Columns

• Energy Minister speaks of difficulties in finding dollars to import fuel
• Agriculture secretary sacked for warning of a coming food crisis
• SLFP distancing itself from SLPP, JVP rejects broad alliance
• Several trade unions threaten to launch strike action

 

At the Presidential Media Division presser, gas company executives defended thier positions, hours before a probe committee handed over its report to President Rajapaksa, blaming the composition of the gasses for the gas cylinder blasts

A fuel price hike announced in the dead of night yet again touched off a cycle of price increases in other sectors, resulting in Sri Lankans experiencing an even bleaker Christmas than they had initially feared. With the prevailing economic crisis expected to get worse in the New Year, the prospects for 2022 also look grim.

It was when they woke up on Tuesday (21) that many in the country found out that there had been yet another fuel price hike – only a few months after one. The Ceylon Petroleum Corporation (CPC) had announced late on Monday night that prices would go up with effect from midnight, which meant that no one could rush off to filling stations before the new hike took effect

The price hike was significant, with a litre of 92 Octane Petrol increased by Rs. 20 from Rs. 157 to Rs. 177. The price of a litre of 95 Octane Petrol went up by Rs. 23, from Rs. 184 to Rs. 207. Auto Diesel was increased by Rs. 10 from Rs. 111 to 121 while Super Diesel was also hiked by Rs. 15, with the price of one litre increasing from Rs. 144 to Rs. 159. The price of a litre of kerosene was also increased by Rs. 10, from Rs. 77 to Rs. 87. The Ceylon Petroleum Corporation’s competitor, Lanka Indian Oil Company (LIOC), followed suit after the announcement.

Gammanpila’s warning

The price hike came just five days after Energy Minister Udaya Gammanpila issued a tweet on December 16, where he stressed that reports that fuel prices would be increased at midnight that day were false. “There is no truth in the news published in websites, of increasing fuel prices tonight,” the minister said in a tweet.

Mr Gammanpila told the Sunday Times that his tweet was “entirely correct” given that he had clearly said there would be no price increase “tonight,” which was December 16. “Announcements of fuel price increases must be made after 10.00pm since otherwise, it will result in people rushing to filling stations,” he pointed out. The minister claimed that the Government had to be even more careful than normal regarding announcing such price increases given that COVID-19 was still prevalent and if people queued up at filling stations en masse, it would also severely affect pandemic control measures.

Lengthy queues, however, have become a part of daily life for many among the public over the past few months, as a severe economic crisis continues to wreak havoc on the country’s finances. Lengthy queues for essentials such as rice, sugar, milk powder, gas and kerosene have become commonplace now, with the public having to risk both catching COVID and going home empty-handed after hours of waiting because stocks have run out.

Even after such a significant hike in fuel prices, the CPC continues to sustain severe losses. The CPC’s losses for this year alone totals Rs. 78 billion, aside from the Rs. 350 billion losses accumulated over the previous years, Minister Gammanpila disclosed. For example, the price of 1 litre of kerosene should be Rs. 110, but even with this week’s increase of kerosene prices to Rs. 87 a litre, the Government continues to suffer a loss of Rs. 23 a litre.

He also warned that the fuel crisis had reached a critical point, with the shortage of dollars making it extremely difficult to import fuel stocks in the coming weeks. “We will have great difficulty in purchasing fuel from mid-January onwards since we don’t have enough dollars. We are in a difficult situation and are working around the clock to find solutions,” he said, before adding that he “can’t see any light” at the end of the tunnel yet.

During the past six months, this has been the second time that the Government has significantly increased fuel prices amid a worsening economic situation. In the face of intense public backlash, some in the Government who, as then members of the Opposition, had been highly critical of the fuel pricing formula introduced by the late Mangala Samaraweera during his tenure as Finance Minister, publicly acknowledged that they now felt such a formula was a good thing.

“We too ridiculed Minister Mangala Samaraweera’s fuel pricing formula while in the Opposition, but if it had been there at this time, it would have helped,” Media Minister Dullas Alahapperuma told the Cabinet media briefing on Tuesday.

Minister Gammanpila sees the ideal solution to be a fuel price stabilisation fund, with a pricing formula to come into effect if this does not materialise. But the problem with both these solutions is that they can’t be initiated at a time when global prices are rising as it will be the poorest segments of society who will be negatively impacted by the move, he noted.

The minister said he criticised the fuel pricing formula introduced during the Yahapalana Government because it lacked transparency. “They did not disclose how the formula was calculated. It was only after I filed a Right to Information (RTI) request that Mangala revealed the formula to the media and the public. Our pricing formula will be more transparent.”

The midnight fuel price hike produced a domino effect which saw a host of other price increases. Unions representing three-wheeler drivers announced that the minimum fare will be increased from Rs. 50 for the first kilometre to Rs. 80 while the Container Transporters’ Association said transport charges would be increased by 20 percent. Bus owners’ unions have also warned that the minimum bus fare is likely to go up by nearly Rs. 20. A final decision on just by how much bus fares will rise will come next week after discussions between the authorities and bus unions. Once schools start in the first week of January, parents will also have to pay more to send their children to school in school vans and buses, as unions representing such transport services warned they may have to hike monthly fees by as much as 25 percent.

Cooking gas crisis hits eateries

Meanwhile, the Bakery Owners’ Association announced that no control prices would henceforth be in effect for bakery products, including for bread. Individual bakery owners were advised to adjust their prices in a manner that would allow them to continue to be in business but without putting an undue burden on customers; a tall order for many.

Yet even the lifting of control prices may not be enough to keep some bakeries in business owing to the continuing shortage in LP Gas. Continued uncertainty over explosions linked to gas cylinders and the failure on the part of the two gas producers Litro and Laugfs to meet the standards set by the authorities have resulted in restrictions being imposed on the distribution of gas. The Bakery Owners’ Association claimed that the resulting gas shortage has forced some 3500 out of 7000 bakeries in the country to close.

Canteen owners and staff, meanwhile, have been hit hard by both COVID-19 restrictions and the gas shortage. About 5000 school canteens along with canteens in state-run universities continue to be closed owing to COVID concerns while many canteens in Government institutions have also closed because owners cannot afford to sell food and drinks at the subsidised rates demanded by them, Canteen Owners’ Association Convenor Asela Sampath claims.

“We estimate there are close to 12,000 restaurants and eateries within Colombo City and suburbs alone. Many of them have been severely impacted by the prevailing gas shortage. This is not even counting the petti kades where people make vade, samosa, kadala and other fried food using gas, most of which are now closed.”

As of now, the question of whether an owner of a restaurant or eatery can keep his or her establishment open remains on whether they can find a gas cylinder. In the event that one is found, owners must also contend with suffering losses due to the continued shortage of another essential product — milk powder, used to make milk tea that goes with most meals. The shortage and resulting high prices of vegetables and other items are also making lives difficult for them, Mr Sampath pointed out. “Many of these establishments are operating from rented spaces and owners are struggling to pay their monthly rents. Some 500,000 people are directly dependent on this sector, which is near collapse now, but the Government is unconcerned with their plight,” he charged.

As public anger continues to mount, some in the Government continue to peddle the same lame excuses, saying that the “entire world is struggling under the pandemic” and that “fuel prices are going up all over the world,” without acknowledging how the Government’s own policy failures exacerbated the crisis or outlining what steps it intends to take to stop the rot.

The appalling lack of accountability is paramount in the way that no one has been held to account over the twin fiascos involving the gas cylinder linked explosions that has so far claimed seven lives and the crippling fertiliser shortage that threatens to ruin the livelihood of tens of thousands of farmers and the country’s food security.

On Monday, the President’s Media Division (PMD) hosted a live media briefing regarding the gas explosions. Moderated by President’s Spokesperson Kingsley Rathnayaka, it featured Senior Deputy Inspector General of Police (SDIG) Deshabandu Tennakoon, Secretary to the Ministry of Technology Jayantha De Silva and Litro Gas Limited Chairman Theshara Jayasinghe. During the briefing, Mr Jayasinghe insisted that Litro had made no move to change the composition of their gas cylinders, which many had speculated may have been the cause behind the explosions.

SDIG Deshabandu Tennakoon, meanwhile, said police could not lay criminal charges concerning the deaths that had occurred as they could not prove there was “criminal intent.” It was also claimed in the media briefing that substandard stove equipment and improper use of such equipment had been the cause of the majority of incidents related to gas cylinder linked fires and explosions reported in recent weeks.

Just a few hours after the briefing, the Presidential Committee appointed by President Gotabaya Rajapaksa to probe the gas cylinder linked explosions handed over its report. The committee’s findings, which were made public the following day, revealed that it had found that a change in gas cylinder composition had indeed occurred and this had a bearing on the explosions and fires associated with gas cylinders since mid-November this year.

What prompted the PMD to “jump the gun” and hold a media briefing on the gas cylinder linked explosions on Monday afternoon without waiting for the report of the Presidential Committee which was due to be handed in a mere couple of hours later? Was it to give Litro Gas another platform to defend itself amid mounting criticism? In the end, the hasty press conference and the subsequent revelations by the Presidential Committee left the PMD looking foolish.

The gas shortage drags on while the fertiliser crisis continues to hinder farmers during the Maha cultivation season. Farmers had overwhelmingly voted for President Gotabaya Rajapaksa and his Sri Lanka Podujana Peramuna Government. Now, however, they have become some of the President’s and his Government’s fiercest critics, holding daily protests over the fertiliser shortages and in some cases, refusing to accept the organic fertiliser distributed by the Government on the grounds that the fertiliser is substandard.

Agriculture Ministry Secretary fired

Amid such anger in the agriculture sector, Agriculture Ministry Secretary Prof. Udith K. Jayasinghe was unceremoniously sacked on Thursday. He was the fifth person to hold that post in the past two years and the fourth in 2021. The senior academic played a leading role in the drafting of the agriculture policy laid down in President Gotabaya Rajapaksa’s election manifesto “Vistas of Prosperity and Splendour.” He was sacked just hours after he made comments to the media that did not sit well with the higher ups in the Government. Responding to media queries while attending a function in Kandy on Wednesday, Prof. Jayasinghe spoke about what would happen in the event of a “food shortage.”

“If a food shortage were to occur, we would have to prioritise who should get food first. So, rather than the youth, we would have to give priority to groups such as pregnant women, children and patients who need more food. As scientists, we will have to come up with a strategy where those who consume more food will have to sacrifice and stop the consumption of foods such as imported apples and oranges, enabling us to find the funds to import essential foods and milk powder,” he told the media.

He also criticised the pace of the Government’s move to fully transition to organic fertiliser almost overnight, when the President’s own election manifesto said it would be done over 10 years. “What happened is like someone took out a really good car, drove it at high speed and then crashed it,” he quipped.

Prof. Jayasinghe’s admission that a food shortage could occur early next year directly contradicts repeated statements made by various Government ministers and spokespersons. In recent weeks, as the fertiliser crisis reached fever pitch and farmers started stepping back from harvesting their fields, warnings were sounded by various sections, including agriculture experts, Opposition politicians and farmers themselves that a food shortage was looming. The Government responded to these warnings for the most part by dismissing them as baseless. At times, certain ministers and MPs have bristled at the very mention of the words “food shortage” and even chided journalists for even bringing up the subject, accusing the media of fear-mongering over a non-existent threat.

As such, a public statement by the Agriculture Ministry Secretary that a food shortage was coming could not be ignored. The result was that Prof. Jayasinghe was swiftly sacked, without even so much as an official letter. He was informed of his firing via a WhatsApp message containing a copy of a letter sent to his successor from the Presidential Secretariat. The new Ministry Secretary is D.M.L.D. Bandaranayake, whose name was announced by President’s Spokesman Kingsley Rathnayaka on Twitter.

Prof. Jayasinghe, though, was not prepared to take his abrupt dismissal lying down. He spent Friday giving interviews to a range of television channels and other media, explaining that he was not officially notified of his firing and that he was disappointed with the way it happened. He also stood firmly by his comments regarding a food shortage, saying all the available evidence points that it is coming.

SLFP-JVP alliance

State Minister and Sri Lanka Freedom Party (SLFP) General Secretary Dayasiri Jayasekara said there was no argument that the fertiliser crisis was a self-engineered one. “This is without doubt, the stupidest thing the Government has done,” he insisted.

The Government was importing nano nitrogen fertiliser at far higher prices than urea while also having to pay USD 6.7 million to the Chinese company after backing down in the row over its organic fertiliser stocks, the state minister remarked.

Mr Jayasekara also took aim at Agriculture Minister Mahindananda Aluthgamage over the crisis that has generated so much fury against the Government among farmers. “Our harvest may fall by as much as 60 percent this season owing to this fiasco. The subject minister should have the guts to clearly tell the President that this strategy will not work, but he hasn’t done that so far.”

Mr Jayasekara, meanwhile, also raised eyebrows earlier in the week when he told journalists that the Janatha Vimukthi Peramuna (JVP) was the sort of party that the SLFP could form an alliance with. He reminded that the SLFP had formed alliances with the JVP in the past, during the presidencies of Chandrika Kumaratunga and Mahinda Rajapaksa.

The SLFP General Secretary was speaking in the context of his party holding talks with various other political parties that either have Parliament representation or are not represented in Parliament. The talks are aimed at forming a broad alliance as the SLFP seeks to distance itself from the SLPP, given that relations between the two have gone downhill quickly in recent months. The SLFP has not even had any serious discussions on the subject of talking to the JVP, yet Mr Jayasekara’s comments touched off a media firestorm after they were taken out of context. It was not long before some journalists were asking him about details of any potential “Memorandum of Understanding” (MoU) between the two sides.

For their part, JVP General Secretary Tilvyn Silva and Propaganda Secretary and MP Vijitha Herath poured cold water on any possibility of an alliance between their two parties, telling the media that the JVP was not interested but that individual politicians can join hands with them if they wished to.

The country also celebrated Christmas and enters the last week of a woeful 2021 amid short term power cuts that have had to be imposed again after one of the turbines of the Lakvijaya coal power plant in Norochcholai malfunctioned. Ceylon Electricity Board Engineers’ Union (CEBEU), meanwhile, warns that it is difficult to say when repairs to the unit can be completed, meaning people in certain areas will have to get used to such power cuts at least through the next week.

Meanwhile, a dispute between the Health Ministry and the Government Medical Officers’ Association (GMOA) resulted in doctors launching an island-wide strike on Tuesday citing seven key demands. The strike continued as of Friday, with talks aimed at trying to find a resolution breaking down, heaping more misery onto an already suffering public. Yesterday, after an executive committee meeting, the GMOA said it was suspending the strike action. Teachers are also warning of a return to trade union action early next year if the authorities do not follow through with commitments made during Budget 2022 to resolve their salary anomaly issue by January and make the teachers’ and principals’ services into closed services.

As the debate continues on whether Sri Lanka should seek assistance from the International Monetary Fund (IMF) to manage its foreign exchange crisis and ensure debt repayment obligations, Central Bank Governor Ajith Nivard Cabraal and Treasury Secretary S.R. Attygalle have been instructed to be present at next week’s Cabinet meeting. They will brief ministers regarding the foreign exchange situation. The Central Bank this week stated that steps have been taken to boost the country’s foreign reserves to USD 3 billion by the end of December. The CBSL Governor has consistently stressed there was no need to seek IMF assistance at this stage, though almost half of the Cabinet are now strongly advocating a deal with the world financial body.