as well as Minister Kiriella’s concern was over the local industry that may be forced to close down. President Sirisena intervened and declared that the threesome – Hakeem, Kiriellla and Bathiuddin — should meet together and resolve the matter. Thus, Bathiuddin did not have his way, at least last week.

Bathiuddin had also presented a memorandum on the import of ethanol. Deputy Minister Ranjith Madduma Bandara (Public Administration and Management Reform) alleged that both the Pelawatte and Sevanagala industries were selling ethanol below the market price. This was leading to huge losses for the Government, he said. The remarks were to trigger a lengthy discussion on ethanol imports and a decision has not yet been made.

What seemed a unilateral decision by the National Water Supply and Drainage Board to raise water bills by 30 percent then came up for discussion. Several ministers noted that the matter had not been forwarded for approval by the Cabinet of Ministers. Finance Minister Ravi Karunanayake added that he too had not been consulted. One minister said the increase was for payment of enhanced salaries to those newly recruited and for bonus payments. Minister Bathiuddin alleged that people have been employed by the NWSDB on ‘political grounds’, what appeared to be a remark aimed at Hakeem. President Sirisena opined that the 30 percent increase negated the benefits accruing to people from the budget.

If indeed there was to be an increase, he said, a campaign should have been carried out to educate the people on why it was necessary. He wanted the increase to be suspended. Hakeem was to explain that “Water rates are reviewed and amended every three years, but tariffs were not increased for the past four years.” He said it costs the Water Board about Rs. 500,000 to Rs 600,000 to supply water to a single domestic household per year.

“The Treasury does not provide any funds for us to do this. We also have to bear all maintenance and repair costs. At present water usage costs Rs 18 per day. This is less than the price of a cup of tea or a bun. However, we spend Rs 48 per cubic metre on water supply per day.”

It was pointed out that pay increases or bonus payments would have to be carried out with Treasury sanction and not by raising tariffs unilaterally. President Sirisena named a three-member Ministerial Committee – Hakeem, Sarath Amunugama and Ravi Karunanayake – to work out a pricing formula. A ministerial source said a ‘smaller increase’ was most likely. Ministers also discussed a proposal in the budget to raise spot fines for traffic offences to Rs 2,500.

Ravi Karunanayake told the Sunday Times there would be no change in this sum. However, he said, through a previous decision by the Cabinet of Ministers, fines for three categories of traffic offences have been increased to Rs 15,000. This was for (i) driving under the influence of liquor, (ii) for driving without reaching the qualified age, and (iii) driving without possessing a licence. He also said that the proposed “payment platform” was by no means a privatisation of the Central Bank as claimed by those in the Opposition.

Karunanayake’s second budget was passed with a two thirds majority on Friday, the result of concurrence over important proposals by those in the UNP and the SLFP. If that is a distinct forerunner for the implementation of the various proposals, issues for the Government in other spheres of the economy remain. One such area is the Development of the Hambantota Port. The Ministry of Ports and Shipping is strongly opposed to proposals to develop this port. This is on the grounds that it alienates primary functions of the Sri Lanka Ports Authority (SLPA) as the owner and operator. Building on arguments placed before ministers earlier by Minister Arjuna Ranatunga, his deputy Nishantha Muthuhettigama, who was acting in the absence of the former said the Hambantota Port was quite different from projects such as the Colombo International Cargo Terminal (CICT) and the South Asia Gateway Terminal (SAGT) that were implemented in Colombo. He noted that the SLPA retained the position of the Landlord, the Port Operator and Regulator. Hence, Muthuhettigama has argued that “such a change will require the SLPA Act to be amended through Parliament.” He has declared that without such amendments the SLPA is not empowered to enter into agreements or MoUs on this matter.

With the proposal to hand over the Hambantota Port to a joint venture company, the Ministry of Ports and Shipping has taken up the position that the entire operation of Hambantota Port will be taken over by the new company. It has pointed out that all the revenue (that are now enjoyed in all Sri Lankan ports by the SLPA as the Landlord and Port Operator) will accrue to the new company. Thus, the SLPA will only be able to get the light dues that is collected for the maintenance of the light houses around the island. Below are some of the other concerns set out in a memorandum to ministers:

“Usually, Ports enter into PPP (Public Private Partnership) ventures to privatise terminal operations but ownership and the operation of the Ports are generally retained by the Government owned Port Authorities.

“Project proposals of this nature should be evaluated based on the commercial value of the facility and the returns over the total period of alienation on a standard format i.e. based on NPV (Net Present Value) of the project. However, in this case we are basing the acceptance merely on the up-front money and the shareholding is purely decided on the quantum of the loan which does not represent the full value of the assets.

“Ports are an integral part of National Security and therefore, considering the past experiences, their total control should remain with the Government. Alienating a Port such as Hambantota which is strategically located close to the main sea route will form a threat to the National Security of our Country. If Hambantota Port is taken away from SLPA in its entirety, the Ports will face severe disruptions due to industrial unrest. The Board of Directors of the SLPA at their last meeting instructed the Chairman to inform the Hon. Minister of their utter dismay regarding the manner in which this project was handled without involving them and the SLPA.

“In the Port of Colombo, the sea bed was given on a concession agreement to build, operate and transfer for a period of 35 years. In this instance, the entire Hambantota Port which is already built, has been proposed for a 99 year lease, and this is a concern that needs to be addressed. Separately evaluate proposals based on the role of the operators and SLPA should continue as the landlord, Port operator and the Regulator. Limit the Project to BOT (Build, Operate and Transfer)basis giving a specific time period and (example three years) instead of 99 years.”

In late October, Ports and Shipping Minister Arjuna Ranatunga said in a note to the cabinet of ministers that phases one and two of the Hambantota Port Development Project, Bunkering Facility and Tank Farm Project involved a total construction cost of US$ 1.4 billion and this cost is to be borne by the SLPA through loans and its own funds. He has said that apart from the above expenditure, the SLPA has spent a substantial amount of money for land acquisition/purchasing and other related work. Currently, the total asset value of the Hambantota Port stands at approximately US$ 1.5 billion.

Minister Ranatunga points out, “Having identified the potential for private investments at Hambantota Port, SLPA floated two Requests for Proposals (RFP) in 2016 for leasing out bunkering facility and called investment proposals for Business Ventures. These were floated under the supervision of the Cabinet appointed committees on a specimen format facilitating the evaluation process.

“However, RFP process was kept on hold as per a decision taken on the 29th meeting of the CCEM (Cabinet Committee on Economic Management) held on July 22. Thereafter, at the CCEM meeting on September 7 instructions were given to evaluate all the proposals under Bunkering in Hambantota Port by the Ministry of Finance and Ministry of Ports and Shipping. The Secretary, Ministry of Ports and Shipping was instructed to report back to CCEM for evaluation. The CCEM is chaired by Prime Minister Ranil Wickremesinghe.

“As decided at the CCEM meeting held on September 14, a Secretaries Committee was appointed to review and negotiate with the two companies nominated by the Chinese Government for the takeover of the Hambantota Harbour. The Chinese Embassy on behalf of the Government of China has recommended two State owned Corporates and had requested the Sri Lankan Authorities to select one of the following:

1 China Communications Construction Company
2 China Merchants Port Holding Company Limited.

“The Secretaries Committee had recommended the acceptance of the offer made by the China Merchants Port Holding Company Limited. CCEM had decided to accept the recommendation given by the Secretaries Committee and recommend the decision to the Cabinet of Ministers as well.

”At the Cabinet meeting held on October 24, I explained my concerns to the Cabinet of Ministers and they requested me to forward a note explaining the details on this matter. Subsequently, by letter dated October 25, addressed to Hon. Prime Minister, I explained my concerns based on the letters addressed to me by the Chairman, with the SLPA board decision and with a brief comparison of the two proposals.

This was discussed at the CCEM meeting held on October 26, and I informed my concerns with regard to the above decision. I also pointed out that I should be included in the aforesaid Committee. Representatives from the SLPA explained their position and the overall impact of the proposals.

“Hon. Prime Minister’s vision is that if the Port of Colombo is burdened with the loans of the Hambantota Port, it is detrimental to the development of the Port of Colombo. The Ministry of Ports and Shipping and the SLPA are in agreement with the Prime Minister’s vision in this regard. At the CCEM held on October 26, this matter was discussed and it was agreed that this arrangement will relieve the SLPA of heavy loan burden, and SLPA could stop using its resources to pay Hambantota loan. This will enhance the SLPA’s financial capabilities to take up major development projects of the other Ports in the future. “

“As requested at the cabinet meeting held on October 24, I am forwarding this note to the Cabinet for the information and attention of the Cabinet of Ministers.”

Another project which is now being pushed by Development Strategies and International Trade Minister Malik Samarawickrema is the construction of apartments and malls by India’s Krrish Group. Like the Colombo Port City (now Colombo Financial City), the project proposal from the Krrish Group was unsolicited. How it came about and the role of the Hambantota District parliamentarian Namal Rajapaksa in this regard have become the subject of an investigation by the Financial Crimes Investigation Division (FCID). The Indian company entered into an agreement “to construct and operate a Mixed Development Project at Transworks Square, Colombo, under the Strategic Development Project Act.”

Claiming that the FCID has said there was “no constraint” in the project going ahead notwithstanding the investigation, Samarawickrema has said that the Attorney General said fresh approval of the Cabinet of Ministers would be necessary. Earlier, the Cabinet Committee on Economic Management (CCEM) urged that the opinion of the Attorney General be sought on the continuation of the project. This is because the project company has submitted a new proposal by re-designing its proposal to undertake this project in two phases which consist of two residential and one Commercial Tower, in addition to the refurbishment of heritage building with an envisaged “US$ 191 million and US$ 208 million for two phases respectively, totalling US$ 399 million”.

Samarawickrema notes; “In consideration of the amount already paid (Rs 4355.5 million) to UDA as per land lease agreement, UDA has executed the lease agreement for 3.7 acres out of the total land extent of 4.3 acres and the final deed was issued on August 11, 2015.” Now, Samarawickrema is seeking approval for the Krrish project again, this time under Board of Investment Regulation No 2 of 2006 providing it tax concessions in terms of that law.

It was under the previous Mahinda Rajapaksa administration that the Krrish Group received an unsolicited proposal on July 31, 2012 for the mixed development project. Months earlier, an FCID team led by Senior DIG Ravi Waidyalankara flew to New Delhi to record statements from persons identified as investors in the Krrish project. Among the aspects probed was Namal Rajapaksa’s links to them and how funds for the project were sent to Sri Lanka.

For President Sirisena, a victory for the SLFP at the local polls seems a high priority judging by his new efforts to invigorate the party. For the United National Party (UNP), a priority area is clearly the economic front where it is compelled to lean even more on China with little forthcoming from Western countries paying mere lip service to the Sirisena-Wickremesinghe Administration.

The Jathika hela Urumaya (JHU), which is a constituent partner of the National Unity Government went public this week saying no elections should be held till the Central Bank bond issue is investigated to a conclusion and the culprits brought to justice. For the two main constituent partners, the SLFP and the UNP, coping with bribery and corruption, a key promise made during presidential and parliamentary polls campaigns, remains a major headache to contend with.