China-Lanka deals on slow gear

The People’s Republic of China, which has since its formation in 1949 has been a true ‘friend in need’ of Sri Lanka with ever generous assistance, has in recent months been distancing itself from us and withholding some vital credit lines. The reason: commission vultures are demanding kickbacks from these projects, according to knowledgeable sources.

Among the crucial projects, to which China had earlier pledged generous credit lines and even outright grants, but is now dragging its feet over, are modern cultural centre –a gift from China -- to be built at former Nomads’ Grounds, the 900mw Norochcholai coal power plant, and the Hambantota port project.

When we broached this allegation about unscrupulous elements here demanding commissions with the Chinese embassy in Colombo, a spokesman simply said “no comment,” but stressed that “We provide assistance without any pre-conditions to help Sri Lanka to develop its economy and to raise the living standards of its people”.

The embassy official also insisted that it was all Government-to-Government assistance.

When pointed out there has been undue delays in going ahead with the above projects, he said that was because discussions were still going on.
There may have also been a grave blunder on the part of this government to question China as to whether it had supplied weapons to the LTTE, based on questionable intelligence probably planted on us just to sour relations between the two countries. It must be noted that China was one of the less than a handful of countries that supplied us arms, when virtually the entire West refused to sell arms to Sri Lanka, especially after the race riots of 1983. The Chinese were so conscious about our plight that they never troubled us to immediately settle payments for those arms.

Another well informed Chinese working in Sri Lanka said it was impossible for the Tigers to get arms from China, but if they had got, it would have been from a third party.

Even at Thursday’s ceremony to launch the Hanbantota port project, observers said a notable absentee was the Chinese ambassador to Sri Lanka and in his place China was represented by its Charge’ d’Affaires. Chinese sources said, however that the ambassador was not present as he was away in China on holiday.

On May 31, Ports and Aviation Minister Chamal Rajapaksa when asked about the several postponements of the launch of the harbour project, told The Sunday Times that they were going ahead with the launch with Ports Authority funds, pending the approval of the US$ 360 million credit line from the Import and Export Bank of China.

Sri Lanka reeling from some of the highest electricity tariffs in the world, largely due to alleged mismanagement and corruption in the Ceylon Electricity Board, the sole power monopoly in the country, and impending blackouts got an extremely generous lifeline when China agreed to fund the entire US$ 455 million coal power project. Even the loan agreement for the project was signed in September 2006 between Treasury Secretary Dr P.B. Jayasundera and Assistant General Manager of the Import and Export Bank of China. But to date the money has not been disbursed for the contractor, the China National Machinery and Equipment Import and Export Corporation, to begin work on the project. Pending the disbursement of funds the contractor has maintained a small office at the site with a skeleton staff.

In the meantime, to be fair by the CEB, it must be said that it has kept much of its side of the bargain by resettling some 74 affected families on extremely generous terms in a new housing scheme replete with all facilities. Even the new 12 kilometre road from Palavi Junction to the project site has reached the half way mark, power sector sources said. They said even the Environmental Impact Assessment has been revalidated as required by law and the surveying for the routing of the transmission lines too is being carried out.

Power and Energy Minister W.D.J. Seneviratne on Friday, however, maintained that all matters had been cleared last week and the money should be disbursed within the next two to three weeks to begin work.

Other sources said so far there were no signs of the arrival of hundreds of Chinese experts and construction workers as envisaged to begin the work.

The Norochcholai coal power plant is an indispensable project, which was to be implemented in three phases of 300 mw each. The first was due to go into operation in 2010 while the second and third in 2011 and 2012. They are also expected to bring down electricity tariffs by 13 per cent with the completion of the first phase and by 22 per cent and 32 percent by the completion of others. Experts have warmed that Lankans were now paying highest tariffs in the world, barring those of only Singapore, as the country depends on hastily set up thermal power plants for more than 60 percent of its electricity needs. And many of those power purchase agreements were entered into under highly questionable circumstances.