Shell Gas terminal goes off shore

Shell Gas Lanka's terminal project is likely to go ahead with the terminal being shifted off-shore, the Board of Investment has said.

The controversial Shell Gas terminal originally proposed to be located in Muturajawela was suspended by the company after investing more than Rs 260 mn.

Shell Gas incorporated a separate subsidiary with BOI concessions to carry out the project.

"The company has done a comprehensive study and a re-assessment of the project and now they have come up with a different solution to build the gas terminal," BOI Chief Thilan Wijesinghe said.

"That involves setting up a terminal off shore."

The company was required to build the terminal as part of its privatisation agreement.

"We are awaiting confirmation from the company, subject to clearance from the Board of Directors of the parent company to recommence the project," Mr. Wijesinghe added.

The PERC at the time of privatisation claimed that the terminal would help reduce the price of gas. Instead the price of gas has skyrocketed under Shell Gas management and the terminal project was suspended. The government also had to forego income it previously earned from gas turnover taxes to prevent Shell Gas from increasing prices again.

The government gave Shell Gas a statutory monopoly of five years but failed to set up a regulator to counter monopoly and anti market trade practices.

Analysts say loopholes in the privatisation agreement and the lack of a gas regulator has hamstrung the governments attempts to check the gas monopoly.

South Asia beyond 2000

Colombo was the venue of an important conference to deliberate the future of South Asia. Some of the world's leading economists gathered together last Thursday and Friday to deliberate on the problems of South Asia and the policies needed to transform these economies into more developed ones.

As the World Bank has pointed out, "South Asia is still one of the two poorest regions in the world vying with sub-Saharan Africa for the worst social indicators". Yet there is a sense of hope and expectation that these countries would emerge from their stagnation.

As the World Bank has noted "It is also the region that has had the second highest growth rate in the world for the last decade, and that seems best positioned to replicate East Asian growth rates during the period of the 'miracle'."

Whatever may have been the deliberations and discussions at these meetings, we see several reasons why South Asia has a Herculean task before it to achieve the kind of needed progress. The enormity of the problems of South Asia can be gauged from the fact that the region has the largest number of poor in the world

About 517 mn of her population or 30 per cent are deemed poor. They suffer from illnesses owing to poor housing, bad sanitation and inadequate nutrition. Health facilities are inadequate and half of South Asia's people are illiterate, even more than in Sub-Saharan Africa.

The resources required to change these situations would be enormous. The low level of economic attainments are themselves a fundamental reason for inadequate resources. These countries lack public resources adequate to meet the large public expenditures necessary to improve their physical and social infrastructure.

Three of the South Asian countries expend large amounts on defence. Pakistan and India, owing to their disputes with each other. Sri Lanka owing to its internal civil war. The magnitude of the resources spent on defence is such that if half those expenditures could be cut and channelled to economic and social infrastructure, the performance of these economies and societies could be different. But that prospect appears bleak.

The political situation of most of these countries is not very conducive to economic growth. Political stability and good government are pre-requisites to economic growth. That is a lesson from history.

Unless and until these countries are able to establish strong, stable and good governments, the prospect of rapid economic growth would remain an unrealistic dream. Democracy, as it is practised in these countries, appears a hindrance to development.

Another important dimension which requires to be in place is the change in work ethics. A far greater commitment to disciplined hard work is needed. The East Asian miracle rested very largely on this factor and even at its time of crisis, there is hope owing to these inculcated values and attitudes.

There is a larger South Asian deficiency which may not have received attention at the World Bank Conference. South Asian societies are extremely clever in analysing their problems and even generating prescriptions for their solution. There may be few other societies which discuss their problems so much, write about them and continuously articulate and debate their concerns.

The entire region appears to suffer from an inability to translate ideas into practical policies and implement them. No doubt some of the reasons are the difficulties enunciated earlier, but apart from them there appears to be a cultural problem which makes these societies analyse their problems rather than find practical solutions.

Until there is change towards more pragmatic approaches and capacities to implement policies, South Asia will remain one of the poorest regions in the world.

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