COAL BATTLE FLARES WITH DISSOLUTION OF LCC BOARD | Sunday Observer

COAL BATTLE FLARES WITH DISSOLUTION OF LCC BOARD

Relations between key players in the power and energy sector flared this week with Power and Renewable Energy Minister, Ranjith Siyambalapitiya dissolving the board of directors of the Lanka Coal Company (LCC).

Chairman of the Lanka Coal Company is former UNP Provincial Councilor Maithri Gunaratne who now leads a political organization named ‘Jathika Pawura’, which even strongly criticized the UNP and its leadership at one point.

Gunaratne also made news recently for criticizing the government, especially, Prime Minister Ranil Wickremesinghe, while addressing press conferences in Colombo.

Gunaratne’s removal from the LCC however, had nothing to do with his political affiliations: It is the culmination of a prolonged battle among various stakeholders of the energy sector.

Reasons for removal

That there was a tussle for power between the Power and Energy Ministry and the state-owned Lanka Coal Company (LCC), headed by Gunaratne, is crystal clear.

Power and Energy Ministry Secretary Dr. B.M.S. Batagoda’s letter to the LCC Chairman, dated January 15, described the reasons leading to the dissolution of the director board.

The letter said, there were serious lapses on the part of the LCC, when awarding coal tenders over the past few years.

The Ministry Secretary said, one of the main allegations against the LCC is its inaction on tracing the individuals responsible for those “serious lapses.”

The Secretary’s letter also observes that the LCC has not maintained proper coordination with the Power and Energy Ministry and other state institutions in the energy sector, such as, the Ceylon Electricity Board (CEB) and the Shipping Corporation.

The letter further adds that the LCC has failed to obtain clearance from the Attorney General’s Department over the legality of some of its agreements.

Citing these reasons, the Secretary said, he recommended the dissolution of the LCC board of directors.

Two days later, on January 17, Gunaratne wrote a response to Batagoda’s letter. He said, the Ministry Secretary’s letter was misleading and it painted a wrong picture about the coal power tenders and the LCC’s involvement.

Gunaratne said, while the Auditor General had found fault with a number of state institutions over the financial losses incurred due to controversial coal tenders, Batagoda had only pointed fingers at the Lanka Coal Company.

He also stated that the Secretary had unfairly held the current board of directors responsible for problems that occurred since 2009. The current board of directors, Gunaratne said, assumed office in 2015.

“Some of the officials who functioned in the company since 2009 were kept in their positions to facilitate inquiries launched by the Police. The officials were aware of the inner working of the company at the time the controversial deals took place,” Gunaratne explained in his letter.

Batagoda had also writen to Minister Ranjith Siyambalapitiya, recommending that he dissolve the board of directors at the LCC and call a shareholders’ meeting to look into issues.

Accordingly, Minister Siyambalapitiya issued a letter to Gunaratne on January 17, informing him of the decision to dissolve the board of directors.

Dissolution

Batagoda spoke to our sister paper, the Daily News, soon after he sent a letter to the Minister recommending dissolving the board, alleging that many illegal things had been taking place at the LCC.

“So many illegal things – awarding of tenders and all; and as the Secretary how can I sit and wait? I have to do something,” Batagoda said.

“So I wrote to the Minister of Power and Renewable Energy and suggested that he dissolve the board of directors and hold a shareholders’ meeting,” he said, adding - “The AG had asked – ‘should the LCC continue?’ and I asked the Minister ‘should it continue? Better to dissolve the board and conduct an inquiry.’”

Dr. Batagoda told the Daily News, he had also written to all stakeholders – at the Ceylon Electricity Board (CEB), the Treasury, the Shipping Corporation and the Ports Authority - informing them of a shareholders’ meeting they would have to attend, after a lapse of over five years – ‘I don’t think there has been a shareholders’ meeting in five years,” he told the Daily News. But, while the decision to dissolve the LCC board on Tuesday (17) caused ripples in many circles, Lanka Coal Company Chairman Maithri Gunaratne had seemed unsurprised by the move:

“First, they came gunning for my resignation, then they brought in various inquiries against me, now they have dissolved the Board of Directors,” he said.

Gunaratne claims, it is his continued opposition to illegal activity in the power and energy sector that led to his dismissal: “I have claimed, for a while now, that the Power and Renewable Energy Ministry, in awarding a coal tender to the company, Swiss Singapore Pvt. Ltd. was incurring a cost of USD 10 a ton of coal.”

“This means, the Sri Lankan consumer is paying USD 10 more than necessary for a ton of coal,” he reiterated - “I raised this matter in a letter, at the time, in 2015 – but it was disregarded,” he said, of the decision to award the tender to Swiss Singapore Pvt. Ltd – the 5th highest bidder, and not Noble Resources International Pvt. Ltd. - the lowest bidder. “In fact, the AG’s report said my letter should have been acknowledged and acted in accordance to, but that was not done.”

He said, the Attorney General’s response to a petition filed at the Supreme Court by the aggrieved bidder Noble Resources International Pvt. Ltd. had found the Ceylon Electricity Board, the LCC, the Standing Cabinet Appointed Procurement Committee (SCAPC), the Shipping Corporation and Ports Authority responsible for the loss of Rs.4.1 billion.

“The Attorney General’s report had furthermore found the Standing Cabinet Appointed Procurement Committee (SCAPC) to have flouted all rules, regulations and guidelines relating to the awarding of tender procedures and deliberately misled the government,” he said, adding that the Supreme Court in its judgment had said, the manner in which officials had acted with public funds had ‘shocked the conscience of the court’

But, while the Attorney General had recommended a broad inquiry into the issue, in a comprehensive manner, “these have taken the law into their own hands and dissolved the board of directors of the LCC.”

The LCC Chairman said, he intended to meet with President Sirisena to resolve the matter.

“We helped to bring this government into power,” he said, “we believed in the Yahapalanaya ideology. I was appointed by the President and I was committed to protecting his interests and the interests of the government.”

The decision to remove Gunaratne however, came from a Minister representing the Sri Lanka Freedom Party: Therefore, there has been no move by the SLFP group supporting the President, to protect Gunaratne.

Government sources said, a decision on the new management of the company would be taken after the stakeholders’ meeting.

WEF

Prime Minister Ranil Wickremesinghe and his ministerial delegation attending the World Economic Forum in Davos, Switzerland, revealed Sri Lanka’s plans for regional cooperation and international trade, for the next three years.

Development Strategies and International Trade Minister Malik Samarawickrama, during the forum, revealed that Free Trade Agreements (FTAs) with China, Singapore and India would be finalized before June this year.

He said, the tripartite agreements would give Sri Lanka market access to one of the biggest markets in the world.

Infrastructure to support industry and trade will fall in place within the next two to three years, the Minister also said, explaining the nature of Sri Lanka’s road map for economic development.

“With the Hambantota Port, it’s a matter of getting the equipment in place – gantry cranes and so on - that should happen soon: Within the next six months, the Hambantota Port should be ready to take off,” he said.

“Expressways are already in place – the Expressway to Hambantota should be complete in the next 2-3 years, the Expressway to Kandy within 3 years and we have called for proposals for Light Rail Transit and Elevated Highways – we envision those will also fall in place within the next 2-3 years.”

The Development Strategies and International Trade Minister also said, Sri Lanka was working towards improving ease-of-business indicators, and addressing other related issues:

“One problem we identified is that our access has been to traditional markets – the United States, the UK, some countries in Europe, and India: We need to diversify our market and diversify our trade – we can do that this year,” he added.

Prime Minister Wickremesinghe had earlier outlined Sri Lanka’s plans for intra-regional trade relations, explaining that as Asia moved towards further economic integration, Sri Lanka envisaged the role of a logistic and business hub in the Indian Ocean.

“We are in the process of completing negotiations for market entry,” the Prime Minster said. “First, the single market…the GSP+ facility which gives Sri Lanka concessions has been approved in principle, and after the customary two-month period, the announcement will be made, as to the date on which Sri Lankan goods can enter the single market.”

Commenting on the FTAs with China, Singapore and India, the Prime Minister said, of the four largest markets in the world, three will be within the reach of Sri Lanka, and Sri Lankan products and services can penetrate these markets.”

The Prime Minister added that separate agreements with five southern states of India were also on the cards, giving Sri Lanka access to $500 billion regional economy:

“We envisage, we can have separate agreements with five southern states of India: Andhra, Telangana, Karnataka, TN, Kerala; which, together with SL is a 500 billion$ regional economy and has the prospect of even going up to trillion dollars.”

He added that the Sri Lanka government was looking at further agreements with the Bay of Bengal countries – “Bangladesh, Malaysia, Thailand, Indonesia, Myanmar,” adding that “an option is to have an agreement with ASEAN rather than to negotiate with individual countries.”

“We will be also talking about an FTA with Japan and a further FTA with Pakistan,” the Prime Minister told the gathering, at the 47th session of the World Economic Forum.

Finance Minister Ravi Karunanayake who also addressed participants, told global leaders that Sri Lanka was looking at a ‘rapid growth orientation’:

“We have looked at two areas,” he had said, “1. How to lure FDI into Sri Lanka and 2. How to use existing manufacturers – who are the best of ambassadors – to improve and increase existing investments in the country – a two-pronged attack.”

The Finance Minister echoed Development Strategies and Trade Minister Malik Samarawickrama in saying “product diversification and market diversification” was key, to “help us increase exports which dramatically reduced in the past ten years.”

“The perilous economy we inherited…has somewhat, been brought under control….owing to strict policies…and today, we are on a right course, where fiscal consolidation is coming in, ensuring financial discipline and ensuring capital investment goes in for revenues of tomorrow.”

Regional cooperation

Prime Minister Wickremesinghe, while in Davos, attended a panel discussion on harnessing regional cooperation in South Asia.

Speaking at the session, attended by other leaders of the SAARC region, the Sri Lankan Prime Minister stressed the need for structural reforms to boost trade.

“The real problem of SAARC has been trade. But, what do we do? Bangladesh and we, our biggest exports are apparels and people who go to the Middle East - I can’t ask people in Bangladesh to come here, or our guys to go there. And what’s the use of us exchanging apparel? So we have to start restructuring our economies, and how we relate to it. India itself just started opening out in 91, 92 - it’s now coming to a critical stage where India can now be a powerhouse for change, but the rest of us are still colonial economies on which we put some manufacturing and send people abroad - only India has made a significant change,” Wickremesinghe said.

“I think we are coming to a critical stage, of how we are to work our trade relations,” The Premier went on to say. “For that, Sri Lanka’s approach has been that it has to be bilateral, we have to deal with it bilaterally. And from the SAARC we have identified India, Pakistan and Bangladesh as the major countries we want to deal with, and we also want to deal with the other Bay of Bengal countries, and we are dealing with the EU, and China and Japan,” he added.

The Prime Minister also came out strongly against the speculation that the SAARC was dead, owing to difference of opinion between key players:

“Is NATO dead? Because Trump has made a statement and there is a difference of opinion on Russia? No, NATO will continue with all the strains,” the Prime Minister said.

“In South Asia, even with SAARC, informal systems are also working within us: How do we keep it going, how do we try and limit the damage that takes place; we’re focused on these issues,” the Sri Lankan Prime Minister explained.

Meeting with UNHRC chief

Another important outcome of the Prime Minister’s visit to Davos was his meeting with United Nations High Commissioner for Human Rights, Prince Zeid Ra’ad al-Hussein.

The meeting took place at a time when various stakeholders of the unity government have expressed divergent views on the “hybrid court” to prosecute alleged war crimes in Sri Lanka, proposed by the UNHRC chief.

The High Commissioner, at the meeting, commended the progressive developments taking place in the country in the sphere of human rights.

He had stated that the UNHRC expects the program to protect and ensure the human rights of all people in the country to go ahead steadily.

Al-Hussein had brought the attention of the Sri Lankan government towards the importance of healing the minds of people affected by the war.

Prime Minister Wickremesinghe, in response, had informed the High Commissioner that the Government anticipates ensuring the rights of all people through the Constitution.

He had also said, a special training would be facilitated for all public officials dealing with the people’s rights. 

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