Challenging times ahead
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Ada light kapuwa (They cut the power today),” said a frustrated Kussi Amma Sera, sipping a cup of tea as she chatted with Serapina and Mabel Rasthiyadu under the margosa tree.“Viduli-bala arbudaya harima avul saha gathai. Kavuruth danne-ne koi welawatada kiyala light kapanne (The power crisis is chaotic. No one knows when the power would be cut),” noted Serapina, while Mabel Rasthiyadu shook her head in resignation, saying: “Aanduwa danne-ne egollo enawada yanawada kiyala (The government doesn’t know whether they are ‘coming or going’).”
The power crisis has been unfolding like a teledrama series every day, with Ministers Gamini Lokuge and Udaya Gammanpila issuing contradictory statements along with trade unions which have been protesting over various issues and warnings that the country’s power sector is in dire straits. With so much confusion over these comments, there is no proper information to the public over power cuts; such is the mismanagement that is taking place in the power and energy sector.
If Energy Minister Gammanpila, for example, says there is power or enough dollars to buy fuel for the Ceylon Electricity Board (CEB) for only eight days, isn’t it the responsibility of the government to ensure uninterrupted power? What is missing is an emergency discussion chaired by the President with ministers and officials involved in energy and power to develop a long-term solution rather than warnings from ministers which imply that the public have to bear responsibility if the government is unable to find dollars. What a state of play!
As I pondered on these issues this Thursday morning (by the way ‘choon-paan karaya’ Aldoris hadn’t come this morning and I was missing my regular kimbula bunis), Seeni bola called on the land line. Seeni bola is a banker friend — so named by friends after once boasting that other banks were handling ‘seeni bola’ deposits compared to his bank!
“I say, some of our ministers are insane,” he said.
“Why,” I asked.
“Well, when Power Minister Lokuge, at a media briefing, was asked about Minister Gammanpila’s statement that they are unable to provide fuel to the CEB, Minister Lokuge’s response was: ‘Even though that’s what he says to the media, we are friends after all. There won’t be a problem’,” said Seeni bola, adding: “What nonsense is he talking? Are governments run by friends?”
“This is the level of competence in the government,” I said, also adding: “If this is the way ministers behave in public, this country is doomed.”
“There is no clear statement being made on the energy and power crisis. There needs to be a clear direction from the government for at least the next six months, on how we would meet our import needs and fuel needs and from where the dollars for these requirements are met,” he said.
“What is happening right now is that decisions appear to be taken on a daily or weekly basis and queues continue to form outside LPG outlets, milk powder sales centres and kerosene outlets with the public furious over these developments as there is no clear understanding or statement on how the country’s requirements would be met for at least the next six months. This is while Gammanpila says fuel to the CEB is available only for eight days,” I said.
“Even the President’s address to Parliament on Tuesday didn’t give any indication on how the government would find foreign exchange to meet urgent import requirements,” Seeni bola said and after a discussion on related issues, we ended the conversation.
The Central Bank this week repaid the US$500 million, an international sovereign bond (ISB) on maturity, but with two more repayments of a total of $6 billion to be made for the rest of the year; where this money would come from is anybody’s guess.
According to the latest data, export earnings were encouraging, with $10.1 billion in January-October 2021, up by 22 per cent from the same (COVID-19 affected) 2020 period. However, imports also rose to $16.6 billion in January-October 2021, showing a trade deficit of $6.5 billion.
Another bit of encouraging news was officials stating that there is no shortage of fuel for SriLankan Airlines which is able to purchase its stocks using its own dollar reserves. It was announced that while the airline has enough fuel reserves for the next one and a half months, last week it had paid US$32 million for future purchases of fuel.
In other developments this week, the Central Bank raised interest rates on Thursday, triggering a drop in share prices at the Colombo bourse on the same day, over understandable fears that investors will pull back their funds to invest in bank deposits and other instruments because of favourable interest rates.
The Central Bank, announcing its monetary policy for this month, also extended the special scheme to April 30 in which migrant workers are entitled to get an extra Rs. 10 per dollar remitted, a scheme the banking regulator said has shown positive trends. This scheme was first introduced for the month of December 2021 only, then extended to January 2022 and now till end April. While the Central Bank was positive on this scheme – aimed at enticing remittances through official channels – the latest figures on remittances were not so encouraging.
For example, remittances in December 2021 were $325.2 million, down sharply from $812.7 million in the same 2020 month. On an annual basis, remittances in January-December 2021 totalled $5.5 billion, down from $7.1 billion in 2020 which meant that migrant workers were sending some funds through informal channels which give a higher dollar value of Rs. 220-240 per dollar compared to Rs. 203 through the banking system.
In another development on Thursday, the Central Bank said that a decision was taken to distribute the financing of essential import bills for fuel purchases among the licensed banks in proportion to their foreign exchange inflows and mandated all registered tourist establishments to accept foreign exchange only in respect of services rendered to persons resident outside Sri Lanka – as it stepped up efforts to ease the dollar crisis in the country.
As I stepped outside the office room and walked towards the kitchen, Kussi Amma Sera emerged with my mug of tea, asking: “Hetath light kapaida (Will they cut power tomorrow too).”
“Wishwasa ne (Not sure),” I replied, realising that this was the state of play in Sri Lanka today, with no one certain about how the power crisis will pan out in coming days.
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