Columns

• President upbeat over vaccination success, explains dream of making Lanka one of the fastest growing economies in South Asia
• Dollar scarcity aggravates power crisis; minister says power cuts can be averted with 300MW Norochcholai plant resuming operation

President Gotabaya Rajapaksa delivering the Government's policy statement in Parliament on Tuesday

When he delivered his Government’s policy statement after ceremonially opening the second session of the Ninth Parliament on Tuesday (18), President Gotabaya Rajapaksa set an objective for his Government during the rest of his term. “Our goal is to make Sri Lanka one of the fastest growing countries in the region in the next few years,” he stated. Towards this end, the Government is working to achieve definite growth in the agriculture, industry and services sectors, he said. The President asked lawmakers and the people for their support to achieve this objective.

President Rajapaksa’s policy statement came at a time when the country is facing its worst economic crisis in recent times. The crippling foreign exchange issue has already created havoc in many sectors.

He acknowledged this reality when he noted that the most serious challenge the country faced today in economic management was the current foreign exchange problem. Rather than blame the Yahapalana Government entirely for the problem, as some of his ministers and MPs have done of late, Mr Rajapaksa emphasised that what they were encountering today “is the climax of a problem for which a number of Governments have failed to provide a lasting solution.” Political analysts were quick to observe that this included the two Governments headed by his brother, former President Mahinda Rajapaksa from 2005 to 2015.

The President made a point to stress how much the COVID-19 pandemic had disrupted his Government’s plans over the past two years. The economic crisis was exacerbated by how much damage the pandemic caused to key sectors such as the tourism industry, foreign labour and the apparel industry, sectors that brought foreign exchange into the country.

The Government had planned to increase revenue from tourism to USD 10 billion over a few years, but the COVID-19 pandemic, which began in December 2019, sent the global tourism industry reeling. Sri Lanka lost about USD 4.5 billion in annual revenue flowing into the country through tourism in 2020 and 2021, Rajapaksa told Parliament.  The country also lost a large amount of monthly remittances sent by about 200,000 migrant workers who left their jobs and returned to Sri Lanka due to the pandemic.

The President further pointed out that due to the lengthy lockdowns imposed on the country, the Government was not able to attract new foreign investments. “Our reserves plummeted and imports were severely hampered by this unavoidable process that took place beyond our control.”

He highlighted the success the Government had in controlling the pandemic. The country has been able to resume normal community life having vaccinated more than 85% of the targeted population. Meanwhile, the authorities are also administering booster vaccines. The latest international data indicates that more than 30 countries have so far vaccinated less than 10% of their populations, while vaccination rates are even lagging in some of the more developed countries. As such, there is no doubt that the Government’s COVID vaccination drive is a resounding success.

Yet the threat of COVID remains, particularly with the arrival of the highly infectious Omicron variant of the virus in the country. Arrivals to Parliament on Tuesday were subjected to compulsory rapid antigen tests before being allowed in. Several persons were found to be positive for COVID during these tests. They included a dancer from the cultural troupe that was due to welcome the President. He was isolated and removed but other performers who had come with him were allowed to perform after they tested negative.

Parliament was originally supposed to reconvene for the new year on January 11, but President Rajapaksa issued a proclamation on December 13 proroguing Parliament till January 18. The move was condemned by opposition parties, who saw in it a sinister attempt to stymie investigations being conducted by parliamentary committees such as the Committee on Public Finance (COPF), the Committee on Public Accounts (COPA) and the Committee on Public Enterprises (COPE) into various irregularities in the Government sector. All these committees became dissolved with the prorogation of Parliament and will have to be reconstituted in the coming weeks.

On Wednesday, Chief Opposition Whip Lakshman Kiriella requested Speaker Mahinda Yapa Abeywardena to give a directive to the committees that are newly constituted that evidence recorded by previous committees should also be adopted and valid under the new committees. For example, he pointed out that the COPF had recorded evidence relating to the sugar scam that amounted to Rs. 15 billion. Speaker Abeywardena refused Kiriella’s request on the grounds that the Speaker had never given such a direction previously. It would be up to each committee to decide whether they would make use of evidence recorded by the previous committee, he said. This means that any or all of the new committees can simply decide to keep out the evidence recorded by the previous committees in pending inquiries and begin inquiries afresh. If they do so, not only would precious taxpayers funds spent on previous inquiries go to waste, but there is scope for valuable evidence to be swept under the carpet and frauds to be covered up. Perhaps that is the plan, after all.

There were also differences of opinion in the Samagi Jana Balawegaya (SJB) regarding how to approach the ceremonial opening and the President’s policy statement. Some MPs called on the party to boycott the President’s speech. However, the party eventually decided to be present during the President’s speech. The SJB, the National People’s Power (NPP) and the Tamil National Alliance (TNA) stayed away from the traditional tea party at the Parliament complex held after the President had delivered his policy statement. The only exception was SJB Kalutara District MP Kumar Welgama, who showed up at the tea party and was seen in animated conversation with Sri Lanka Freedom Party (SLFP) General Secretary Dayasiri Jayasekara. Though an SJB MP, Welgama has publicly distanced himself from the party, saying he remains “an SLFPer through and through” and that the SJB was a means to an end to come to Parliament when the SLFP refused to give him nomination to contest.

Some of the other statements the President made during his policy statement rang hollow given the current state of the country. He claimed his Government did not support any form of human rights violations and would also not leave room for any such act in the future. “We do not condone such actions in any manner,” Rajapaksa added. Yet, local and foreign human rights organisations have documented how journalists, civil society activists and those who held dissenting opinions have faced harassment and intimidation over the past two years of his term.

The President also outlined how his Government will give priority to electric vehicles when it eventually lifts its import ban on vehicles. He spoke about how renewable energy sources have been prioritised under his manifesto “Vistas of Prosperity and Splendour Policy”. The Government has agreed on a target of generating 70% of the country’s energy needs through renewable energy sources by 2030.

The President’s comments came as the country is undergoing its most severe energy crisis in recent memory. At present, the country’s power grid is in shambles. One of the three 300 MegaWatt units at the Lakvijaya coal power plant in Norochcholai has been out of action for the past few weeks. With hydropower generation also curtailed due to lack of rain and need to conserve remaining water for farming, the Ceylon Electricity Board (CEB) has been forced to rely on costly thermal power plants being operated using diesel and furnace oil. Yet, these efforts have been hit by the foreign exchange crisis, with the Ceylon Petroleum Corporation (CPC) insisting that the CEB, which already owes it Rs. 90 billion, find dollars to pay for further fuel purchases. The CEB, which is also running at colossal losses, says it is in no position to do so.

Appeals by the CEB to Lanka Indian Oil Company (LIOC) to bail it out by supplying necessary fuel to its power plants were also rejected this week, with LIOC saying it too only had fuel stocks sufficient for its filling stations.

This stand-off between the CPC and CEB has seen power breakdowns as well as both scheduled and unscheduled power cuts over the past two weeks as operations at various power plants had to be stopped due to lack of fuel. Even the day after the President delivered his policy statement, people in many areas had to endure power cuts lasting up to two hours as the CEB fought to balance the national grid and prevent a catastrophic island-wide blackout.

Last minute discussions between Power Minister Gamini Lokuge and Central Bank Governor Ajith Nivard Cabraal on Wednesday resulted in the CB releasing some foreign exchange to the CEB. The CPC also agreed to provide fuel stocks to the CEB sufficient fuel stocks till January 22. These stocks have now been delivered. Power Minister Gamini Lokuge told the Sunday Times yesterday that he expected the third unit of Norochcholai power plant to be added to the national grid by January 25. “The unit from the Norochcholai power plant will add 300MW to the national grid. This addition will more than make up for the shortfall in power that we have been relying on the thermal plants to supply,” he claimed.

Minister Lokuge has embarrassed both himself and the Government over the past two weeks after making bold pronouncements of there being no need to go for power cuts, only for the CEB to impose power cuts lasting several hours, often catching the public completely unawares. He has since sought to be more restrained. He still told the Sunday Times that he did not believe there would be any need for further power cuts once Norochcholai was added to the national grid “provided there are no further breakdowns of power plants and we get rains expected in April.”

Lokuge’s statement, however, again underlines just how helpless he and his Government have become when trying to provide uninterrupted power: they are relying on luck. The hope that there will be no breakdowns at any major power plants, given how they are already being pushed beyond their capacities, is ambitious at best. Meanwhile, the minister is also hoping for heavy rain, come April. What happens if it does not come? The minister also expects the CPC to keep supplying fuel to the CEB whenever the need arises, something which the CPC has not agreed to.

In comments to this column in December, Energy Minister Udaya Gammapila warned that the Government would have great difficulty in purchasing fuel from mid-January onwards due to the dollar crisis. This warning has now proved true. Tuesday’s offer from the Indian Government of a USD 500 million credit line to purchase petroleum products may provide some breathing space. This is how it is likely to be for the foreseeable future. The country has to hold out a begging bowl and hope some friendly nation gives it something to get by. Most often, these are loans, yet such is the pathetic state to which the country has fallen that some in the Government trumpet each one as if they have secured an outright grant.

Despite the offer of the Indian line of credit, Minister Gammanpila told the Sunday Times on Friday (21) that he does not see much difference in the current situation. Several Letters of Credit to be opened by the CPC are still pending due to lack of dollars. The CPC, meanwhile, has already delivered to the CEB diesel and furnace oil stocks sufficient until January 22 (yesterday), but is not in a position to deliver more, he remarked.

Meanwhile, speaking at a public event on Friday, Mr. Gammanpila stressed that the CPC was not in a position to provide the CEB fuel on a continuous basis unless a large dollar loan was obtained from somewhere. He noted that the CPC was currently suffering a loss of Rs. 30 for every litre of diesel it sells. Fuel consumption has gone up exponentially over the past few years as the road networks improved and people travelled more. With world oil prices too rising to record levels, the financial situation for the CPC has become dire.

He said about two thirds of dollars that come into the country every month had to be used to purchase fuel. “We can print rupees but we can’t print dollars. We have only a limited amount of foreign exchange left. We have to manage that carefully to import fuel. We will have to rely on fuel to produce electricity till the rains come in April.”

Unlike Mr. Lokuge and many of his cabinet colleagues who have insisted that the Government could provide electricity without power cuts, Mr. Gammanpila advocated for short term power cuts to manage the situation. “My understanding is that this drive to provide electricity all 24 hours of the day will end with us having to undergo power cuts lasting up to four hours in March if we don’t secure a huge dollar loan from somewhere. But such a loan will also come with huge interest. Isn’t it better then to have power cuts lasting about 1 ½ hours now till the rains come?” he asked. He likened the situation to having to decide between spending one’s entire salary to eat at an expensive restaurant for two days and going hungry for the next 28 days or to bring provisions from the shop to cook and have all three meals a day for the month.

The standoff between the CPC and the CEB over the past two weeks has also seen the two ministers become involved, with both taking shots at the other over the media. The controversy prompted Sri Lanka Podujana Peramuna (SLPP) MP Dilan Perera to quip during a news conference this week that perhaps the best solution to the energy crisis would be for the two ministers to exchange their portfolios.

Minister Lokuge attempted to downplay the spat on Friday, telling the Sunday Times that there was “no personal or professional issue” between himself and Minister Gammanpila. Even if this is true, it has now become crystal clear to the general public that the country is now being run on a day-to-day basis.