Monday, February 29, 2016

Sri Lankan school empties amid Aids rumours

From BBC
A school in western Sri Lanka has been emptied of all but one pupil amid false rumours that the boy has Aids.
The boy's mother said they had faced discrimination since her husband died
Parents removed their children from the Kurunegela school last week, despite the six-year-old having a certificate proving he does not have the disease.
His mother said many other schools had rejected him because her husband's death had been wrongly blamed on Aids.
School officials told the BBC's Sinhala service they would try to hold a session to educate parents.
Chandani De Soysa said she had been trying for some time to find a school place, but "they didn't take my child because of this Aids fear".
"I protested and nothing happened, even I found it difficult to get any work."

Low HIV awareness

Villagers have erected a sign warning people to avoid the school

After her case was reported by BBC Sinhala earlier this month, the educational and human rights authorities became involved, and last week one school was ordered to take in the child.
Despite both her and her son holding certificates showing they are not infected, parents immediately began putting pressure on her to remove him, but she refused.
"He went to the class and played with other kids, but then suddenly all the parents came and took their children away," she told the BBC.
His class teacher, who stayed with him at school, said she felt "very sad when the child asked me why all my friends are leaving because of me, and why the police and others are here".
She said even though other children had treated him normally, "I am not sure how the children will react even when they come back".
The regional education director, Saman Wijesekara, said parents of all 186 pupils had formally asked to stop attending the school.
"We are thinking of having an educational session to parents to solve this issue," he said.
The school head has closed the school for two days but BBC Sinhala reporters say angry parents have been standing at the school gate and protesting to officials and teachers who enter.
Meanwhile officials from the Sri Lanka Human Rights Commission have been to the school and have also visited the boy's home.
Sri Lanka is considered to have a very low prevalence of HIV, the virus that causes Aids.
According to UN figures, in 2014 there were 3,200 adults and 100 children living with HIV, fewer than 0.1% of the population.
But there is also concern about poor awareness of the virus and how it spreads, which leads to stigma and discrimination.

Golden Key saga : Presidential order for Finance secretary, CBSL governor

From SL Mirror
Presidential Secretary - Anil Amaratunga has formally informed the Finance secretary and Central Bank governor to pay the remaining sum to Golden Key depositors.
This measure has been taken on the directive of President Maithripala Sirisena on the complaint of a depositor, reports say.
Although the payments should be done to the court ruling on Oct. 23, 2009 with regard to the SC(FR)191/2009 case, the former CBSL governor had misled the judiciary and secured a court order on March 30, 2014 to pay back just 41% of the deposit.
Afterwards, the courts had ordered on July 29, 2013 to pay back 50% of the deposit instead of the 41%.
However, the depositor's complaint had cited that the CBSL was preparing to payback the depositors overlooking this court order, providing the respondents the opportunity of getting away with paying less.

Sri Lanka downgraded by one level to 'B+'; outlook negative: Fitch

ECONOMYNEXT - Fitch Ratings has downgraded Sri Lanka by one notch to 'B+' from 'BB-' with a negative outlook at the lower level, on falling foreign reserves, high debt maturities and lack of policy coherence.
Sri Lanka's sovereign rating is now four levels below the lowest investment grade rating.
Sri Lanka external liquidity ratio was too far below BB and even B rated countries, Fitch said.
"The Sri Lankan sovereign faces increased refinancing risks on account of high upcoming external debt maturities, the rating agency said.
"Further, the sovereign's external liquidity position remains strained, reflecting pressure on foreign exchange reserves.
"In Fitch's view, this partly reflects a weakening in policy coherence that increases the likelihood of Sri Lanka requiring external liquidity support from the IMF and other multilateral institutions."
The full rating commentary is reproduced below:
Fitch Downgrades Sri Lanka to 'B+'; Outlook Negative
Fitch Ratings-Hong Kong-29 February 2016: Fitch Ratings has downgraded Sri Lanka's Long-Term Foreign- and Local-Currency Issuer Default Ratings (IDRs) to 'B+' from 'BB-'. A Negative Outlook has been assigned to the IDRs. The issue ratings on Sri Lanka's senior unsecured foreign- and local-currency bonds are also downgraded to 'B+' from 'BB-'. The Country Ceiling is downgraded to 'B+' from 'BB-' and the Short-Term Foreign-Currency IDR is affirmed at 'B'.
The rating action reflects the following key rating drivers:
- Increasing refinancing risks. The Sri Lankan sovereign faces increased refinancing risks on account of high upcoming external debt maturities. Further, the sovereign's external liquidity position remains strained, reflecting pressure on foreign exchange reserves. In Fitch's view, this partly reflects a weakening in policy coherence that increases the likelihood of Sri Lanka requiring external liquidity support from the IMF and other multilateral institutions. Sri Lanka's external liquidity ratio, as measured by Fitch at the end of 2015, was 70.9%, which is far below the median of 'B'-rated peers' of 171.9% and the 'BB' median of 152.4%.
- Significant debt maturities. Sri Lanka faces significant debt maturities in 2016 amid the country's vulnerability to a shift in investor sentiment. Fitch estimates the sovereign's external debt service to be close to USD4bn for the rest of 2016, compared with FX reserves of USD6.3bn (end-January 2016). Sri Lanka's vulnerability to a shift in investor sentiment was evident when investors sold-off the equivalent of nearly USD2bn in local-currency government securities in 2015. A further outflow from treasury bills and treasury bonds, which account for about 31% of the country's FX reserves, could put more pressure on reserves. However, prevailing low oil prices will continue to support Sri Lanka's current-account deficit in the near term. Fitch expects the current-account deficit to remain manageable at about 3% of GDP over 2016-17.
- Weaker public finances. The deterioration in Sri Lanka's fiscal finances is driven partly by consistently low general government revenues. At an estimated 13% of GDP, Sri Lanka's gross general government revenues remain far below the 'B' median of 25.4% and the 'BB' median of 26%. The 2016 budget did little to address this issue directly and absent any significant fiscal consolidation, Fitch expects continued fiscal slippage over 2016-17. Sri Lanka's gross general government debt (GGGD) burden is estimated to have increased to more than 75% of GDP by the end of 2015, up from 71% at the end of 2014 and much higher than the 'B' median of 52% of GDP and 'BB' median of 43.6%.
  - Decline in foreign-exchange reserves. Fitch has revised downwards its forecast for foreign-exchange reserves, with reserve coverage of current external payments now forecast to decline to 2.9 months in 2016 from an estimated 3.4 months in 2015. This forecast compares unfavourably with Fitch's earlier forecast of 3.9 months for 2016 and is well below the 'BB' median of 4.2 months. While the authorities have undertaken certain measures to support external finances, including entering into bilateral swaps with other central banks, Fitch does not view this to be a sustainable way to improve the stability of the external finances.
- Foreign-currency debt portion remains high. Sri Lanka has also increased its issuance of foreign-currency debt, which Fitch estimates now makes up close to 46% of total public debt, up from nearly 42% at the end of 2014. This has increased vulnerability of Sri Lanka's public debt to a significant depreciation of the exchange rate, which would increase the debt burden in local currency terms.
- Favourable economic growth. Sri Lanka's macroeconomic performance remains stronger than some of its peers' in the 'B' and 'BB' range with real GDP growth for the five-year period ending 2015 averaging close to 6%, compared with the 'B' median of 4.6% and 'BB' median of 3.9%. Sri Lanka also continues to score highly, compared with the 'B' median, on basic human development indicators, such as education, health and literacy, which is indicated by its favourable ranking in the UN's Human Development Index. These relative structural strengths, combined with a clean external debt service record and smooth transition of power during the presidential and parliamentary elections in 2015 indicates a basic level of political stability, which supports the rating at 'B+'.
The Negative Outlook reflects the following risk factors that could, individually or collectively, result in a downgrade of the ratings:
- A further increase in external vulnerability driven by a sustained decline in FX reserves reflecting, for instance, reduced international market access and/or a sudden reversal in portfolio inflows.
- A further deterioration in policy coherence and credibility that widens macroeconomic imbalances and/or heightens external vulnerabilities.

Sunday, February 28, 2016

Injunction Order Against Remanding Of Yoshitha Refused: Bail Application Fixed For March 8

From Asian Mirror

The Colombo High Court today refused a request by the lawyers of Yoshitha Rajapaksa to issue an injunction order nullifying the remand order given by the Kaduwela Magistrate on January 30.

Rajapaksa's lawyers argued that the remand order was given, not considering the bail application.

However, the request was refused since the Magistrate had directed the suspects to be remanded under the Bail Act, since they had not cooperated sufficiently with the FCID investigations.

Meanwhile, the second respondent of Rajapaksa's bail application petition filed objections through an affidavit.

The court ordered Rajapaksa's lawyers to file counter-objections.

The next hearing was fixed for March 8.

Sirisena Purges SLFP: Duminda Silva, Prasanna Ranatunga Removed As Electorate Organizers

From Asian Mirror

Twenty six new SLFP electorate and district organizers were appointed by President Maithripala Sirisena this morning.

SLFP Organizer for Kolonnawa Duminda Silva was one high profile individual to lose his position, to be replaced by Kotikawatte-Mulleriyawa Pradeshiya Sabha Chairman Prasanna Solangaarachchi. Meanwhile, UPFA MP Prasanna Ranatunga was replaced as the Minuwangoda Electorate Chief Organizer by his brother Ruwan Ranatunge.

The SLFP Treasurer, Minister S.B. Dissanayake, was named the Hewaheta Electorate Chief Organizer.

As expected, Kanthi Kodikara was removed as Chief Organizer of Maharagama Electorate to be replaced by Western Province CM Isura Devapriya.

Dhanasiri Amaratunge, another Rajapaksa supporter, was removed from the post of Dehiwala SLFP Chief Organizer. Keerthi Udawatte was appointed in his place.

Sri Lanka Navy Suspend Yoshitha Rajapaksa

From Asian Mirror
Sri Lanka Navy suspended Lieutenant Yoshitha Rajapaksa with effect from February 28, under the direction of the Ministry of Defence, in order to keep the ongoing FCID inquiry independent.

The FCID questioned Rajapaksa at Navy Headquarters on January 30 before arresting him on charges of money laundering at the Carlton Sports Network.

He and four others are in remand custody from January 30.

We build too many walls and not enough bridges

From FT
Guest Column - By Rohan Masakorala

Sri Lanka needs to leap into the modern world to catch up as we have lost so many opportunities to develop the country and increase the quality of life of our people. On one hand we can blame the war for everything that went wrong but what about the never ending political arguments and issues added with extremist, bureaucracy and action of unions driving political agenda ruining our chances of giving a better country to the next generation? This question comes to my mind, as I have observed that the Sri Lankan society at large has really not connected to the modern 21st century world in terms of attitude, spirit and ambitions.

I am not talking about the ordinary citizen, but the general political, business and institutional culture/framework, except for a few who thinks otherwise. Many seem to be not very open, candid or positive. Constructive dialogue seems still far away among private sector as well as the Government. The appetite to work in silos, personal territory, short term benefits and agendas and solving problems at dinner tables without taking responsibility seems to be the norm for many.

Falling standards of professionalism, ethics is what I have seen through a near 25 year journey in the field of international trade and transportation. Leadership in many institutions works in much closed territories. Lack of professional knowledge in handling issues by placing facts into paper and communicating the right message is not visible. Probably there are more MBAs and PHDs today than any time before. But delivery of these professionals is questionable. With all these professionals, why is our country not connecting to the world as it should be and why are we not communicating the proper messages to the masses?

Any country needs to safeguard their strengths and strategies for nation building. But we must be open for new ideas and move away from age old ways of doing things where information and digitalisation, together with artificial intelligence is changing the rest of the world and its landscape rapidly.

Protecting our own silos, institutions and personal businesses will certainly help the able and the informed to keep on distorting the economy while the poor get poorer.

Building fences and walls in a free economy where competition has to thrive and new technology/knowledge has to enter would be disastrous and would be a non-starter for targets we have set. Instead we have to break barriers for trade and that is the task for the Government and chambers to do. But poor communication and a reactive action rather than proactive signals by the Government to the grassroots, businesses and professionals would make our efforts difficult to break the cycle of suspicion and build confidence.

The concept of working in one voice for the common benefit and greater influence should be our national agenda. Although we have a national government, it is still visible that the administration is finding it difficult to drive the importance of national policies and implement what is already done. A committed few are struggling due to unwanted, sometimes unprofessional obstacles.

As an emerging country with tremendous opportunity if we do not give the proper signals of reforms and stability, the road ahead is still going to be tough for Sri Lanka.

As a nation, politicians, businesses, institutions need to build bridges among themselves. Instead of building walls now is the time that the country needs to build greater global networks to attract and win the attention of the rest of the world to develop our exports as well as to increase global capital inflows to achieve sustainable development goals and to alleviate the poor from poverty.

In writing these sentiments I thought of using a quote on the net: ‘We build too many walls and not enough bridges’, which is attributed to Sir Isaac Newton. This is the best diagnosis for the state of affairs in our country in the second decade of the 21st century. I sincerely hope that we could change this, and we can change this if all our leaders take the national responsibility before the personal agenda.

(The writer is the CEO of Shippers’ Academy Colombo, an economics graduate from the Connecticut State University USA, senior consultant Ports and Aviation – SEMA, Past Secretary General Asian Shippers’ Council.)

Govt denies foreign currency crisis

From FT
By Ashwin Hemmathagama – Our Lobby Correspondent

The Government yesterday refuted in Parliament allegations by Opposition members of a foreign currency crisis in the country.

State Minister of National Policies and Economic Affairs Niroshan Perera rejecting Opposition criticism told Parliament that foreign currency reserves stood as US$ 7.7 billion as at 9 January 2015.

“The estimated foreign exchange reserves position as at 26 November 2015 was US$ 7.3 billion. This is a decline of US$ 0.4 billion. It was caused due to foreign debt payments, settlement of the matured international sovereign bond, payment made to the IMF under the stand-by arrangement facility, and the supply of liquidity to the domestic foreign exchange market,” the State Minister said.

Despite the decline, the Government has taken steps to protect and increase foreign exchange reserves by entering into a currency swap of US$ 1.5 billion with the Reserve Bank of India, issuing two international sovereign bonds amounting to US$ 2,150 million, entering into new foreign currency swap arrangements with local commercial banks amounting to US$750 million, allowing greater flexibility in the determination of the exchange rate on the demand and supply conditions, reserving the right to intervene to curtail any excessive volatility from 4 September 2015, reducing loans to value ratio to 70% for loans and advances in respect of motor vehicles with effect from 1st December 2015, and revising the method of computation for the customs valuation of motor vehicles for the purpose of calculation of excise duty at the time of import.

However, UPFA Joint Opposition member Udaya Gammampila disagreed with the Minister’s response.

“Foreign direct investments fell short in 2015. Added to this, foreign selling was high compared to purchases at the Colombo Stock Exchange. These are the issues that affected the foreign reserves. The Central Bank has issued a new regulation to question the source of income from all those who bring in over Rs. 200,000/- into Sri Lanka. But some time ago, the Finance Minister informed this House that no questions would be asked about the source of money brought into Sri Lanka, having the intension of building the reserve base,” he said.

In response, the State Minister explained the volatility in global markets, which is not an exception.

“There are many reasons for foreign reserve fluctuations. The key issue was that a father borrowed money some time ago. Since the death of this father we are burdened with debt. I am sure MP Gammampila forgot this issue. We are bound to service the debt regardless of the aircrafts landing at Mattala and the ships calling at Hambantota Port. We have to pay our dues regardless of us playing cricket at Sooriyawewa stadium built from borrowed money. On the other hand, the Government follows rules and regulations in terms of inward and outward foreign currency flows. The Prime Minister clarified in Parliament that Sri Lanka is also affected in 2016 by the global issues,” he said.

Making use of the supplementary question, the UPFA joint opposition member Bandula Gunawardane informed Parliament of rumours of Fitch Ratings revising the ratings on Sri Lanka.

“Parliament possess authority over public finance. On 31 December 2015, foreign currency reserves stood at US$ 7.3 billion. Unfortunately, the reserves came down by US$ 1 billion to US$ 6.3 billion by the end of January 2016. Added to this, we are supposed to pay back a US$ 1.1 billion loan we took from India. Aggravating the issue, Fitch Ratings was attempting to change the national rating from positive to negative. We all know that the Central Bank has requested Fitch to hold the report,” said MP Gunawardane.

UPFA joint opposition member Dinesh Gunawardane meanwhile said, “the Prime Minister has informed Parliament several times about the situation in the country. But Fitch Ratings which was positive has now turned into negative during the last 48 hours. The unlimited amount of our foreign exchange getting drained out of the country is the key reason for this.”

In response, Minister of Higher Education and Highways and Leader of the House of Parliament Lakshman Kiriella criticised the Rajapakse regime for borrowing at astronomical rates to fund their pet projects.

“We don’t have reserves but a collection of moneys borrowed from internationals. You ruined the country for 20 years where the foreign reserves came down to alarming levels of US$ 1000 million. So, you borrowed money at 8% - 9% from wealthy tycoons abroad. You should be ashamed to call these moneys ours. Almost 90% of the reserves are nothing but money borrowed at high rates,” added Minister Kiriella.

No omelette without breaking eggs

Ranil’s tough line deserves watchful support

From The Sunday Island - By Kumar David

The public has been haranguing the government for not prosecuting corrupt and criminal politicos (of whatever regime), not acting firmly against racist provocateurs and not pulling up slack government servants to enhance the quality of state services. If this is the grouse then strong action is justified and nobody should complain if the Prime Minister breaks a few eggs to make an omelette – there are good reasons to be cautious in supporting tough governments because Lee Kwan Yue like experiences have been mixed blessings, but more on that some other time.

Demonstrations of public outrage at malfeasance is abundant in print, electronic media, TV and is a prime topic of every social conversation. The antidote was well stated in a letter to the Island (19 February) by reader DEMOS: "If the law of the land is enforced equitably, and where breaches of the law occur, justice is meted out strictly without fear or favour, the majority of people will be happy in the knowledge that they can live with dignity and with an assured sense of security ". Very good, but enforcing the law with equity, putting an end to racial incitement and that ensuring public servants work in proportion to their remuneration, provokes vengeance from law breakers, racists and slackers. These eggs need to be broken if Mr Demos is to enjoy his nourishing omelette.

Allow me to muse on these themes from the perspective of a leftist and dwell on what the left should be doing but falling short. I expended time seeking leftist reactions to the question "What should our relationship to the Ranil Wickremesinghe government be?" The reply fell not into a wide spectrum, but into two sharply dichotomous positions. The Better-Left, for want of a name, consisting of the LSSP Majority Faction (Lal Wijenayake, Jayampathi, Vijaya Kumar), left-liberal intellectuals and Tamils said: ‘Responsible Cooperation’. ‘Responsible’ is an issue based approach – there will at times be disagreements. ‘Cooperation’ means now is a not-to-be-wasted opportunity to collaborate with the government for both positive purposes, and no less important, to defeat racism that has not been entirely eradicated, 8 January and 17 August notwithstanding. Others, such as Siritunga’s United Socialists, ex-Maoists and some civil society organisations e.g. those led by Jehan, Nimalka and Pakiasorthy, also belong to the responsible but not unconditional collaborator block. The JVP is tied up in knots of its own making and has managed to get both feet into its mouth.

The other side of the dichotomy is exemplified by the Dead-Left – or Dead & Buried (D&B) – consisting of the LSSP minority, the CP and Vasu’s DLF. Frontline Socialists (a JVP breakaway sliver) also belong indirectly to an ‘overthrow this government and bring back Mahinda’ agenda. The D&B’s theoretical fig-leaf is ‘Mahinda is pro-people; the present government pro-imperialist’. This is farcical. The Rajapaksa gang’s anti-Western posture was to save its skin from war-crimes prosecution, its tilt to China to collect booty from Chinese companies, and as for socialism, I sincerely don’t see what’s socialist about that regime’s programme during its two terms of office.

The Better-Left

The Better-Left I can identify with but the pity is that it’s not deeply involved in mass action. Lal is doing a great job with public consultation on the constitution and Jayampathi will be on the drafting body, but still isn’t it a disgrace that the left needs, albeit open-minded, liberals to lead the fight against chauvinism? What a goddamn shame; it’s not the left, but Ranil Wickremesinghe and Mangala Samaraweera who are the most prominent spokesmen denouncing racism today!

Some in the Better-Left are handicapped by sectarianism; they manifest the negative side of Trotskyism and do not understand that nurturing a broad-left should be their main task. Ranil does not need their help to mobilise the liberal class, he can do it better himself; the tactical need today is for another separate vanguard on the left flank of society. Is this difficult to grasp? It has not penetrated some pro-Ranil left sectarians on whom the importance of broad-left mobilisation has not dawned. Ranil is willing to grasp opportunity: His "Hit-to-see; if you want to fight, let’s fight" is the right frame of mind and is waking up liberals who have long been grumbling about inertia.

Now cut the crap that the left is in decline globally and our predicament is normal. Heard of Jeremy Corbyn? Heard of Bernie Saunders? The world is changing, Lanka will change; how soon depends on our clarity and purposefulness. What is indisputable is that young people, the next generation, in the West is vibrant and the working class in the US is following in its wake – in the UK trade unions were one driver of Corbyn’s rise to leadership.

I took the initiative of bringing Corbyn to the notice of Lankan readers when he was derided by the British media as a dead loser; the UK media is a lot more sanguine now. The Guardian (15 February) carried a piece by Freddie Sayers, editor in chief of YouGov, which said: "In both cases (Corbyn and Saunders) a key enabler has been the detoxifying of leftwing ideas. The word socialism itself has become acceptable again, and to the millennial generation it has more to do with Swedish sunshine than Soviet gloom. A recent YouGov study in the US revealed that 18- to 29-year-olds are the only group that overtly favours the term. But there are significant minorities in the older generations that also favour the concept – and they add up".

The PM has taken the fight to the GMOA and the press. I have not yet studied ETCA and will take it up next week; in principle internationalism and collaboration with India are good. In respect of the press it is true that (a) much of it, not excluding the Daily Mirror and Dirana, was a Mahinda tail-wager and that (b) to this day contributes little to foster pluralism, devolution or imaginative and constructive inputs to the development discourse. Sure I have reservations re- the government’s reliance on a capitalist development strategy with no grounding in the guiding role of the state. This contradicts even models of successful Asian capitalism, South Korea, Taiwan and Singapore.

However this piece is not about whether the left can collaborate with the UNP on economic policy; it is about the political programme that has come to the forefront – constitution, devolution, pulverising chauvinism, and a framework for all-round development. The extended common ground is welfare (education and health), and a functional public service, not class fundamentals. I do not seek commonality with the UNP on socialism, capitalism or any other –isms. First things first; at this time of peril secure democracy first; maybe our ways will part after that.

Ranil as populist

Life never ceases to surprise and some things the PM has said recently are not consonant with the image I have carried over the years. His punch lines at the World Bank Research function were quite un-Ranilish. Here are the choice ones: "The rich have got richer the poor become poorer"; "The bottom 80% pay 80% of taxes and the economy’s weight is borne by the masses"; "I think we require a capital tax". I rubbed my eyes in disbelief; I was used to this sort of thing from NM, but Ranil!

But there are three inconsistencies. First this is inconsistent with the government’s budget proposals which are not poor-friendly but intended to spur capitalist growth in anticipation, I presume, of a trickle down effect. Reducing the income tax ceiling to 15% and inducements to entrepreneurs, do not resonate with the PM’s pro-poor talk; somebody is taking somebody for a ride! The imbalance of expected revenue and envisaged state spending is a second discrepancy. Who will pay? Economists are not good at expressing themselves; when tongue-tied they borrow from the civil engineering argot. So they have "structural" problems, which apart from this imbalance, refers to low investment, skills deficiency and weak institutions.

This brings me to the third defect. I have been pushing for a development and industrialisation programme; Make-in-Lanka to dovetail into what is turning out to be a big Make-in-India push. My pleas are falling on deaf ears, like my Single-Issue Common-Candidate concept which was ignored for two years. I don’t see how the PM is going to get anywhere resource-wise, unless he aggressively points in a chosen direction. I repeat, Lanka must cash in on India’s potential boom and I am inclined to view ETCA through this prism.

Ranil’s purported populism raises interesting prospects that I leave you to mull over for the rest of the week. Let us take a dim view of the PM; let us hypothesise that his populism does not come from the heart; that for him it is unfamiliar territory. Territory he is venturing into because he needs allies among progressive sections of society to defeat chauvinist monsters and the Rajapaksa rump and to overcome colossal inefficiency in the state. To do the second of these he needs a deal with the working class; to do both he needs a wider alliance.

Now, there is something called momentum. One can have allies, make commitments, set wheels in motion, and having used erstwhile collaborators, ditch them, saying "Thank you very much" and go the other way. History has many such examples; but history also has many counter examples where momentum could not be reversed and change followed upon change. It all depended on how the specifics unfolded. For now let us not ask for too much and work towards the ‘merely’ democratic tasks I enumerated previously. Let us also keep our eyes open, ready to cross whatever bridge, in whatever direction, when it becomes necessary to do so.

Saturday, February 27, 2016

Learning Vallibel Lessons The Hard Way

From The Sunday Leader - By Nirmala Kannangara
The Department of Forest Conservation has come under severe criticism for approving a mini hydropower project within the Dellawa Forest Reserve in the Neluwa Divisional Secretariat in the Galle District which is expected to have a disastrous impact on the ecology. Approval for this project had been granted in 2014 and questions have been raised as to whether the Forest Department was forced to extend its approval as the project proponent is the Joint Chief Executive Officer of Vallibel Power Erathna PLC which is owned by none other than Dhammika Perera, close associate of former President and current Kurunegala District MP Mahinda Rajapaksa.
Anda Dola, a tributary of Gin Ganga, is the latest victim of rapidly spreading mini hydropower projects in the country. Environmentalists are querying as to how the Department of Forest Conservation as the project approving authority gave their approval to Easa Hydro Technologies (Pvt) Limited to start a hydropower project within a forest reserve.
The Chief Executive Officer of Easa Hydro Technologies (Pvt) Ltd, Russel de Silva, had submitted an application in 2013 seeking approval to start the Anda Dola mini hydropower project to supply electricity to the national grid. An Initial Environment Examination (IEE) had been done in 2014 which is said to have been carried out by vested parties without even visiting the sites and most of the environmental impacts have not been stated in the report.
“Neither the Forest Department nor the Irrigation Department can now claim that the IEE report submitted by the project proponent is irregular as they have to check whether the IEE had been carried out unbiased and whether it had been done according to their guidelines and whether the ‘experts’ who conducted the examination visited the sites,” an environmentalist said on condition of anonymity.
Be that as it may, questions have now been raised as to why the project proponent Russel de Silva gave the official address of Easa Hydro Technologies as No 4, Narahenpita Road, Nawala which has turned out to be a bogus address.
According to the Irrigation Department, all letters sent to the Nawala address had been returned. An investigation carried out by this newspaper revealed that Russel de Silva is the joint CEO of Vallibel Power Erathna PLC which is owned by the former Secretary Transport Ministry and one-time Chairman, Board of Investment (BOI), Dhammika Perera, and De Silva’s reachable address is not the Nawala address but 27-2, East Tower, World Trade Centre, Colombo 1, which is the official address of Vallibel Finance.

Fake address
All attempts to contact Russel de Silva to find out why a fake address was provided in his application and why an irregular IEE report was submitted to the Forest and Irrigation Departments and why most of the conditions stipulated by the Forest and Irrigation Departments were ignored by him when constructions were carried out, failed and none of this reporter’s calls were returned.
The Sunday Leader visited Vallibel Power Erathna PLC, 27-2, East Tower, World Trade Centre on Wednesday, February 24 to meet Russel de Silva who was in his office at the time, but De Silva refused to meet the representative of the newspaper claiming he was at a meeting. Although all contact details of this reporter were sent to him, De Silva failed to contact the newspaper to make any comment. When a call was made the following day, De Silva was still at meetings and did not want to spare even a few seconds to answer the call.
When contacted, Director Irrigation (Galle and Matara), Engineer Deepika Priyani Thrimahavithana confirmed to The Sunday Leader that the IEE report was irregular.
In a letter dated January 18, 2016, Thrimahavithana had informed Director General Irrigation how the environment had been adversely affected due to this project although 75 per cent of the construction of the weir had been completed.
According to the letter, the fish ladder suggested by the Irrigation and Forest Departments had not been placed and the number of trees that had been felled for construction work had exceeded the number stated in the IEE report and the loss of vegetation on the slopes of the mountains had resulted in soil erosion. The letter further explains how the Dellawa River banks had faced erosion due to illegal removal of sand by the contractors at night time to be used for the power project construction work.
Meanwhile, Thrimahavithana said how the IEE report had deliberately failed to state that more than 200 families in Anda Dola, Dellawa, Upper Panangala and Miyenawathura villages use the Anda Dola river for their daily needs and the given details of the water flow were misleading.
“According to the IEE, the water flow near the weir is 580 litres per second which is absolutely incorrect. The water flow is merely 150 litres per second and how could the power project obtain water for their purpose when the normal flow is lesser than what they have stated in the IEE report? Their plan is to divert the river and release a few litres of water into the stream and use the remaining to generate power. In such a backdrop, what will happen to the ecology?” Thrimahavithana said.
“According to the application submitted, the project is to generate 770kw for the national grid, but when one considers the accurate water flow per second, it is questionable as to how Easa Hydro Technologies is going to generate this electricity given the large differences in water levels.
“The water flow given in the IEE is not accurate and although it says that they will release enough water to the stream from the weir, their secret plan is to divert the entire water flow to the powerhouse without releasing any water downstream,” Thrimahavithana alleged.
According to her, once the water flow downstream is reduced, it will badly affect the villagers who will have to suffer without water for their daily needs including for agricultural purposes.

Adverse impacts
Meanwhile, a spokesman for the Environmental Foundation (Guarantee) Limited said that a reduction in water flow through the weir to the spot where Anda Dola meets Dellawa Ela is expected if the project is allowed to go ahead.
“Once the water flow is reduced from the weir, it will adversely affect the aquatic flora and fauna and terrestrial fauna that depend on the stream. The ecology of the area and its importance as a habitat of fauna and flora, some of which are considered endemic or endangered, has not been highlighted in the IEE. The construction of the penstock line (concrete channel) is a disturbance to the species living in the forest. Although the Irrigation Department has specifically laid down a condition that neither the people nor the environment should be affected by the diversion of water, it is now clear that there will be a long-term impact once the water flow is reduced. The Forest Department had clearly stated how the waste should be disposed but concrete and other debris were seen all over the stream hindering the quality of the water and fish habitats and their breeding sites amongst the impact to the environment,” sources alleged.
The sources further said the negligence of the project proponent was the main cause of the massive environment destruction and added that a 6.5 km stretch of Anda Dola would become completely dry once the power generation begins and the entire water flow is diverted to the powerhouse through the weir. He further noted that some of the trees that had been cut down are endemic to the region and are listed in the IUCN red-list of endangered species.
“The massive trench that had been dug through a hill has compromised the steadiness of the soil quantity which may soon result in a severe landslide. Since this project is within a protected forest reserve, why did the Forest Department fail to ask the project proponent to get an unbiased Environmental Impact Assessment (EIA) which had to be open for 30 working days for public comments to see what the negative side of this project could be? Therefore, it is evident that the Forest Department was forced to give their approval to this disastrous project by the Rajapaksa administration since Dhammika Perera was working behind the scenes,” the sources alleged.
Meanwhile, highly reliable sources from the Ceylon Electricity Board (CEB) accused the Sustainable Energy Authority of promoting destructive mini hydropower projects which produce inferior quality electricity for the national grid.

Higher interest rate
“Quality electricity could be generated through coal power, large scale hydropower and thermal power projects but not from mini hydropower projects. In regard to the Anda Dola power project, they have stated that they obtained a Rs.210 million loan from Vallibel Finance at 7 per cent interest. When we purchase electricity from such projects, we have to pay a higher rate until the loan is settled and a lower rate is paid once the loan is settled. According to expertise CEB knowledge, the Anda Dola project could have easily been done with Rs.100 million. The reason behind estimating the cost at Rs.210 million is to get a higher rate for the electricity they generate until the loan is settled. This is a trick. The Sustainable Energy Authority should have a proper mechanism to find out whether or not the project proponent is misleading them. By not doing so, the country is losing money,” the CEB sources said.
According to the sources, the CEB has to purchase electricity once the Sustainable Energy Authority recommends it. The sources further said that if the CEB has a method to check the quality of the electricity that is generated through mini hydropower projects, the number of such projects could reduce drastically.
“The electricity produced by thermal and coal maintains a good standard but not the mini hydropower generation. If the quality is not good, the CEB doesn’t purchase electricity from them. So it is a loss to those who produce low quality electricity. Either they will improve their quality or stop producing electricity,” sources said.
According to the sources, once electricity is generated and sold to the CEB, Easa Hydro Technologies will receive around two hundred thousand rupees per day.

Power Games Rife As KLS Energy And CEB Clash

From Sunday Leader - By Ifham Nizam
Electricity Board Engineers Union (CEBEU) says a businessman with connections to senior government officials is demanding that a 35MW plant be allowed to operate and that power be purchased at a high rate of Rs. 23 per unit (the Standard Power Purchase Agreement (SPPA) rate paid in 2009).
As the Ceylon Electricity Board (CEB) stood firm against this, the company in question, KLS Energy Lanka (Pvt) Ltd. (a Malaysian company) filed a case in the Commercial High Court against CEB.  (See attachments L5 and L6). The courts issued an injunction order on October 30, 2015 but mysteriously, CEB was not informed of this case. CEB was not aware of anything until the injunction order was handed over, the Union points out.
The injunction specifies:
* Not to cancel their permit to develop 35MW plant
* Not to handover the allocated land to any other developer
* Reserve Grid connection at Chunnakam Grid Substation allocated for their plant without using it for any other purpose
Speaking to The Sunday Leader, CEBEU President Athula Wanniarachchi said they would not give into the whims and fancies of certain individuals.
In 2009, two influential businessmen (Malaysian and Sri Lankan) got a Provisional Approval from the SEA (Sustainable Energy Authority) (Attachment L3) for a 35MW hybrid wind and solar power plant in KKS (Jaffna). As this exceeds 25 MW, it is illegal to go without competitive bidding as per the Sri Lanka Electricity Act No. 20 of 2009.CEB officials said that then Power and Energy Ministry Secretary Shavindra Ferdinando had influenced both SEA (Attachment L8) and CEB (Attachment L2) to carry out this illegal action. They also said that for a project of this nature, the developer needs a license from the energy sector regulator, the Public Utilities Commission of Sri Lanka (PUCSL) as well. However, then Director General of PUCSL, Prof. Ranjith Perera refused to issue it as it was against the law.
According to CEBEU, Perera was under tremendous pressure over this issue from the former President Mahinda Rajapaksa and finally resigned from the post without approving this permit. But the present Director General of PUCSL Damitha Kumarasinghe approved this illegal plant on his first day at work. (Attachment L1) Kumarasinghe has signed on behalf of Prof. Perera by name which is also illegal.
“As a Union we are highlighting the importance of assigning unbiased, educated, honest people to these so called independent commissions. Also this is not something personal against Damitha Kumarasinghe,” the Union said.As the plant was not constructed within the given time-frame, the SEA Permit expired and in 2013, the company made an appeal to SEA to get it back. A committee was appointed to look in to this but then SEA Chairman, Prasad Galhena gave his approval without considering the recommendation of the committee or even getting the views of the other SEA and CEB officers (Attachment L4).However, CEB did not consider this as proper approval. Now the SEA permit has expired for the second time.  The Union says Galhena is still a member of the commission (PUCSL). It is understood that non-conventional renewable power plants (NCRE) with capacity less than 25MW are paid a standard price of Rs.20. (SPPA- Standard Power Purchase Agreement). As this is not economical for the country, CEB decided to call competitive bidding for Wind Power less than 10MW. First tenders for 2 nos. of 10MW plants in Chunnakam, were called on 14/12/2015. The wind mafia however was totally against this competitive bidding process as they needed guaranteed high profits and have, through the court case, indirectly attempted to stop the competitive bidding process of wind plants as well.
In order to bolster their case, they have made false statement to the media that CEB/CEBEU is against private sector participation in wind development. But what they really need, sources say, is selling electricity to CEB at a high price and to avoid competitive bidding. CEBEU stipulates that large wind resources like Mannar (equivalent to Laxapana Hydro) must be handled by CEB and small scale ones (less than 10MW) can be handled by the private sector.
The Union strongly believes that their role is crucial to prevent the government taking an ad-hoc decision again on this matter.
“We have reliable information that they now have connections with the present government as well. There is a massive pressure again on CEB, and the Ministry to allow this illegal business,” the Union stressed.
However, when contacted, PUCSL Director General Damitha Kumarasinghe told The Sunday Leader that they had not approved any such projects but had given a no-objection letter, which he termed a basic for a project of that nature.

Ravi K dismisses PAYE tax rumours

Finance Minister Ravi Karunanayake dismissed speculation yesterday that the Pay as you Earn (PAYE) tax on salaries would be revised to Rs. 750,000 from the threshold of Rs.2.4 million slated in the Budget proposals.

The Minister dismissed the rumours saying it was mere speculation. “There is no such thing, we are not going to revise this,” he told the Sunday Observer.

The government in the 2016 Budget raised the tax-free threshold for PAYE tax on annual salary from Rs. 750,000 to 2.4 million, while maintaining corporate income tax at 15 and 30 percent.

In his remarks proposing the Budget last year, the Minister said the move to increase the figure was to provide concessions to employees.

PAYE tax above this limit is to be charged at a uniform rate of 15 percent and the taxable income will be inclusive of all the earnings of the employee with no exemptions. He estimated a decline in revenue from individual tax by Rs. 4 billion as given in the Appendix to the Budget Speech.

ETCA needs broad-based consultation with private sector

Agreements with neighbouring countries are essential for a country to progress economically. Singapore developed its economy after expanding trade with major countries. However, agreements such as ETCA are not a zero sum game, economic analyst, tax consultant and businessman, Dr. Madunath Perera said.

India is a major industrial country in the region and Sri Lanka must enter into an agreement with India to develop the country, but not an agreement such as ETCA, to develop exports, Perera said adding that Sri Lanka will not benefit from this agreement.

Many professionals said the proposed Economic and Technical Cooperation Agreement (ETCA) will affect the local services sector.

Indian workers could seek employment in banks, services, businesses, the retail trade and engage in fishing in the deep seas under ETCA. The danger of such an agreement should be realised. The government may try to sign the agreement saying that some sectors have been dropped.

“ETCA is a continuation of the Indo-Sri Lanka Comprehensive Economic Partnership Agreement (CEPA),” he said. As the information technology sector is undefined it could be related to any profession or sector. It could include any profession from data entry clerk to an engineer.

India’s economy is huge. However, the most poverty-stricken people and the unemployed in the world live in India. Ninety-four percent of the labour force is not properly employed.

Agreements should be signed with other countries. But, before signing agreements like this with India, the government should consider the unemployment rate in India.

Recently, applications were called for 368 office assistant vacancies and over 2.3 million had responded. Among them 150,000 were graduates while 24,969 were postgraduates. Two hundred and fifty held doctorates.

“The minimum qualification was having studied in a school and the ability to ride a bicycle.

According to another website 85% of the graduates in India are unemployed.

Seventeen percent of those qualified in Information technology are unemployed. This is the situation in India. The government should consider this before signing agreements such as ETCA. As businessmen we are not happy with the proposed agreement,” Dr. Perera said.

He said according to a recent statement in Parliament by the government, the two countries were getting ready to sign the framework agreement of ETCA soon.

It has been said Sri Lanka has already presented its framework agreement to India. It was not made public or presented in Parliament.

Sri Lanka should not lose its economic independence when signing such agreements.

The Ceylon Chamber of Commerce in a media release said the Chamber has consistently supported the expansion of Sri Lanka’s trade interests through signing mutually beneficial and well-designed trade agreements, and this has been clearly articulated in the ‘10 Principles’ on the economy.

“The Chamber believes that agreements are an important tool in deepening trade and investment opportunities for our businesses, within a rules-based framework.

The Chamber has urged the authorities involved in the ETCA to build on this by adopting a systematic consultative and information sharing process with the private sector.

Any bilateral or regional agreement that Sri Lanka forges, must be supportive of the country’s holistic economic interests (rather than cater to individual business interests); must recognise size asymmetry of the economy; and must take a phased approach to liberalisation where domestic regulatory systems need updating.The Chamber notes with concern the level of misinformed opposition proliferating in the media regarding the proposed ETCA.

While we recognise that the final text of an agreement cannot be made public due to the nature of bilateral trade negotiations, the government can consider publishing a ‘White Paper’ on ‘Expanding trade in services, investment and economic cooperation with India’, which captures the government’s thinking on the issue.

There are valid concerns of an uneven playing field faced by Sri Lankan business in India.
The Chamber understands that the Framework agreement includes a chapter on ‘Early Harvest’ of barriers to trade in goods (including quota issues and NTBs).

The opposition to ETCA and further overall liberalisation of trade in goods and services citing ‘national interest concerns’ must be carefully examined alongside the potential gains to consumers and firms in Sri Lanka.

The latter too is a matter of national interest. The Chamber urges the government to not entertain protectionism that may come under the guise of national interest concerns. It is important that the government looks beyond the narrow commercial interests of a few and instead focus on the broader economic imperatives of exports, investments, and job creation to set a course for the future prosperity of the economy.

Over the past decade and a half, the Sri Lankan economy has become more closed and more inward looking than before, resulting in a falling share of global exports. As a small economy with a limited domestic market, trading more with the world and welcoming more business and investment partnerships from abroad is our only path to prosperity.

Services liberalisation needs to be pursued, within a mutually-beneficial framework. While it is governments that sign trade agreements, they ultimately impact – positively and negatively – on consumers and businesses.”

Senadhipathi has Rs 1.1 B in 96 Fixed Deposits

From Ceylon Today - By Ishara Ratnakara

Avant Garde Maritime Security Chairman Major [Rtd] Nissanka Senadhipathi has mammoth 96 fixed deposit accounts under his name in several banks, aggregating
Rs 1,110 million, investigations by the Criminal Investigations Department (CID) has revealed.

Top CID sources said these accounts included 62 at the Commercial Bank, 20 fixed deposits at the National Development Bank (NDB), six at the LOLC, seven at the Peoples Leasing and one at the BOC respectively.

The CID probe has also revealed that former Navy Commander Somathilaka Dissanayake has 24 fixed deposit accounts including 12 at the NSB, one at the State Mortgage and Investment Bank, three at the BOC, four at the Commercial Bank, three at Sampath Bank and one at the NDB.

Sri Lanka’s megapolis plan a challenge, needs experts to make it successful


Feb 26, 2016 (LBO) – Sri Lanka’s Megapolis development project’s success depends on the establishment of a separate authority to govern the project while social change would also be a key, the president of the Chamber of Construction Industry said.
“The Megapolis Authority with the right expertise is a must if this project is to fly,” Surath Wickramasinghe, President, Chamber of Construction Industry said.
“This is a challenging exercise, especially the financial side of it – it all needs to be generated to make it a success while the proper knowledge and expertise is also needed to get about with the task.”
Wickramasinghe says social change will be a key to making the project a success.
“There is a lot of social change that needs to come through this type of mega development. The people need to embrace the changes that need to be made while the government also needs to ensure the citizens get a better deal than a land scam under the guise of development.”
The megaplolis plan has four fundamental pillars: economic growth and prosperity, social equity and harmony, environmental sustainability and individual happiness.
Its main goal is to create jobs and investments through creating a dynamic regional spatial structure that promotes economic productivity, attracts investments, enhances business opportunities and creates jobs.
The plan will have cities dedicated for aero, marine and technology with 13 other projects which have been earmarked for development.
“So all this is marked, the question is how to implement it,” Wickramasinghe told a forum in Colombo recently.
“I’m not sure if we have the expertise to make it happen.”
However, he said that Sri Lanka is not the first country to do this kind of project and can look at India to learn more.
“We can look at the Indian model; study how they have success of it.”
“We can bring in foreign experts to add to our local expertise like what the Board of Investment is doing.”
The government of India under Prime Minister Narendra Modi has a vision of developing 100 smart cities as satellite towns of larger cities and by modernizing the existing mid-sized cities.
Data shows that as of 2015, there are 35 megacities globally. Tokyo is on top with the highest population touching 38 million with Jakarta, second and Shanghai is the largest city proper. Chennai is the 35th megacity.
The new mega plan envisages transforming the Western Province by 2030 to a Megapolis with an estimated population of 8.4 million, an increase of 3 million.