Arjuna still defiant on lubricant project; damning letter from Austin

At last Tuesday’s weekly cabinet meeting, there was an unusual turn of events over the US$ 10 million Lubricant Blending project in Muthurajawela by a Malaysian company

Earlier, as exclusively revealed in these columns last week, President Maithripala Sirisena severely admoni shed Pe t roleum Re s o u r c e s Development Minister Arjuna Ranatunga at the previous cabinet meeting for delaying the company’s licences. This was despite the company being ready to go into production from January this year after trials and training of personnel. He directed that the licences to the firm be immediately issued after Minister Ranatunga, in a memorandum, sought further discussions.

At the cabinet meeting last Tuesday, Minister Ranatunga tabled a document which said that he, his brother Dhammika Ranatunga, who is Chairman of the Ceylon Petroleum Corporation ( CPC), and Petroleum Resources Development Ministry Secretary Upali Marasinghe, were opposed to the decision to issue licences to the Malaysian firm Hyrax Oil Sdn. Bhd. The move seems to go against the principles of collective responsibility and is unprecedented after decisions are made.

The grounds on which the Petroleum Resources Ministry has allegedly delayed the process are by claiming different reasons. Once it said the Public Utilities Commission of Sri Lanka ( PUCSL) had not cleared it. Then it said the project, ( despite Cabinet approval), had been placed before the National Committee on Economic Management. However, the Attorney General’s Department had by then formulated a BOT (Build, Operate and Transfer) Agreement that had been signed. This was between the Malaysian firm and the Ceylon Petroleum Corporation ( CPC). The CPC, in terms of this agreement, will inherit the blending project in ten years.

In this regard, a letter written on January 12 this year by the just retired Presidential Secretary Austin Fernando to Petroleum Resources Development Ministry Secretary Upali Marasinghe, is damning. Here are highlights:

“When inquiries were made regarding non- operation of this Blending Plant, the impression given to us by you was that the PUCSL ( Public Utilities Commission of Sri Lanka) has not confirmed that the Plant was ready for operations. The enclosed copy of the letter of 18th December 2017 issued by you proves that it could now commence work since the above requirement is fulfilled.

“However, from Paragraph 2 of your said letter, it is quite clear that the CPC has not given attention to carry out instructions given in this communication which appears to me as a total failure of administration.

“Since a copy of your letter has been referred to the Managing Director of Hyrax Oil, it is most likely that this company would go in for arbitration or for such other legal proceedings which may finally result in:

1. Delay in the operation of the Plant of which there is a possibility of demurrage being claimed by the Company from CPC;

2. Receiving a determination of penalty or any other damages that could be caused due to such delay;

3. Facing allegations of loss of standards of “ease to do business” within the country;

4. Diplomatic issues that could be raised between Sri Lanka and Malaysia, since we are aware that there was interest shown on this project by the Hon. Prime Minister of Malaysia when he visited Sri Lanka a few weeks ago. “Therefore, I may advise you to pur- sue this matter with CPC and Hirax Oil and settle any disputes or road blocks and take action according to the applicable laws, agreements and business ethics.

“Any loss caused to the government by non-adherence to laws, agreements and processes will have to be borne by those accountable and responsible for such loss. To pursue such status, I copy this letter to Auditor General for consideration.”

The letter makes clear that President Sirisena’s outburst against Minister Ranatunga came six months later. That is after his Secretary has concluded in January that there is a “failure in administration” but until now, no action seems to have been taken against those responsible.

The events leading to the outcome of this lubricant blending project and the letter written by none other than the Secretary to the President, come at a time when ministers have been crowing from rooftops that Foreign Direct Investment (FDI) to Sri Lanka is on the rise to high levels. Here is an example that lays bare the reality behind the “ease of doing business” in Sri Lanka. Who cares?

In a recent international global index of the best in doing business, Sri Lanka is way down the ladder. So much for foreign investment.