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 Spotlight

                    The report the govt. wanted kept out of The Leader


 SriLankan Airlines in financial tail spin 


Nishantha Wickremasinghe, Peter Hill, Tim Clark, Nigel O'Shea and Harry Jayawardena

President's B.I.L Nishantha Wickremasinghe met Tim Clark early December to strike a compromise

Nishantha wanted Govt. to negotiate with 
Emirates in good faith

Nishantha wants a strong chairman and  board that could work free from political interference

Tim agreed with NW to enhance fleet, phase out expatriates and grant executive status to all board members 

Emirates pull out will be an IT nightmare for a fully integrated SriLankan say airline staff 

Tim Clark agrees to manage Mihin but refuses to take over huge debt and staff except cabin crew

Sajin gets Mihin to pay spa bill in Istanbul and Rs 40,000 for one day's meals

President asks Tim Clark how Emirates can help Mihin

By Sonali Samarasinghe

With Emirates announcing it will not seek a renewal of the contract with SriLankan Airlines, the Rajapakse government is now faced with a myriad financial problems, as it prepares to take on the formidable challenge of running the national carrier.

Even as the relationship deteriorated rapidly following the expulsion of SriLankan Airlines CEO Peter Hill, Emirates reacted angrily, sending a Letter of Demand calling for a reinstatement of his status.   

As the troubled partnership saw various interested parties including the likes of Sajin Vass Gunawardena hovering like vultures, Chamal Rajapakse as Aviation Minister and Mahinda Rajapakse as Finance Minister acted heavy handed and bullish. Yet saner counsel was to have prevailed even inside the President's own camp although going unheeded in the end. 

In the hope of a more profitable and less acrimonious end to the 10 year partnership, President Rajapakse's brother in law and SriLankan Airlines Director Nishantha Wickremasinghe was to undertake a one on one negotiating process with Emirates' President Tim Clark late last year. To this end in early December last year before the hostility between the two major shareholders came to a head, Wickremasinghe met Tim Clark and put forward the concerns of the government.

Revision of terms

It was Wickremasinghe's considered view that a renewal of the contract must include a revision of terms with regard to management. He viewed as flaws in the Emirates Management the following:

(1)            Emirates appointing expatriates as heads. For example CEO Peter Hill. Expatriate heads in catering, engineering etc.

(2)        All executive decisions being made by Emirates alone.

(3)        GoSL members not possessing executive powers.

(4)            Emirates not having a concrete development plan for Sri Lanka (i.e: Expansion into South Africa, Australia etc.).

The meeting with Wickremasinghe whose sophisticated approach and negotiating skills sat well with Tim Clark, was therefore somewhat of a measured success.

The Sunday Leader learns however that except for CEO Peter Hill the only other expatriate seconded to Sri Lankan is Nigel O'Shea. An Indian Niraj Kumar who was head of finance has also left and it is learnt O'Shea may soon leave also. In any case airline sources said these appointments had no adverse impact.

Transitional arrangement

Nevertheless Clark for the moment agreed as follows:

(1) To remove all expatriates from SriLankan Airlines and to head hunt suitable Sri Lankans to take over the positions over a pre agreed time frame.

(2) To give all GoSL board members executive status.

(3) Agreed to enhance the fleet to 22 aircraft in the next five years.

The Sunday Leader investigations reveal that Wickremasinghe had in turn recommended to President Rajapakse a set of options which were sound in every respect.

Option (1) -

(a) To enter into some kind of transitional arrangement with Emirates before SriLankan fully taking over the management.

(b) To negotiate in good faith considering how Emirates held SriLankan together after the airport attack.

Option (2) -

(a) If negotiations break, Wickremasinghe had mentioned that SriLankan Airlines had very talented people who could take over.

(b) He had also mentioned it is learnt that a very strong chairman and a board should be constituted that could work free from political interference.

Wickremasinghe puts forward a valid argument. Despite the corruption that pervaded the signing of the contract in 1998 with the government losing out by not negotiating a better deal for itself, Emirates was a viable outfit that had made a huge impact in the skies since its inception in 1985 to meet the challenge.

Employee relations

Despite allegations Emirates planted its discards at SriLankan to keep good employee relations within its own airline, the management skills of the outfit cannot be disputed whether or not it was used to the benefit of GoSL or otherwise.

SriLankan Airlines' come back after losing six aircraft in July 2001 following the LTTE attack was commendable even though detractors would say there were huge insurance payouts on the aircraft. SriLankan's unflinching presence in the sky while other big airlines like Swiss air folded up after the September 11, 2001 attack was also creditable. Neither did the airline crumble as it suffered another blow with two air attacks by the LTTE in March 2007.

SriLankan Airlines in July 2001 took a series of bold decisions shutting down non profitable routes and strengthening those that brought the highest yield. Using Male as a hub due to adverse travel advisories and bad publicity, the airline plied the lucrative markets of Europe and Japan.

World Trade Centre attacks

The management also carried out a stringent cost reduction exercise and when two months later the world reeled after the World Trade Centre attacks in New York, SriLankan Airlines was ready to meet the challenge and even expanded its network.

Be that as it may following the Wickremasinghe/Clark talks, there for a space the matter rested. Alas enter in the meantime blunderbuss and Head of Mihin Lanka, Sajin Vass Gunawardena into the equation. His mishandling of the non issuance of 35 tickets to President Rajapakse and his entourage to fly from London to Colombo in time for the budget debate on December 14, was nothing short of a one ring circus. Given moreover, that it was his own brother, Manoj Gunawardena who is the SriLankan Airlines head of worldwide sales and in overall charge of such matters in any event.

It was after a futile furore created by the government culminating in the expulsion of CEO, SriLankan, Peter Hill that Emirates fired a Letter of Demand calling for the reinstatement of  Hill's work permit and visa. Tim Clark may have flown down to Colombo on January 2, but not before he angrily cancelled two pre scheduled meetings. First a board meeting of SriLankan scheduled for January 8 and the other another one on one meeting with Nishantha Wickremasinghe on January 9.

 Rajapakse darlings

In one fell swoop Sajin Vass Gunawardena and others of his ilk in a bid to feather their own nests and hang on to their preferred status as Rajapakse darlings for the time being, destroyed  the good work done by Wickremasinghe and plunged the national carrier into a financial loop de loop.

As these columns reported three weeks back on December 23, the Presidential Secretariat had approached SriLankan Airlines and requested it take over the debt ridden Mihin Lanka and help run the spluttering airline under the experienced SriLankan Airlines wing.

The talk among industry personnel was that Emirates was being hounded out in this ill thought out manner only to accommodate the grandiose plans of Sajin Vass. Emirates sources in Dubai confirmed to The Sunday Leader President Rajapakse himself had wanted to know how Emirates could help Mihin Lanka. 

Sources close to Tim Clark told The Sunday Leader that while Clark had not objected to SriLankan Airlines taking over the management of the loss making Mihin Lanka it had refused point blank to take over the huge debt and large numbers of staff except perhaps the cabin crew.

Re-engineer the management

It is interesting to note in this context that President Mahinda Rajapakse in his budget speech 2008 ironically said that while Mihin Lanka - the new budget airline was set up to facilitate foreign travel of low income travellers a process had commenced to re-engineer the management of SriLankan Airlines in a manner favourable to the country.

It is not an irony however that was lost on the highly respected Tim Clark who was surprised not only at the huge debt incurred by the budget airline but according to our sources in Dubai also commented that Mihin was the first budget airline he had come across with business class seats. 

Mihin is heavily in debt owing over Rs. 420 mn to the Ceylon Petroleum Corporation, and over US$1 million to SriLankan Airlines. It is recording a loss of about Rs. 7-8 million a day and about Rs. 240 million a month.

At an adjournment debate last Thursday (10) UNP MP Ravi Karunanayake stated that while SriLankan Airlines had lost US$ 300 million in 10 years  only showing profits in catering and ground handling, Mihin was losing Rs. 240 million each month. And one of its planes was grounded as not airworthy. The government does not know how to take this country forward, he charged.

 Another HSBC loan

Karunanayake also inquired if the government had allocated money to run SriLankan Airlines or whether it would have to go for another HSBC loan. 

The UNP MP also pointed out that 40% of the passengers on SriLankan Airlines were controlled by Emirates. He asked how the government intended to get these passengers back and inquired how new offices were to be set up and how the government would find the start up costs.

While Aviation Minister Chamal Rajapakse by a most opportune coincidence was spared a reply by having to run off for a funeral, his Deputy Sarath Kumara Gunaratne said the airline will not be privatised and the government stood ready to buy Emirates' shares.

Giving an indication of how much the government will have to fork out, last Sunday Tim Clark told AFP in Dubai he valued Emirates' stake in SriLankan Airlines at "150 million USD," a figure The Sunday Leader also reported exclusively last week. He also revealed that "Emirates would retain its 43.6 % equity in the company for the time being, and continue to have a board presence."

Formidable competitor  

Be that as it may a top SriLankan Airlines source speaking on condition of anonymity told The Sunday Leader that the national carrier would not be able to stand alone if Emirates were to pull out at this juncture.

Industry sources told The Sunday Leader it was obvious Emirates had been getting ready for any eventuality. By selling the two remaining aircraft owned by the national carrier and then leasing them back Emirates had successfully liquidated their assets. With 43.6% of the shares they would also have equal status on a future board and could be the biggest stumbling block in any decision.

Emirates would remain SriLankan Airlines' formidable competitor in the skies with one horrific advantage. Emirates would be able to control SriLankan not only from within but also from without including through their IT reservation system with which SriLankan is now totally integrated.

Moreover SriLankan Airlines will not be able to stand alone despite the government bravado it is ready to take over management come April first. And that's no joke. The operational costs of running a national carrier is enormous.

Why SriLankan can't stand alone

The national carrier will not be able to stand alone if there is no capital infusion for expansion of fleet, redecoration of aircraft or increase in capacity and routes.

Emirates sources earlier told The Sunday Leader the reason Emirates was brought in as a partner was to ensure the national carrier would not be dependent on government funding and said the level at which SriLankan Airlines is now is a reflection of their excellent management. With all the negatives in the country, a lack of a modern fleet, a lack of flatbed seats and the prevailing war situation, SriLankan has become today a top level international airline.

The company cannot move forward without refurbishing the aircraft which will cost a minimum of US$30-40 m or without redoing and redesigning the seats at least in business class which will again cost a heavy packet. However airline sources said, "we won't be able to survive in the skies if we don't do that."

BoI Chief Dammika Perera however pointed out that even at this moment there was no infusion of capital by Emirates in any case. Perera also earlier noted that SriLankan had been afforded a huge fuel subsidy of Rs.500 million in 2002 as well. 

(1)            Skywards

Air Lanka had a frequent flyer programme called SERENDIB CLUB whereas Emirates at the time did not have such a system. Emirates following the 1998 deal took over the SERENDIB system, upgraded it into a more sophisticated programme and renamed it SKYWARDS where Emirates became the dominant partner.

BOI sources told The Sunday Leader the entire programme was controlled in Dubai and even the membership is not made known to the overseas SriLankan country  managers and adding its efficiency was highly overrated.

Be that as it may this is a huge customer base and Sri Lankan stands to lose these customers. Possibly Emirates will hand over the customers who have engaged as SriLankan Airlines customers but there will be no benefit to us by this. However if we are to remain in the programme Emirates sources indicated they would charge the usual commercial going rates. If SriLankan pulls out of the system now it will incur a huge customer base loss and a synergy loss as there are other benefits added to SKYWARDS like Star Thai Alliance and relationships with other major carriers.

(2)        Code Share

Both carriers benefit from the code share agreements and given that SriLankan does not fly to many countries like US, Canada, Rome, Zurich, and code share with Emirates including flights code shared to Singapore, two points in Germany other than Frankfurt and some lesser known points in UK like Birmingham this would be a major loss. SriLankan's international visibility will drastically decline which will in turn affect its load.

(3)            Reservation system - an IT nightmare

SriLankan has been totally technologically integrated with Emirates. The national carrier shares the Emirates owned Mercator system which was up graded at preferential rates of US$1-2 million. However it would be an IT nightmare to pull out now. Not only does Emirates have access to all SriLankan Airlines data they will either withdraw the service or charge SriLankan the going commercial rates of US$5-6 million to remain. If SriLankan goes back to the old system we would be going back five years in time an airline source said as Mercator is a sophisticated system. 

(4)        Aircraft lessors

Maintaining the leases say SriLankan Airlines administrative sources would be one of the biggest challenges. In fact it is reliably learnt that airline leasing companies are already getting jittery about the Emirates pull out as questions arise whether SriLankan Airlines can stand alone surrounded by such huge financial commitments. The uncertainty has placed the government in a very vulnerable position as it takes over management on April 1 this year. The other issue is of guarantors for the leases when Emirates walks out.

(5) Exodus of staff and pilots

With the lid off on the ban on recruitment of SriLankan staff by Emirates Airlines, pilots are being offered attractive packages elsewhere even as a worldwide shortage of pilots has made them an indispensable commodity. Already some 20 pilots are leaving SriLankan as uncertainty of the future grips the staff at the national carrier.   

SriLankan has approximately 202 pilots even though 220 would have been a more comfortable figure to work with.

Chairman Harry Jayawardena last Thursday (10) was to address the staff and local pilots at the Bandaranaike International Airport stating he would increase their salaries and assuring them of a stable future.

However a pilot who wished to remain anonymous told The Sunday Leader, Harry in his usual style had also dropped a large hint widely regarded as a threat by casually mentioning in passing that when India faced a problem of pilots taking up jobs in other countries it's aviation authority cancelled their licences. Some pilots were visibly upset with one stating he was definitely going to move out after that veiled threat. 

Undercutting SriLankan was the main issue - Dammika

BOI Chairman Dammika Perera said the government would take over the management from April 1 and run it 'very efficiently without any problem.' He charged that at the time Emirates took over in the first year the airline had a fleet of nine aircraft and made a profit of Rs 1.9 billion whereas by last year the profits had come down to Rs 500 million with no ownership of a single aircraft. He said all aircraft with SriLankan currently are on lease.

Perera also told The Sunday Leader the reason Emirates was unable to negotiate was because the BOI had already shown evidence of the way Emirates was undercutting the national carrier while remaining a shareholder and synergic partner. The turnover on the code share routes is approximately USD 1.5 billion Perera states. 'So even if our sales are US$ 300 million per annum then according to the regulations 25% of that which is US$ 75 million must come to SriLankan.' Undercutting its own partner is the biggest reason for this problem. This is the reason that they had to move out because they had no answers. 

Perera had earlier on several occasions publicly accused Emirates of undercutting SriLankan Airlines. 

What is good for the goose.

Perera also posed the question if Emirates maintained it was the accepted financial practice to lease planes and it was on this basis it sold all SriLankan owned aircraft and leased them back, whether the Emirates' huge fleet was leased as well or owned by Emirates. Highlighting the duplicity of Emirates in dealing with SriLankan, Perera said 10 years ago we had nine aircraft, now we have 14 on rent.

'We don't even have that asset. What has Emirates done to develop our airline other than sell our assets and leave us with lease payments,' he asked. There is a profit on ground handling and catering but even if we didn't have an airline we would have made a profit on those two sectors which are the cash cows.

Furthermore Perera also pointed out that Emirates' undercutting was so perfectly constituted it would undercut SriLankan on pricing even on a ticket on the same plane with customers having to pay more if bought through SriLankan and less if through Emirates. The BOI Chairman said this was like a bus conductor charging a passenger Rs. 100 if he got in from the front of the bus and Rs. 95 if he got in through the back door.

It is Emirates that has violated the agreements, he said.  

This is what happens when you appoint a wharf clerk as CEO -  Ravi

UNP MP Ravi Karunanayake told parliament last week Mihin Air was running at a loss with the father's Lanka Putra Bank giving a loan to the son's airline. He also said Mihin does not even fly to India now and noted one of its aircraft was grounded as not airworthy. "This is what happens when you appoint a wharf clerk as the CEO of a company," Karunanayake quipped.

The UNP MP also alleged that the personal bills of Mihin Lanka CEO Sajin Vass Gunawardena including for spa treatments at the Holiday Inn Hotel in Istanbul were eventually paid for by Mihin Lanka. This despite Sajin receiving a salary of Rs.450,000 a month. According to the hotel bill, Sajin had spent Rs 40,000 for one day's meals courtesy the budget airline.

His spa treatments had cost approximately Rs.16,000 with the grand total for one night being approx Rs. 138,000. As this newspaper has revealed in its past issues the Lankaputra Bank headed by none other than Sajin Vass Gunawardena's father has far from granting small and medium enterprises loans decided to extensively fund among other top level companies, Sajin's Mihin as well.

It will be recalled that the Treasury had initially pumped in Rs. 250 mn while the cabinet had later authorised another Rs.500 million to Mihin. The Lanka Putra Bank which was originally set up to help poor farmers and small and medium enterprises has also invested a sum of Rs.300 million as redeemable preference shares.

The total operational cost of Mihin Lanka as of March 31, 2007 was  Rs. 195,410,886.41 and despite extensive state patronage Mihin Lanka is incurring some Rs. 8-9 million in losses each day.

An ambitious advertising campaign and promotion costs are a staggering Rs. 25,249,614.13. The amount spent on staff salaries and allowances are Rs. 16,129,577.06 and the aircraft wet leasing charge is Rs.90.8 million.

Managing Director/CEO, Sajin Vaas Gunewardena draws a monthly salary of Rs. 450,000 while Senior Manager - Flight Operations, Errol M. G. Cramer makes Rs. 500,000 a month. Head of Flight Operations, Athula Dissanayake gets a salary of Rs. 600,000, according to particulars furnished to parliament on December 10, 2007. Head of Commercial, Rohan Perera and Head of Finance and Administration, Lohan Sajiva Suwaris draw Rs. 350,000 each.

There are also six officials drawing Rs. 250,000 per month while Coordinator to CEO, Vimal Perera and Manager, Human Resources and Administration, Joyce Kandaragama are paid Rs.150,000 each per month. Mihin Lanka according to documents furnished to parliament employs a total of 157 personnel.

On December 31, SriLankan Airlines withdrew its ground handling facilities due to non payment of funds. Mihin was compelled to manually pushback its aircraft before take off.

The controversial supposedly low budget but high cost airline faced further ignominy in the new year when it was compelled to use its own staff to handle the check-in counters as well.

While check-in services were relatively easy and could be taken over by untrained Mihin staff, ground handling including take off, landing, luggage and technical services were specialised jobs which required particular skill.

Sources revealed Mihin Lanka was now desperately looking to recruit retired personnel from SriLankan Airlines in order to set up their own ground handling services. It is learnt even the aircraft toilets could not be cleaned as a result of the withdrawal of the facilities.

Just the week before, Mihin was compelled to ground its A320 aircraft plying to Indian destinations due to non payment of dues. The Bulgarian company that leases out the A320 aircraft to Mihin on a wet lease had instructed its pilots not to fly the aircraft as Mihin had not settled its dues under the lease.

Mihin currently attempts to fly to seven destinations. They are Dubai, Male, Bangkok, Tiruchirapalli, Trivandram, Gaya and Singapore.

Sajin's Mihin currently owes the Petroleum Corporation Rs.420 million and SriLankan Airlines over US$ 1 million.   

These debts SriLankan will now have to carry with the change of management as Sajin looks to piggy back on the national carrier to maintain his standard of living.

Tim Clark on 2007 performance

The year under review saw an increase in competition from government supported carriers mainly in the Middle East and from several new low cost carriers that are operating notably in the South Asian, Far Eastern and Middle Eastern regions. However, the continuing level of traditional SriLankan hospitality and service has enabled SriLankan to preserve its market share despite these developments.

Amidst the competition, passenger revenue grew 10.67% with a 5.36% increase in passenger traffic and a 5.66% growth in yields. Cargo revenue increased by 15.24% with a 8.15% growth in cargo carriage and a 7.42% increase in yield. As a result, revenue of the airline grew by 11.12% to reach Rs. 67,963.76 million during the year.

Break even load factor of the airline rose to 72.34% from 72.00% due to a rise in operating expenditure resulting from escalating fuel prices and the weakening of the Sri Lankan Rupee against major foreign currencies.

Route Network

SriLankan flies to 51 destinations in 28 countries in Europe, Asia, Middle East, Australia and North America but these include a large number of code share flights. Sri Lankan is the most frequent foreign airline into India with a total of 95 flights per week. In 2007 passenger revenue was Rs. 54.6 million a 10.67% increase from 2006 which was Rs. 49.4 million. The number of passengers carried in 2007 was 3.18 million as opposed to 3.01 million in 2006. 

Share holding

GoSL              - 51.05%

Emirates         - 43.63%

Employees    - 5.32%

By virtue of office, three of the government nominee directors including the chairman own one ordinary share each of the company. 

Aircraft

At the time of privatisation in 1998 the national carrier's fleet consisted of nine aircraft. That is four ageing Lockheed L1011 Tristars, two Airbus A320s and three Airbus A340s. These were owned by the airline. Today SriLankan has 15 aircraft all on financial leases. They are six new A330-200 aircraft, four  A340s, five A320s, two Antonov AN12F Freighters, a Cessna Caravan aircraft and two Turbo Otter amphibious aircraft. 

  


President's proposal to the APRC

The report the govt. wanted kept out of The Leader

President Mahinda Rajapakse last week attempted to get the All Party Representative Committee (APRC) to adopt as its own a political proposal he submitted based on the 13th Amendment to the Constitution as a means of resolving the ethnic conflict. Expressing fear that a consensus document submitted by the APRC will lead to the collapse of the government given the warnings of the JVP, the President told the committee members on Thursday, January 9 at a specially convened meeting that they should therefore stick to the full implementation of the 13th Amendment formula as the basis of their report. And helpfully the President flashed a draft document he had prepared before the members based on the 13th Amendment for their adoption and asked Chairman Tissa Vitharana to read it.

The President when asked by the members for copies however declined to do so with Minister Douglas Devananda claiming it will end up in The Leader newspaper. The document titled, A Political Proposal: The Way Forward said though the 13th Amendment is an integral aspect of the Constitution of Sri Lanka, it has not been implemented in its entirety or even substantially, at any time upto the present.

The 13th Amendment was introduced by the UNP consequent to the Indo-Lanka Agreement of 1987.  "The government will correct this situation by immediately commencing the implementation of the 13th Amendment," the document read. The APRC which met Thursday however decided to submit its own interim report to the President on January 23, which is to be an advancement on the 13th Amendment and one which excludes reference to a unitary state. To keep the President happy, the APRC will also call for the full implementation of the 13th Amendment as promised by the President until such time the APRC proposals take a legislative form. Reproduced below is the full report the President submitted for adoption by the APRC and which was not circulated at Wednesday's meeting fearing it will reach The Sunday Leader. Well it did!

A POLITICAL PROPOSAL:

THE  WAY FORWARD

1.  A political initiative by the government, appropriate at this time, must begin with the implementation of the 13th Amendment to the Constitution. This is existing law. Moreover, it is part of the Constitution, the highest law of the country.

It is beyond doubt that the implementation of constitutional provisions is a basic duty of the government. What is contemplated here, as a point of departure, is the,

1. Application of established principles.        

2.         The crucial elements here are political will and sincerity of purpose.

Although the 13th Amendment is an integral aspect of the Constitution of Sri Lanka, it has not been implemented, in its entirety or even substantially, at any time unto the present.

This is due, essentially, to lack of political resolve. The result has been a deep sense of cynicism - a reaction to laws consistently honoured in the breach.

The government will correct this situation by immediately commencing the implementation of the 13th Amendment.

3.         Part of the rationale underpinning this approach is our conviction that decisions relating to suitable courses of action for the future can properly be made only after current provisions have received practical expression.

The position today is that the Constitution contains provision for structures, which have never been put in place. The gaps, if any, in these structures will be clearly identifiable only after substantial implementation.

This is, consequently, the obvious step to take at this time.

4.         This action will be taken by the government within the framework of the country's constitutional and legal system, as interpreted in authoritative judicial rulings.

The effect of recent pronouncements by the Supreme Court is that there has been no lawful merger of the Northern and Eastern Provinces for the purpose of power sharing, and that they constitute distinct entities in this context.

It follows that the procedures now envisaged by the government will be resorted to in this constitutional setting.

The government wishes, at the same time, to emphasise that what it proposes to do is not merely to implement laws which have been in the statute books for two decades. This is neither timely nor sufficient.

It is necessary to take into account developments, which have taken place during the intervening period.

With this end in view, the government proposes to add a variety of new elements, which give the current initiative a character, and identity of its own.

6.         A critical imperative at this time is the progressive revival of vibrant electoral mechanisms in the Northern and Eastern Provinces.

The re-establishment of government control over the Eastern Province now provides us with the opportunity of holding elections to those Pradeshiya Sabhas and local authorities, in respect of which the electoral process remained dormant because of the presence of the LTTE in the areas in question.

It is the government's intention to complete this before March this year.

Simultaneously, preparations will be made for the holding of provincial council elections in the Eastern Province as a whole.

The government believes that this will be possible with regard to the Northern Province as well before the end of the year 2008.

7.   Meanwhile, pending the holding of elections in both provinces - the north and the east - arrangements will be made to bring into being informal, but effective, bodies which will enable participation by the people of these areas in matters pertaining to their governance at the provincial level. This will serve as part of a visible political process.

Inasmuch as the governor's authority, in terms of the structural framework of the 13th Amendment, provides the channel through which decisions of the board of ministers of the province receive legal effect, it is envisaged that the informal bodies will be constituted by the president, one for each province, to interact with the governor in an advisory capacity in all matters relating to provincial administration. The president will perform this function in consultation with members of parliament representing the two provinces.

The qualifications and experience required of the persons eligible for appointment will be spelt out, and selections will be made in keeping with these criteria.

These bodies, which will be a bridge between the governor and the people of the two provinces, will function until provincial council elections are held in the Northern and Eastern Provinces.

8.   A series of effective measures will be taken, as a matter of the highest priority, to redress problems of a practical nature which members of minority communities have complained of consistently.

Where these measures require statutory intervention, legislation will be presented.

This category of situation is exemplified by Article 2(b)(2) of the 13th Amendment to the Constitution which provides that "Tamil shall also be an official language." It is further enacted that "Parliament shall by law provide for the implementation of the provisions of this Chapter."

Accordingly, comprehensive legislation to facilitate the use of Tamil as an official language will be presented to parliament within two months.

9.         There are many contexts in which remedial measures will assume an administrative, rather than a legislative, character.

The following are instances of measures, which will be strenuously accelerated and implemented by the government:

(a) recruitment of Tamil police officers in sufficient numbers to enable Tamil speaking members of the public, not only in the north and the east, but in the country as a whole, to transact business in their own language in police stations;

(b) the taking of all steps, including recruitment of staff and procurement of equipment, to enable Tamil speaking members of the public to deal with ministries, government departments, statutory corporations and all other public bodies in their own language;

(c) the provision of interpreters and other relevant facilities in all courts of law, so that the needs of members of minority communities are catered for fully with regard to all aspects of the administration of justice;

(d) the regular holding of, and streamlining of procedures for, mobile 'clinics' where officials fluent in the Tamil language will engage in problem solving on the spot.

10.   Action will be taken to expand the ambit of the functions and responsibilities of Pradeshiya Sabhas and local authorities to develop them into potent instruments of public service at the grassroots level.

At the core of the government's attitude to public administration is its belief in the compelling need for a 'bottom up,' as opposed to a 'top down,' approach at this time.

It is proposed to draw extensively upon the gramarajya concept, embedded in our own country's political culture and traditions, as well as the panchaya system which has proved exceedingly fruitful in India, to buttress participatory values and to achieve the highest possible degree of sensitivity on 'the part of the administration to the aspirations of the people.'

Particular attention will be paid to:

(a)            ensuring adequate resources, on a regular basis, for local authorities in the discharge of their enhanced responsibilities; and

(b) establishing an institutional nexus between local authorities and provincial councils, so as to enable the former to make a direct and more vigorous impact on decision making at the provincial level.

11.   The government will, within a period of two months, introduce legislation in parliament for the appointment of an ombudsman to address a wide range of grievances on the part of members of minority communities, in such fields as recruitment to the public service, admission to schools and universities, withholding of benefits and all other complaints of an administrative nature.

A special feature of this legislation is that the ombudsman appointed for this purpose will not be restricted in his function to reporting to parliament but will be empowered to make decisions, which are enforceable.

12.  The government attaches the greatest value to the work of the APRC as an indispensable forum for inter-party deliberations directed towards the emergence of as broad a consensus as possible in respect of the key components of a just and viable political solution.

It is the government's firm conviction that these deliberations should continue with greater intensity.

The continuity of this process is of vital importance to the nation.

As and when agreement is arrived at on the salient features of a political solution, the government will be prepared to undertake the legislative measures required to give effect to the consensus reached.

The government's present purpose is to initiate the political process by the adoption of a series of measures which are immediately capable of being taken, with the conviction that this is the beginning of a process, the future trajectory of which will be determined principally by the proceedings of the APRC.

  


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