Govt. hoping for near normalcy by Sept. amid challenges

Plans to vaccinate all under 30 within next 75 days; military playing key role in battle against pandemic Basil moves fast into forefront of policy making and diplomacy; meets top envoys for a balancing act vis-à-vis China Govt. throws full weight behind Gammanpila as he faces no-confidence motion next week; Cabinet reshuffle put on hold

With an economy battered by COVID-19 and shattered by a cocktail of snowballing issues, the Government is setting the clock for later this year for a return to “normalcy.” Chief of Defence Staff (and Army Commander) General Shavendra Silva, who oversees the campaign against the deadly disease, declared it is with the planned vaccination of all under 30 years by the end of September. “Restrictions could be relaxed, and the country could be re- opened,” he announced this week.

The deadline is not far off. End of September is only 75 days from today. However, such deadlines have been placed time and again by General Silva, the country’s topmost military officer. Some have come right whilst others have been proven wrong. The latest was on there being no lockdown (or travel restrictions). Nevertheless, there was one that lasted more than a month. And that it caused more enormous damage to the economy besides hardships to the people is no secret. Whilst in no way blaming Gen. Silva, for his assertions or conjectures, it is pertinent to note that it only highlights the many vicissitudes of the machine that is fighting COVID-19 – Medical Specialists, Doctors, Public Health Inspectors, government political leaders, the security forces, Police, and other health officials. The lack of centralised control has cost money and lives.

This has prompted many an opposition politician to opine that whilst the military had an important role, the exercise should have been spearheaded by medical experts. Even some top rungers in the Government silently hold this view. Anyway, that exercise has metamorphosed into state policy with many serving or retired military officials have replaced officers in the state sector or the diplomatic service. That the move did not augur well is becoming increasingly clear. The military and the public service did not blend as they should, and the public paid the price.

Basil’s talks with envoys

However, Gen. Silva’s remarks this week assume significance in the light of a “course correction” exercise the Government appears to have launched. Sri Lanka Podujana Peramuna (SLPP) leaders, who acknowledge that COVID19 has come to stay, are of the view that the vaccination programmes now under way would largely conclude the preventive phase. They feel that would lift the burden from the Government’s heaviest task. Hence, different sectors are being identified to work at “near normalcy”. Underscoring this aspect are meetings Finance Minister Basil Rajapaksa had with Colombo-based envoys. They included envoys from the United States, India, the United Kingdom, China, Russia, Germany, and the European Union. He took great pains to seek their support for President

Rajapaksa’s development programmes -- an exercise that is aimed at balancing the rest of the international community with visible heavy leanings only on China. He made the point that Sri

Lanka was neutral.

How much such diplomacy, sans the presence of even Foreign Minister

Dinesh Gunawardena, or a role by his Ministry, will work is anybody’s guess. Of course, his task did not centre pointedly on foreign policy issues but more an explanatory pep talk on government policies and positions.

Yet, the absence of anyone from the Foreign

Ministry in interactions with overseas envoys has been a first by the ruling alliance. The finance minister was seeking the help of envoys and thus their countries to implement President Gotabaya Rajapaksa’s development policies. What is new is the fact that such an appeal is coming 18 months after the alliance was voted to office by a finance minister of the current government. He is telling the envoys of the new vistas and thus trying to erase at least some of the old impressions. Even if it was not so specifically spelt out, that is the belief of Sri Lanka being closer to China than all others.

It is not just the economic concessions that have forged this new reality. Just two weeks ago, the Central Bank issued a coin to felicitate the Communist Party of China on its 100th anniversary. At the UN Human Rights Council’s 47th sessions in Geneva, a week ago, Sri Lanka was the only signatory from a Commonwealth country to sign a resolution sponsored by China against the UK. It was over alleged violation of human rights by the UK. The move, the Sunday Times learnt, has infuriated the UK since all these years Sri Lanka has looked to the UK as the mother of the Commonwealth. On the other hand, Sri Lanka is also mindful that it was the UK, in place of the US which was out of the UNHRC, that spearheaded the Resolution on Sri Lanka at the Human Rights Council. The precursor to the Chinese move was the allegation genocide of Muslims in China’s Xinjiang region – an accusation which Beijing is very touchy and flatly denies.

In what seemed a part of his discourse, Minister Rajapaksa also spoke to electoral organisers of the ruling alliance. It came at a time when one of the partners – the Sri Lanka Freedom Party (SLFP) – has shown disappointment over its continued presence in the alliance. This surfaced at a recent Central Committee meeting where, except for those holding government office, others wanted to part ways. Already former President Maithripala Sirisena has had a meeting with President Rajapaksa on Thursday. Since this was a one-on-one event, SLFP sources said, it was not related to party matters. President Rajapaksa is expected to have a meeting with a party delegation.

Minister Rajapaksa said that they should embark on development work in the electorates for which financial provisions have already been made. He said the Government was planning to conduct Provincial Council elections and such activity should be completed expeditiously. He, however, did not disclose when such elections would be held.

No-confidence motion against Gammanpila

One of the tasks for the Government will be the No Confidence Motion against Energy Minister Udaya Gammanpila. It will be taken for debate in Parliament tomorrow. President Rajapaksa has invited all government MPs for a meeting today at the Janadipathi Mandiriya. They have also been told to remain behind after the meeting for dinner. A “three line” whip issued to government MPs yesterday said they should vote for Gammanpila. The three-line whip is one which is underlined thrice and is issued by the Chief Government Whip.

The No-Confidence Motion (NCM), signed by 43 MPs of the main opposition Samagi Jana Balavegaya (SJB) states: “Whereas the Hon. Udaya Gammanpila, Minister of Energy, has taken action to raise fuel prices without the approval of the Cabinet of Ministers as stated in writing by the General Secretary of the Sri Lanka Podujana Peramuna, which is the main party representing the Government, although the Cabinet of Ministers is collectively responsible and answerable to Parliament in terms of Article 43 (1) of the Constitution of the Democratic Socialist Republic of Sri Lanka.

And whereas has derogated from the principles guiding the state policy in contravention of Article 27 (1) of the Constitution and shirked the fundamental duties in contravention of Article 28 of the Constitution, thereby breaking the oath taken in terms of Article 53 of the Constitution.

And whereas has not informed Parliament and people of this country of the profit which the Ceylon Petroleum Corporation and the Government earned by not reducing prices of petroleum fuels but keeping the prices at a high level since January 2020, when petroleum prices fell excessively in the world market, up until now.

And whereas has not fulfilled the pledge given to people that the advantage of the falling prices of petroleum fuels in the world market will be given to people by reducing the prices of essential goods.

And whereas has not kept to the pledge given not to raise fuel prices within two years based on such price advantage.

And whereas has failed to inform this Parliament and people what happened to the

Fuel Price Stabilization Fund, claimed to have been established by the Government to use the advantage of falling prices when oil prices rise;

And whereas has not fulfilled the pledge given to use the profit earned by the

Government when prices were falling to rescue the Ceylon Petroleum Corporation from its indebtedness to state banks,

And whereas has through the raising of fuel prices, led to the rise of production cost in all consumer goods parallel to it and the accompanying escalation of inflation, thereby placing people affected by the COVID-19 Pandemic in further suffering economically,

And whereas has led to the possible adverse effects on exports and the overall economy due to the escalation of production cost.

And whereas has failed to fulfil promises given from time to time by directly and indirectly contravening the people’s agenda given in being elected to the Government, the policies of the Government and the Constitution of the Democratic Socialist Republic of Sri Lanka.

That this Parliament resolves that it has no confidence in the competence of Hon.

Udaya Gammanpila, Minister of Energy, to function as a cabinet minister any longer.”

As pointed out earlier in these columns, it is not clear why the SJB chose to pointedly blame Minister Gammanpila when the Government declared officially that the fuel pricing committee was responsible for the decision. Ruling alliance sources said yesterday that a proposed cabinet re-shuffle was now being held up until the no-faith vote on Gammanpila is taken. These sources also spoke of the possibility of another portfolio for Gammanpila when the proposed changes take place. In the past months, Minister Gammanpila has been seeking cabinet approval to confer more power on himself. This is what his latest Cabinet Memorandum said: Cabinet Memorandum Amending of Ceylon Petroleum Corporation Act of 1961 no 28 Background.

1.1 – The 1961 no 28 Ceylon Petroleum Corporation Act was made to create a corporation for carrying out business activities such as import, export, sales, supply and distribution which is related to lateral activities related to petroleum industry.

1.2 - According to currently enforced, and time to time amended 1961 no 28 Ceylon Petroleum Corporation Act the power to importation, exportation, refinery, sales, supply and distribution of Petroleum related fuel products such as petrol, diesel and kerosene is only assigned with the Petroleum Corporation.

1.3 - However, the 2002 no 33 Petroleum Products (Special Provisions) Act provides power to the minister in charge of the subject to issue a licence to any person or board of persons to import, export, sales, supply, and distribution of petroleum related fuel with the recommendation of the energy supply committee. The minister had been given power to issue

the licence, considering the betterment and needs of the petroleum industry.

1.4 - In addition, due to the decisions in the act not getting amended according to current time, there were instances where there was incapability to accurately identifying or making decisions about some of the petroleum products.

2.0 - Description and justification

2.1 – The above mentioned 2002 No 33 Petroleum Products (Special Provisions) Act is not in an operational condition, therefore the Petroleum Corporation Act needs to be amended in a suitable manner to transfer power and issue licences to competitive institutions to carry out import, export, sales, supply and distribution.

2.2 - The Ceylon Petroleum Corporation is currently working towards build, operate and transfer a new refinery with a production capacity of 100,000 barrels. According to the 1961 no 28 Ceylon Petroleum Corporation Act’s 5(E) clause the corporation only has the power to refine oil. Therefore, there is no power given for another competitive or joint venture business to request permission for refining activities, therefore the act should be amended in a manner that empowers a competitive or joint venture business to refine oil.

2.3 - Though there is a definition submitted regarding petroleum products when the currently functional act was imposed, today there is a wide range of definitions on petroleum products and resources; therefore, by adding clear definitions, future problems can be reduced. Due to these reasons, amendments must be brought in.

2.4 - Accordingly, the drafting has been done by the ministry regarding the below-mentioned suggestions that is to be included into the currently functional time to time amended 1961 no 28 Ceylon Petroleum Corporation Act (attachment 01).

2.4.1 - The power to be vested on the subject minister to provide permission according to cabinet approval to any party that becomes eligible after undergoing a proper selection to import, refine, carry out sales, supply, manufacture, mix, distribute petrol, diesel, kerosene and combustible oil and other petroleum products and alternative fuel

2.4.2 - to add new definitions regarding “Petroleum.”

The worsening economic crisis

The No- Confidence Motion, as is clear is, on account of the steep rise in fuel prices brought about at midnight when there was a lockdown. The issue that now confronts the Government is paying for monthly crude stocks. The matter has been the subject of discussion at more than one weekly ministerial meeting with even suggestions being made for fuel rationing – a move that could have a debilitating effect on development activities and the economy. With the foreign reserves reaching a perilously low level, several opposition leaders have voiced serious concerns over the devastating effect. Among them are SJB General Secretary Ranjith Madduma Bandara, JVP leader Anura Kumara Dissanayake and former Prime Minister Ranil Wickremesinghe, who occupies the only bonus seat in Parliament for the UNP. Their comments appear in a box story on this page and underscore the seriousness of the situation.

Sri Lanka’s foreign exchange reserves have dwindled to barely enough to pay for three months of imports at a time when big repayments of its foreign debts are due. Sri Lanka needs to make foreign debt payments totalling $3.7 billion this year, having paid $1.3 billion so far. That is in addition to local debt, according to the Central Bank. Energy Minister Udaya Gammapilla has confirmed that the country lacked enough cash to pay for oil imports.

This makes the suffering farmer wonder whether the Government's decision to move ahead with organic fertilizer is simply a cover for the Government's near bankruptcy. “Parents cannot pay the fees of their children studying abroad. There is an oil tanker, and we can't find the dollars to pay for it. Similarly, we cannot bring in fertilizer. This whole organic fertilizer is just a cover for government's bankruptcy," former Prime Minister, Ranil Wickremesinghe said in a recorded statement.

The Rupee has been gradually weakening against other major currencies, making these repayments more costly. Investors are also expressing concern about Sri Lanka’s capital controls.

With an international sovereign bond maturing soon, a $1 billion repayment is due before the end of this month. This will drop the reserves to less than $3bn. Just as comparison, Indian reserves are at more than $610bn, China more than $3tn and Bangladesh’s is more than $43bn.

The SAARC swap framework from RBI (Reserve Bank of India) came into operation on November 15, 2012, to provide a backstop line of funding for short term foreign exchange liquidity requirements or short-term balance of payments stress till longer-term arrangements are made. The facility is available to all SAARC member countries, subject to their signing the bilateral swap agreements.

Sri Lanka originally signed the swap deal available to SAARC countries in 2020 and repaid it in February 2021 after rolling it over once. Many speculated that the Eastern Container Terminal (ECT) withdrawal from India was the cause for Sri Lanka having to settle the swap deal without any further extensions. However, the truth is that any subsequent extensions required Sri Lanka entering into an IMF agreement. Similarly, this $400m swap expected in August 21 again will have to be settled by February 2022 with one possible extension, unless Sri Lanka agrees to IMF conditions.

The special swap facility of $1,000 million was originally requested by President Gotabaya Rajapaksa in May 2020 from Prime Minister Narendra Modi for a “special” $1.1-billion currency swap to help the country boost its foreign reserves. Prime Minister Mahinda Rajapaksa on a virtual call with the Indian PM a few months ago requested for temporary freeze on debt repayment. To this day, the India has not responded to any of these requests. In India, Sri Lanka still does not have a High Commissioner since December 2019. India’s attitude towards Sri Lanka has deteriorated considerably since November 2019, according to retired local diplomats. Apart from showing lack of solidarity in international forums, India also put Sri Lanka almost at the bottom of the list when it delivered free COVID-19 vaccines to its immediate neighbouring countries in January 2021. The Indian Government sent free doses to Bangladesh, Nepal, Bhutan and the Maldives — more than 3.2 million in total. Donations to Mauritius, Myanmar and Seychelles followed. Afghanistan and Sri Lanka were at the bottom of the pile.

To add to the Government’s woes, the US has sent veteran diplomat Atul Keshap as Chargé d’Affaires to New Delhi. He was onetime envoy in Colombo. It is a wellknown secret that the Government and the former US

Ambassador to Sri Lanka and the Maldives didn’t see eye to eye on many matters. As part of his new remit, Ambassador Keshap has met the Japanese, Australian and EU Ambassadors and the Foreign Secretary of India among others in the last few days, according to his official twitter handle. Although Sri Lanka would have been an unlikely agenda item in any of these meetings, as a former ambassador to the nearest neighbour, it would have been a topic that none of these Quad coun

try representatives could have avoided.

The Government appears to be mindful of the worrying developments. A stock taking of sorts is under way. That includes plans for US style media briefings to shore up the Government’s image and project its viewpoints. If such a strategy is to be based on the one like the daily dose fed to the public over COVID19, it is doomed to fail. Most of the people think twice of the claims.