State of national economy, scandalous SUV order and fuel price hikes By Shamindra Ferdinando

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A smiling PM Mahinda Rajapaksa takes SLPP membership from SLPP Chairman Prof. G.L. Peiris in late 2018 at the former’s Wijerama Mawatha residence while Sagara Kariyawasam, General Secretary of the Party, now embroiled in simmering controversy, looks on.

Trade Minister says Prez does not bring money from Mirihana or PM from Medamulana

What is the current state of the economy? How can the public determine the state of the economy? Let me briefly refer to recent statements made, both in and outside Parliament, by members of the ruling Sri Lanka Podujana Peramuna (SLPP) on the state of the economy. The issue, at hand, is whether the incumbent government is competent to cope up with the situation.

Trade Minister Bandula Gunawardane (SLPP/Colombo District), Energy Minister Attorney-at-Law Udaya Gammanpila (PHU/Colombo), Urban Development and State Minister of Coast Conservation, Waste Disposal and Community Cleanliness Dr. Nalaka Godahewa (SLPP/Gampaha District) lucidly explained ground realities. They painted an extremely bleak picture. Perhaps, they haven’t done so intentionally, to place the government in a difficult situation. However, their assessment certainly underscores the responsibility on the part of the government to review its strategies, without further delay.

Twelve years after the conclusion of the war against terrorism, the national economy is in tatters. The deterioration of the economy cannot be entirely blamed on the rampaging global pandemic, Covid-19.

Political parties may seek to take cover behind the pandemic, conveniently forgetting how waste, corruption, irregularities and negligence withered the economy. Obviously, the pandemic has accelerated the decay and the government is in an unprecedented crisis. Vast majority of people are struggling to make ends meet against the rapidly worsening situation.

Those responsible (both UNP and SLFP members of Parliament in the 2015-2019 yahapalana administration cannot absolve themselves of the responsibility) for Treasury bond scams, perpetrated in Feb 2015 and March 2016, are now advising the SLPP on how to manage the economy. Interestingly, the SLFP is a constituent of the ruling SLPP, whereas those who stood with the Treasury bond thieves, now represent the Samagi Jana Balavegaya. There is never a dull day in utterly corrupt Sri Lankan politics.

‘Government unable to bear continuing losses’

Lawmaker Gammanpila made two damning statements as regards the state of the economy – at the Energy Ministry, on June 3, and at another briefing, at the same venue, on June 11. Unfortunately, the former Jathika Hela Urumaya (JHU) heavyweight’s critical comments didn’t receive sufficient media attention.

Addressing the media, on June 3, at his Ministry, Minister Gammanpila admitted that heavily debt ridden and cash-strapped government and the Ceylon Petroleum Corporation (CPC) weren’t in a position to procure USD 3 bn loan (USD 3,000 mn) required for a new oil refinery at Sapugaskanda. Therefore the funding required for what Minister Gammanpila described as the country’s largest single project to be carried out following competitive bidding had to be external investment (read outside the government).

Declaring that the proposed refinery project will be the biggest ever industrial venture undertaken, Minister Gammanpila declared that all major previous undertakings had been carried out, sans competitive biddings. The declaration was made after he admitted that altogether the Hambantota port (USD 1,350), Norochcholai coal-fired plant (USD 900mn), the Mattala airport, and the Colombo-Katunayake highway, cost USD 2,916, whereas the proposed Sapugaskanda refinery project is estimated to cost a staggering USD 3,000mn. PHU leader Gammanpila’s admission there hadn’t been competitive bidding, in respect of previous major projects, is nothing but an indictment of the previous Rajapaksa administration, or the system in place.

Minister Gammanpila’s declaration that the Ceylon Petroleum Corporation Act (No. 28 of 1961) would have to be amended to pave the way for USD 3 bn investment, triggered accusations the government was planning to privatize the state venture. The lawmaker described the proposed Sapugaskanda project as a BOT (Build, Operate and Transfer) basis enterprise with it reverting to Sri Lankan ownership once the investor recoups his investment.

The ministerial claim that the government refrained from increasing fuel prices for 21 months is a grim reminder the public cannot expect the truth from politicians. Or did they keep quiet expecting a miracle rescue like their earlier faith in Dhammika Peniya (syrup) and the hocus-pocus of pouring contents of some earthenware containers into a river to tackle the pandemic?

At the June 11 briefing, Minister Gammanpila commented on the imminent fuel price increase, in addition to the proposed Sapugaskanda project. Gammanpila explained that the government’s inability to bear further losses against the backdrop of the pandemic driven collapse of the tourism sector, halt in foreign investment, sharp drop in foreign remittances, hence the hiking of the fuel prices with the world market price of crude topping USD 70 per barrel. The Minister declared that it would be quite a challenge to procure the required fuel, amidst the foreign exchange crisis.

Responding to strong JVP criticism of the Sapugaskanda project, Minister Gammanpila pointed out that the USD 3 bn estimate was based on a pre-feasibility report, prepared before him being appointed the Energy Minister. The forthright politician declared that once they finalized feasibility study a better understanding of the project could be had.

The bottom line is that the country lacked wherewithal to undertake a major infrastructure project.

Total collapse of revenue sources professed

State Minister Dr. Godahewa, during an inspection tour, on June 09, of Sarakkuwa and Dungalpitiya areas badly affected by the sinking of the fire-ravaged X-Press Pearl container carrier, didn’t mince his words when he explained the state of the national economy. Dr. Godahewa, who had served the private sector quite efficiently, before turning to party politics, explained the pathetic state of the national economy. What he said was simply frightening. Assuring the SLPP’s commitment to provide relief to those who had been affected, Dr. Godahewa declared that one fourth of state revenue had been spent on ongoing efforts to bring the Covid-19 epidemic under control. Dr. Godahewa asserted that the government faced the prospect of total collapse of state revenue. The State Minister’s assertion cannot be taken lightly.

Making reference to Rs. 5,000 relief allowance paid to selected groups of people, on four occasions, the former Chairman of the Securities and Exchange Commission estimated that so far the government spent over Rs 250 billion for Covid-19 control/relief work.

Trade Minister Gunawardane, too, bitterly complained about the state of the economy in Parliament. His June 8 speech, in the relatively empty Parliament, underscored the pathetic situation. The government seemed quite helpless and in a deepening dilemma over the absence of wherewithal to meet daunting challenges. In his own way, Minister Gunawardane admitted that public finance was in quite a distressing position. The COPE (Committee on Public Enterprises), COPA (Committee of Public Accounts) and COPF (Committee on Public Finance) should take tangible remedial measures to redirect Sri Lanka’s from its disastrous path.

In spite of making quite horrendous revelations about waste, corruption, irregularities and negligence, the parliamentary watchdog committees haven’t been able to bring runaway corruption under control. Those who had been exposed at COPE proceedings continue in their nefarious activities with impunity. The national carrier, SriLankan Airlines is a case in point. In last week’s column, titled ‘How public sector corruption withers national economy: RJ’s insight,’ the writer dealt with the late Rajeewa Jayaweera’s damning reportage of the national carrier. RJ left SriLankan Airlines, in 2005, not in 1995, as inadvertently mentioned. RJ’s brother, Sanjeewa Jayaweera (SJ) brought the error to the writer’s notice. But, what really interested me was SJ’s observation that the report of the Presidential Commission of Inquiry (PCoI) on SriLankan Airlines, Mihin Air et al prepared following 12 months of sittings during yahapalana rule hasn’t been released, nor any action initiated against the wrongdoers.

RJ’s 41 articles on the national carrier revealed how those who managed the SriLankan Airlines and political authority defied laws of the land and continue to do so. The accumulated losses suffered by the national airline now stand at a staggering Rs. 326 bn with the two-state banks – BOC and People’s Bank – continuing to bear the losses.

Minister Gunawardane explained the country’s economic woes, bluntly. Acknowledging that the national economy was in dire straits and if budget shortfall couldn’t be met, through domestic and foreign loans, there was no option but to sell-off assets. Having compared how a government and a family struggled to manage shortfall income, the former reputed economics tuition master recommended selling of national assets. The SLPP certainly owed an explanation whether Minister Gunawardane articulated its position.

Minister Gunawardane told the stark truth to the House that neither Prime Minister Mahinda Rajapaksa, who was also the Finance Minister, nor President Gotabaya Rajapaksa would bring money from Medamulana or Mirihana to solve the unprecedented financial woes facing the country. Emphasizing the responsibility of Parliament, in respect of public finance, Minister Gunawardena emphasized 225 members of Parliament (regardless of political parties they represented) were responsible for taxpayers’ money.

Sharp hike in fuel price amidst Covid time bonanza

Minister Gammanpila’s Friday announcement, on fuel price hike, came as quite a surprise. That move flabbergasted the public, as much as the shameless decision to procure 228 Toyota Land Cruisers did in late May. Of the 399 vehicles ordered, 225 were for members of Parliament, made up of SLPP 145, SJB 54, TNA 10, JJB 3 (JVP contested under the JJB banner), AITC 2, EPDP 2, UNP 1, SLFP 1 and OPPP, TMVP, MNA, TMTK, ACMC, NC and SLMC one each. Among the beneficiaries is the sole UNP National List member though yet to take oaths as an MP. Obviously super luxury Toyota Land Cruisers are ordered for 225 members of Parliament. If so, the government should reveal the lucky recipients of the three remaining SVUs. Such luxury vehicles for lawmakers, at a time the country is experiencing severe economic difficulties, cannot be justified under any circumstances. Now JVP leader Anura Kumara Dissanayake has questioned the rationale in ordering SUVs for 225 members, the JVP should ask the Secretary General of Parliament Dhammika Dasanayake whether the three JVPers, in Parliament, were included in the list of those destined to receive brand new vehicles. Did the Finance Ministry submit a Cabinet paper that dealt with 399 vehicles, including those intended for MPs without seeking their approval? The JJB parliamentary group comprised Anura Kumara Dissanayake, Vijitha Herath and Dr. Harini Amarasuriya.

The contentious issue at hand is whether the Finance Ministry placed an order for SVUs for MPs without asking the consent of all members of Parliament, representing 15 recognized political parties?

Media Minister and co-Cabinet spokesperson Keheliya Rambukwella is on record as having said that though the Prime Minister’s Office announced the cancellation of the 399 vehicle order, against the backdrop of financial difficulties caused by the Covid-19 pandemic, the government may not be able to do so because Letters of Credit had already been opened. Amidst the growing public anger over the squandering of public funds to acquire luxury vehicles for MPs, Minister Rambukwella, on June 11, declared that the Finance Ministry, and other parties to the Rs 3.7 bn transaction, following successful negotiations, has cancelled the vehicles for lawmakers.

It would be pertinent to mention that the Prime Minister’s Office on May 20 indicated the impending fuel price hike. A statement issued by the Prime Minister’s Office said that the government was seriously concerned about the rising price of crude oil in the world market from 2020 and an upward revision was imminent.

However, what really stunned the public was General Secretary of the SLPP Attorney-at-Law Sagara Kariyawasam questioning the fuel price hike. National List MP Kariyawasam asked whether the unexpected increase was meant to undermine the SLPP administration. The MP faulted Energy Minister Gammanpila for the situation.

Hiru presenter Chamuditha Samarawickrema last Sunday (13) ridiculed lawmaker Kariyawasam’s declaration. Samarawickrema, who had been recently embroiled in a controversy over make-up artist Chandimal Jayasinghe and Public Security Minister, retired Rear Admiral Sarath Weerasekera, having functions at the Shangri-La hotel, on May 30 and May 28, respectively urged MP Kariyawasam not to stage dramas.

The Hiru anchor questioned Kariyawasam’s accusation that Minister Gammanpila did so to cause trouble for the government.

The government obviously is in deep trouble. It should explain why such expensive SUVs were ordered for lawmakers, in May, against the backdrop of the rapid deterioration of the nation’s financial position. The country got to know of the despicable decision to place an order for SVUs only after the Prime Minister’s Office through a public announcement claimed to have cancelled in the fourth week of May.

CPC saves USD 300 mn

COPE, PAC and COPF proceedings, since the last general election, revealed waste, corruption, irregularities and negligence. Inquiries that had dealt with public sector enterprises over the past two decades, exposed public-private sector partnerships in utterly wasteful and corrupt practices. So much so that today’s financial crisis cannot be examined without taking into consideration extremely poor management of state enterprises, and public and private sector cooperation, at the high level, to rob the country. Two such glaring examples are the Treasury bond scams, perpetrated in 2015 and 2016, by the Yahapalana administration, and the massive sugar tax scam, carried out by the SLPP. The JVP is on record as having alleged that the sugar tax scam is far worse than even the Treasury bond scams. The high profile sugar scam couldn’t have been executed without the issuance of gazette bearing No 2197/12 dated Oct 13, 2020 by the Finance Ministry. That resulted in the immediate replacement of Rs 50 duty on a kilo of imported sugar with a mere 25 cents. In spite of COPF Chairman lawmaker Anura Priyadarshana Yapa’s declaration, on January 05, 2021 that the consumers didn’t benefit at all from duty reduction the government has conveniently forgotten the matter. The SLPP should be ashamed of its role in such corrupt practices.

Perusal of proceedings of COPE, COPA and COPF underscored those in political authority as well as officials who ruined the national economy. As the writer mentioned before, the ruination of SriLankan Airlines is just one example. Both the SLFP and the UNP ruined the national carrier in style is certainly nothing to be surprised about. They dealt with all state sector enterprises in a similar way. The way procedures have been manipulated to rob the country is another story. Proceedings in respect of procurement of coal required by Norochcholai revealed unprecedented corruption. But, absolutely nothing has been done. No action whatsoever has been taken against corrupt elements, though shocking revelations have been made in Parliament.

Would you believe the statements issued by the Prime Minister’s Office and Energy Minister Gammanpila, as regards the status of crude oil prices, were contradictory? However, the Communication Department of Parliament recently revealed that the CPC saved USD 300 mn in 2020 due to the drop in crude oil prices in the world market as well as some other factors. This came to light during COPE proceedings, thanks to a query raised by SJB member S.M. Marikkar.

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Disclaimer: State of national economy, scandalous SUV order and fuel price hikes By Shamindra Ferdinando - Views expressed by writers in this section are their own and do not necessarily reflect Latheefarook.com point-of-view

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