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17th July, 2005  Volume 12, Issue 1

First with the news and free with its views                                     First with the news and free with its views                             First with the news and free with its views                                    

Politics

Govt.'s doomsday scenario

Inside Politics

By Suranimala

With the unprecedented success of the Jana Bala Meheyuma campaign, the UNP last week decided to up the tempo against the........

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 More Political Articles

> Painful prescription for ailing CEB


Govt.'s doomsday scenario

Ranil Wickremesinghe, Chandrika Kumaratunga, Wimal Weerawansa 
and Mahinda Rajapakse

Inside Politics

By Suranimala

With the unprecedented success of the Jana Bala Meheyuma campaign, the UNP last week decided to up the tempo against the government calling for presidential elections in November even as President Chandrika Kumaratunga made one last desperate attempt to change the executive presidential system through parliament.

Time, Kumaratunga knows, is fast running out and in a last ditch effort to lobby all shades of opinion within parliament for a constitutional manoeuvre, she hit all round the wicket hoping against hope the TNA, JVP and the JHU can be persuaded to support a change in the executive presidential system.

President's statement

Towards this end, in a načve political attempt to soften the TNA and the LTTE, the President in a statement issued Thursday blamed the violence in Trincomalee that is threatening the fragile ceasefire agreement on the opponents of the Post-Tsunami Operations Management Structure (P-TOMS).

Notwithstanding the fact several security forces personnel were injured in grenade and other attacks by the LTTE, the Commander in Chief of the Armed Forces and Defence Minister, Chandrika Kumaratunga went on record stating the violence was "precipitated by the assassinations of several senior unarmed political cadres of the LTTE in their Trincomalee office earlier this week."

Not stopping at that, the President also had this to say - "At a time when the government of Sri Lanka has taken the momentous and historic decision to commence working together with all stake holders in the post tsunami reconstruction effort in the north and east through the P-TOMS, it is regrettable but not entirely surprising that opponents of the same would seek through various means, including orchestrated violence, to disrupt the conflict transformations process, desired by the vast majority of the people of Sri Lanka."

Thus, whilst absolving the LTTE of any blame, the President has attempted to shift the blame on the violence in Trincomalee to the opponents of the P-TOMS - namely the JVP, JHU and the Sri Lanka Muslim Congress.

At the same time, in a bid to appease the JVP and JHU, the President also directed the gazetting last week of the Anti Conversion Bill, hoping possibly that it would endear the two extremist parties to her and help maintain the balance in parliament. The Supreme Court order on the P-TOMS in this context would have also helped even superficially to appease the JVP and the JHU to an extent.

With the stage thus set, the President's confidant, national list MP, Wijedasa Rajapakse on Thursday submitted to parliament two constitutional amendments providing for changes in the executive presidential system as well as electoral reforms.

Amendments to the constitution

Terming it the 20th Amendment to the Constitution, Rajapakse has called for the repeal of Article 30 (2) of the Constitution, which provision provides for the election of the president by the people.

In taking away the power of the people to elect the President, Rajapakse proposes that the president be elected by the members of parliament through a secret ballot.

Furthermore, Rajapakse proposes in the amendment that the executive powers of the people including the defence of Sri Lanka be exercised by the president, prime minister and the cabinet of ministers, as opposed to the president as stated in the present constitution.

He also states in the amendment, the speaker of the house will act for the president in the event the holder of the office of president is unable to perform his functions by reason of illness, absence from Sri Lanka or any other cause.

What the amendment seeks to do effectively is pave the way for Kumaratunga to return to parliament and be either elected president with reduced powers or continue as a powerful prime minister within the new constitution.

In a further amendment proposed titled the 21st Amendment to the Constitution, Rajapakse moots a change in the electoral system providing for a 241 member House, of which 168 will be directly elected from parliamentary electorates with the balance 73 elected on a proportional representation basis.

With that amendment, whilst the Tamil political parties would be in a position to increase their numbers in the House, it would effectively decimate the JVP and the JHU, which parties can only hope to vie for the 73 slots on the proportional representation basis.

Thus, the only way the JVP can survive in such a system is by forming an alliance with the SLFP lest it be reduced to about 10 seats in parliament.

Having submitted the amendments, Rajapakse spoke to several UNP MPs soliciting their support and indicated both the JVP and the JHU had agreed to back the amendments.

But this bait the UNP was not prepared to bite and no sooner the amendments were brought to his notice, UNP Leader Ranil Wickremesinghe rejected it out of hand, making the entire manoeuvre an exercise in futility.

UNP meeting

Wickremesinghe in fact told Chief Opposition Whip, Mahinda Samarasinghe to communicate to Rajapakse that the UNP will not be considering any amendments to the constitution in relation to electoral reforms or the executive presidency until the presidential election is held as scheduled in November.

On the contrary, at the UNP's political affairs committee meeting on Wednesday, July 13 the party was all gung ho ready to take the fight to the President's doorstep if any attempt was made to postpone the presidential elections.

At the meeting called by Wickremesinghe and attended by senior members including Deputy Leader Karu Jayasuriya, Chairman Malik Samarawickrama, Tissa Attanayake, G.L. Peiris, Mahinda Samarasinghe and Kabir Hashim, it was decided to extend the agitational campaign from August.

The political affairs committee also decided that a 'petition drive' calling for presidential elections should be launched house to house from August, with back up campaigns in all towns.

With the strategy for the follow up action planned, the political affairs committee focused on Prime Minister Mahinda Rajapakse's tsunami funds misappropriation scandal, where the unanimous opinion was that the party should call for a full scale investigation.

The UNP Leader himself pointed out that monies received by the Prime Minister cannot be transferred out of state control into private hands since it tantamounts to not only criminal misappropriation but also a criminal breach of trust against public property.

"When I was prime minister, Prima gave a donation of Rs. 25 million in 2003 to mark their 25 year anniversary in Sri Lanka and asked me to use it for any purpose I saw fit. I deposited it to a parliament scholarship fund and is now under the control of Prime Minister Rajapakse. It did not go into a private account. I do not know whether that money was used for the purpose for which it was deposited," Wickremesinghe said.

The UNP Leader also referred to Finance Minister Sarath Amunu-gama's statement in parliament and said according to that statement there were only three official accounts and the 'Helping Hambantota' private account was not one of them.

Continuing Wickremesinghe said The Sunday Leader had presented the facts meticulously with documentary proof and the defence submitted by Rajapakse had also been demolished.

Said he, "In this backdrop we cannot be silent, especially when tsunami victims are still languishing in makeshift tents and the monies given are deposited in a private account and gathering interest. Even S.B. Dissanayake called me today and said to pursue this case vigorously."

With Wickremesinghe's comments receiving unanimous approval, the matter was also placed before the UNP working committee on Thursday, July 14, where once again it was decided to pursue the case in all available fora.

Wickremesinghe in fact referred to a Rs. 25 million donation made by Unilever to the 'Helping Hambantota' fund as detailed by Prime Minister Rajapakse and asked whether it was possible a multi national company could have done so.

"According to the Prime Minister, Unilever has given Rs. 25 million only for Hambantota. Unilever products are sold in all districts affected by the tsunami and in fact more of their products are sold in several of the other districts affected by the tsunami. MPs from the affected districts must go in delegation to Unilevers and ask for funds to help their districts as well. Otherwise say the people will boycott their products because of the discrimination," the UNP Leader said.

Taking the cue from Wickremesinghe, UNP's Hambantota District MP, Sajith Premadasa on Friday wrote to Unilever seeking assistance for the work he is doing in the area in view of the fact the Premier is yet to use any of the monies given him by the company.

Kadirgamar violates the law

The Prime Minister apart, Colombo District MP, Ravi Karunanayake pointed out to the working committee Foreign Minister Lakshman Kadirgamar too had violated the law by providing his wife a per diem from Foreign Ministry funds every time she travelled with him in addition to the ticket payments.

"When questioned Kadirgamar said there was a circular authorising such payments but I spoke to the Foreign Secretary, Palihakkara, today and he said there is no such circular. He said there was a general circular covering per diems but it did not cover spouses of the ministers. It was also confirmed Kadirgamar's wife does not have any official status in the Ministry," Karunanayake said.

The MP said as such, whilst taking action against the Prime Minister, the party should also move against Kadirgamar, a proposal for which the UNP Leader gave the green light.

Accordingly, the UNP Leader authorised the complaint against Prime Minister Rajapakse to be made Monday, July 18 with the CID followed by the complaint against the Kadirgamar duo. The complaint is to be lodged by Kegalle District MP, Kabir Hashim tomorrow.

And on Thursday, July 14, former Attorney General, Tilak Marapone drafted the complaint against Rajapakse as directed by the party and submitted it for the consideration of the leadership and it was duly approved.

Despite this looming crisis confronting the Prime Minister, he was focused on capturing the SLFP's presidential election nomination and had a hurried but secret meeting last week with Minister Mangala Samaraweera, JVP Propaganda Secretary Wimal Weerawansa and Ruwan Ferdinands at the residence of a Tamil businessman prior to leaving for a family engagement to India. The Premier was visiting India to attend the home coming of his brother Basil's daughter who married an Indian national.

At this secret discussion, Minister Samaraweera had stressed the importance of Rajapakse being nominated the SLFP presidential candidate and the steps needed to be taken to ensure a speedy decision.

Samaraweera had said to achieve this objective it was important to neutralise Anura Bandaranaike and the way to do so is by offering him the premiership in the event of Rajapakse winning the presidency.

He had further said if Rajapakse agrees to amend the constitution upon winning and grant some of the powers of the executive president to the prime minister, there was a possibility Bandaranaike will pull out of the race and support Rajapakse's candidature.

If that was the case, the President's support will be reduced to four or five deputy ministers and she would be weakened in the party as well, it was also said.

Rajapakse however did not agree, stating Ministers Nimal Siripala de Silva, Maithripala Sirisena and Ratnasiri Wickremanayake too were expecting to be appointed prime minister under his presidency and naming Bandaranaike would see them rallying behind Kumaratunga.

Samaraweera was not convinced. He said the history of the SLFP shows all members gravitate to the centre of power and Rajapakse need not fear any divisions.

He went on to say it was the same strategy which saw Chandrika Kumaratunga without any title in the party assuming the leadership.

JVP support for PM

Supporting Samaraweera was Wimal Weerawansa. Said Weerawansa - "We must ensure the presidential election is held this year and Kumaratunga's term ends by December 2005. Both the President and the government are losing ground by the hour and the people are becoming increasingly disillusioned. With each passing moment the rift between the SLFP and JVP is also widening. Therefore the only way to stem the tide is by nominating Mahinda Rajapakse as the candidate immediately."

Added he - "If that happens, we can tell the country we have come to an understanding with Mahinda. We can even sign an agreement. But to do all this the Premier must keep a straight backbone and take decisions. Therefore, either in a good or bad way, the Prime Minister must start his presidential campaign straightaway both within the party and the country."

Not wanting to take the battle head on, Rajapakse said irrespective of all the issues raised, the party machinery was in Kumaratunga's hands and without it, there was little he could do to launch any campaign.

Shot back Samaraweera, "That is why you will have the JVP machinery at your disposal."

Continuing, Samaraweera said he has already made preparations to set up a campaign secretariat with the party media machinery also under his control.

Given this backdrop, Samara-weera pointed out it was difficult for the President to control the campaign levers and if they worked out the strategy carefully she could be checkmated.

With those words, Rajapakse was swayed and agreed to launch his campaign on his return from India, kicking it off initially with a poster blitzkrieg.

SC ruling

In the midst of all these developments, the Supreme Court on Friday added a new dimension to the looming crisis in government by staying the setting up of the regional office of the P-TOMS in Kilinochchi and the regional fund but went on to say the agreement in substance was valid and the President had the powers to enter into such an agreement with the LTTE.

Effectively what the Supreme Court has said is the JVP claim that the P-TOMS agreement and the ceasefire agreement were a nullity because it compromised national sovereignty was not a valid contention.

For the JVP, though they picked up a crumb in the form of the stay order on the headquarters being set up in Kilinochchi, the seal of approval given to the overall agreement meant the JVP's own action has helped grant legitimacy to the P-TOMS agreement (see box for SC order).

At the same time, the government was left in a quandary over the stay order issued by the Chief Justice Sarath N. Silva with Justices, Raja Fernando and Gamini Amaratunge agreeing since the LTTE would not accept shifting the headquarters from Kilinochchi, thus placing the entire agreement in jeopardy and with it the foreign funding.

The LTTE, no sooner the order was known, made it clear security considerations will not enable them to work outside areas controlled by them, thus putting the whole agreement in jeopardy.

But if the LTTE were to agree to a shift in the location, then what the JVP has done by going to court is to have legitimised the entire P-TOMS agreement.

In fact the stay order on the regional fund and the Kilinochchi head office will be a blessing in disguise to the LTTE with the organisation now in a position to claim to the whole world, the government is not even in a position to enforce a simple agreement.

At the same time, what the JVP action has done is legitimised the ceasefire agreement entered into by former Prime Minister Ranil Wickremesinghe with the LTTE, since the Supreme Court has not ruled out of order that provision which was part of the P-TOMS agreement.

More importantly for the LTTE was the Supreme Court ruling out the Kilinochchi headquarters for the regional committee which the Tigers claim was a tacit acceptance that Kilinochchi was not part of a united Sri Lanka. This the Tigers claim has strengthened their case internationally for a separate state and has the JVP to thank for it.

Government on notice

And while the Supreme Court was issuing its order on Friday, the LTTE also put the government on notice with regard to the ceasefire agreement in a letter issued through the Head, Sri Lanka Monitoring Mission (SLMM), Hagrup Haukland.

In that letter, LTTE Political Wing Leader, S.P. Tamilselvan rejected the conditions stipulated by the government to provide transport security for LTTE cadres and said the administration was duty bound to do so in terms of the ceasefire agreement. The LTTE has said it will not be bound by restrictions placed by the government with regard to the transport of its cadres.

"We reiterate therefore that our travel proposals on June 30, 2005, formulated after careful and lengthy discussions, be taken in the right perspective and given effect without any further delay. Please be advised that we will be forced to resort to our means and modes of transport if suitable action is not taken to effectively implement our proposals without further delay. If this becomes a necessity, the military should not interfere with our travel and security arrangements. If on the other hand, the military attempts to prevent or hinder such travel, we would be compelled to react suitably. This, we fear, would push the ceasefire agreement into a grave and complex situation," Tamilselvan also wrote in his letter.

Thus, with the P-TOMS now in abeyance following the Supreme Court decision and the ceasefire hanging by a thread, Kumaratunga has finally hit ground zero.

The bottomline is, the political floodgates are now wide open and nothing short of a miracle can prevent the government in its entirety from being completely submerged.

Excerpt of Supreme Court order

The preamble to the MoU sets out the basis on which it was entered into, being the need to provide urgent humanitarian assistance to the persons who have extensively suffered on an unprecedented scale from the tsunami that struck Sri Lanka in December 2004. As head of the executive and of the government it is the duty of the President to ensure that essential relief and assistance for rehabilitation, reconstruction and development should be made available to the persons who have thus suffered. Hence in my view there is no illegality in the President entering into an MoU for the objectives and reasons set out in the preamble. The petitioners have failed to make out a strong prima facie case in respect of matters (i) and (ii) drawn in issue by them.

Mr. S.L. Gunasekera contended that it is illegal to enter into the MoU with the LTTE which he described as a terrorist organisation that caused tremendous loss of life and property in this country. The contention is that even assuming that the President could enter into a MoU for the objectives and reasons stated in the preamble, the other party to the MoU is not an entity recognised in law and should not be so recognised due to antecedent illegal activities of the organisation.

In this regard I have to note that the matter so strenuously urged by counsel cannot by itself denude the status of the fourth respondent to enter into the MoU. The circumstances urged by counsel cannot and should not have the effect of placing the fourth respondent and the organisation that he seeks to represent beyond the pale of law. We have to also to bear in mind that already a ceasefire agreement has been entered into on 23.2.2002 between the government of Sri Lanka and the LTTE, which according to section 2(b) of the MoU "shall continue in full force and effect."

In these circumstances there is no illegality in entering into the MoU with the fourth respondent for the purpose of rendering humanitarian assistance as contemplated in the preamble to the MoU. The petitioners have failed to establish a strong prima facie case in respect of this matter as well. In the result the petitioners have failed to make out a strong prima facie case on any ground that warrants interim relief as to the entirety of the MoU.


Painful prescription for ailing CEB

By Mandana Ismail Abeywickrema

Recommended ownership, regulatory framework and Report of the committee

The government is still dilly dallying with the unbundling of the Ceylon Electricity Board (CEB) and restructuring the power sector to remedy the crisis-stricken sector from falling deeper into an abyss.

With an overall debt of Rs. 89 billion and a short-term debt of Rs. 36 billion, if the government manages to secure the funds from the Asian Development Bank (ADB) and the Japanese Bank for International Co-operation (JBIC) it could secure up to Rs.6 billion.

The report of the committee on power sector reforms headed by the Additional Secretary, Power and Energy Ministry, W. B. Dissanayake was finalised on July 12 and handed over to the Power and Energy Minister, Susil Premajayanth on July 13.

The committee in its report has deemed it necessary to establish reasonable financial stability in the electricity industry.

However, it has clearly stated that contrary to statements made by politicians through restructuring the cost of electricity could be brought down, it would not be possible to do so.

The report states, "Although the cost of electricity could be brought down by off loading all the sector debts, it is not possible to reduce or even to stabilise the electricity prices, at current levels."

According to the report, "while the new enactment is being drafted for passage through parliament, it is imperative that financial stability of the CEB be improved by immediate revision of tariffs to atleast reflect the steep increase of fuel prices." (See box)

Root causes of crisis

The Sunday Leader has in its possession a copy of the final 13-page report, which was handed over to Premajayanth for final deliberations before presenting it to cabinet.

The 13-member committee after about 30 sessions of discussions identified the root causes for the present crisis in the power sector.

According to the report, the power sector is faced with serious and longstanding issues including a financial crisis and four major issues have been identified as those in need of urgent attention.

First among them are the obstacles faced by the CEB during the past one or two decades in implementing the plans for setting up large scale, low cost base load plants, particularly those using coal and fuel and large scale hydropower projects.

The proliferation of relatively low capacity thermal power generating plants using petroleum fuels, the prices of which have sharply risen is a cause.

Another cause identified is the CEB's inability to increase tariffs to commensurate with the increasing fuel prices, depreciation of the rupee which contributed to the increase in capital costs and a part of the operational costs and the consequential higher prices paid to independent power producers in terms of their contracts.

The final root cause is the structural and managerial weaknesses and operational inefficiencies within the CEB, as well as an inadequate level of empowerment in its decision making process.

The committee in the report has mentioned three strategic initiatives - (tripod) to be adopted to solve the problems related to the four root causes.

However, the committee highlights that the "sector reforms essential to ensure a viable, self-sustainable and nationally beneficial power sector should have three principal strategic initiatives, each of which constitutes a leg of the power sector tripod."

Tariffs

First in the three initiatives is the immediate adjustment of electricity tariffs to at least reflect the direct costs consequent to the increase in the price of fuel. This however is needed to be followed by a realistic, fair and transparent mechanism for tariff setting and compensation for tariff subsidies.

The next is the urgent implementation of the lower cost large-scale thermal base-load generating plants using coal, until they meet a substantial part of the energy requirements. The committee highlights that there should not be any room for vacillation and diversionary moves.

The committee has included policies and measures to be adopted in this aspect. (See box)

The third leg is restructuring the power sector by unbundling the CEB and establishing independent, self-contained and commercially oriented companies fully owned by the CEB and ensuring their continued viability by offloading debt and subject to an independent and transparent regulatory mechanism.

To receive optimal results, the committee in its report has recommended that these three initiatives be implemented consistently, vigorously and concurrently with equal emphasis on each initiative.

Speaking of power sector reforms, the committee has noted that it suffers from issues related with its structure, governance and regulation and the reforms are expected to help gear the sector for future challenges. (See box)

Legal framework

The committee has reiterated that the subsidiary companies under the CEB will not be privatiszed and the necessary legal framework would be drafted accordingly.

However, the committee has stated in its report that a written agreement of the relevant international lending agencies be obtained by the government for the concepts contained in the paper. This has been considered a mandatory requirement by the trade unions, especially with regard to debt off-loading and implementation of the long-term generation expansion plan.

The report states it is a reflection on the consensus arrived at by the committee as a basis for a legal framework.

The committee discussions were based on the proposals submitted by the alliance of the CEB trade unions, on the understanding reached between the alliance of CEB trade unions, Power and Energy Minister Susil Premajayanth, Finance Minister Dr. Sarath Amunugama, Power and Energy Ministry Secretary Weerahandi in the presence of Prime Minister Mahinda Rajapakse and the views expressed by the ADB and JBIC.

However, it is expected to take months or even a year to reach finality in the whole process.

Till then, the country's heart and soul - the power sector - would have to survive with its ailments.

Power sector reform process

Following is the sector structure proposed by the committee in its report.

(a) The sector will be restructured to ensure increased efficiency, transparency, autonomy, accountability, competition and financial viability. Presently vertically integrated functions of generation, transmission and distribution of the CEB will be vertically and horizontally unbundled.

(b) The Ceylon Electricity Board (CEB), established under the provisions of the Ceylon Electricity Board Act No. 17of 1969 will remain as a statutory body subject to the necessary changes in keeping with these proposals. Autonomy (independence) and authority of the CEB will be granted by introducing necessary legislation. CEB should be allowed to form one subsidiary company and/or hold shares of other companies. Relevant legislation should be suitably amended/repealed or be introduced to ensure the aforesaid.

(c) CEB owned subsidiary companies will be established under the provisions of the Companies Act No. 17 of 1982 for the following functions presently handled by the CEB and they will operate independently as separate legal entities.

* Generation -- one company

* Transmission and bulk electricity trade - one company

* Distribution - two or more companies

All non-core activities will remain with the CEB.

Broad policies such as human resource management and accounting policies applicable to subsidiary companies will be jointly evolved by the CEB and subsidiary companies.

(d) The CEB Employees Provident Fund and the Pensions Fund will continue under the CEB.

(e) The Lanka Electricity Company (Pvt) Ltd. (LECO) will remain and continue as a separate entity at this stage of reforms.

(f) The Public Utilities Commission of Sri Lanka (PUCSL), established under the Public Utilities Commission of Sri Lanka Act No 35 of 2002 will act as the economic, technical and safety regulator for the electricity industry of Sri Lanka.

(g) The independent Monitoring and Advisory Committee (MAC) will be retained to monitor the performance of these companies and advice the  minister of power and energy on operational and financial matters of the relevant subsidiary companies and the CEB. This committee will make recommendations to the minister of power and energy on matters relating to the appointment and removal of -the board of directors of the CEB.

Policies and measures recommended by committee 

(a)   The Government or the CEB or the subsidiary companies will not initiate projects, call for proposals or entertain proposals, or appoint committees to investigate proposals, whether solicited or unsolicited, to build any new power plants that would operate on oil or other fuels of which the price is linked to world oil prices, except in accordance with the approved Long Term Generation Expansion Plan.

(b)   With the primary objective of reducing the electricity production costs, where the Long Term Generation Expansion Plan recommends coal fired thermal power plants, those plants should be implemented.

(c)   The existing policy of building all future thermal power plants only by the private sector should be suspended for the first 900 MW coal-fired thermal power plant. The objective of this is for the public sector to build the first 900 MW coal-fired power plant expeditiously by securing a long-term low-interest loan and to provide relief' to electricity customers within the shortest possible time.

(d)   A conducive environment should be created for the state sector to compete with the private sector for thermal power generation, except as required in (c) above.

(e)   The coal-fired power plant proposed to be built at Norochcholai at Puttalam shall be the first coal-fired power plant. The government shall process the concessionary- financing proposal without delay, enter into the required agreements, and target to build the power plant to produce electricity from year 2010 onwards. All relevant government institutions, CET and the institutions established under the reform process will be instructed to strictly adhere to this schedule.

(f)   No substantial quantity of the annual electrical energy requirement shall be contracted to be purchased either from one power plant or from a group of power plants belonging to one privately owned entity.  A 10% share of energy is considered to be substantial in the power sector.

All obstacles to the rapid construction of the Upper Kotmale Hydropower Project should be cleared and the project should be implemented to produce electricity from year 2009.

Efficiency improvement of existing power plants should be undertaken to reduce the operational costs.

Agreeing with trade unions  

On Friday (15), Power and Energy Minister Susil Premajayanth together with the committee met with trade union representatives.

After a long discussion, which lasted about three hours, the trade unions agreed to the formation of companies under the CEB.

Following the legal and parliamentray procedures, the formation of the companies is expected to take one to one and a half years.

However, the trade unions have said that during the interim peiod of one to one and a half years, the government would have to form strategic business units to overlook the functions.

The events at a glance

January 2, 2004: The reorganisation scheme under the power sector reform process was published for the information of the general public.

May 7, 2005: CEB trade unions launch protest campaigns against the implementation of the reorganisation scheme. Special meeting chaired by Prime Minister Mahinda Rajapakse with the participation of ministers of power and energy, finance and senior government officials.

May 13, 2005: Power and energy minister appoints committee to attend to matters pertaining to the agreement signed at the May 7 meeting.

May 26, 2005: The alliance of the CEB trade unions forwarded a new concept paper on power sector reforms to power and energy minister.

May 30, 2005: The committee on power sector reforms appointed by power and energy minister and headed by Additional Secretary, Power and Energy Ministry, W. B. Dissanayake commenced deliberations.

June 6, 2005: Special meeting between the members of the committee and lending agencies - ADB and JBIC - chaired by Power and Energy Ministry secretary.

June 9 and 13, 2005: The ADB and JBIC forwarded their views.

June 27, 2005: Power sector reforms committee meets with Prime Minister to discuss issues on which the committee could not have reached a consensus.

July 13, 2005: Final draft report of the committee handed over to power and energy minister.

July 15, 2005: Power and energy minister meets with trade union representatives.

ADB,  JBIC requirements

The views and main requirements of the ADB and JBIC were similar and they included an independent regulation of the power sector, autonomy of the sector through the establishment of the new companies under the Companies Act, introduction of competition to ensure increased efficiency within each functional area of the power sector, development of appropriate policy, legal and regulatory framework to ensure a balanced growth of the power sector, enhancing the sector efficiency by establishing a commercial and competitive business environment  and the improvement of the financial viability of the sector.

However, the lenders were not agreeable to the establishment of strategic business units (SBUs).

ADB Head awaits Govt. response

ADB Head Alessandro Pio when contacted by The Sunday Leader said that the bank was yet awaiting the government's response.

The bank's requirements with regard to the restructuring process remain the same.

As for JBIC, the bank maintained that their requirements too have not changed.

Speaking to The Sunday Leader, Representative, JBIC, J. Sahara said that the bank was not in a position to make any comments as they had still not received the report from the power sector reform committee.

Causes for the present ailments

Following are the four root causes identified by the committee in brief.

* Non-implementation of low cost power projects. Eg: coal and hydropower projects.

* Proliferation of relatively low capacity thermal power generating plants.

* Non-revision of tariffs

* Institutional deficiencies. 


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