Govt will not put entire burden on public - Amunugama | Sunday Observer
Fuel price hike and bus fare

Govt will not put entire burden on public - Amunugama

26 December, 2021

The Government is not attempting to put the entire burden of the recent fuel price hike on passengers, said Vehicle Regulation, Bus Transport Services and Train Compartments and Motor Car Industry State Minister Dilum Amunugama.

The State Minister, in an interview with the Sunday Observer said, however, the bus fares will have to be revised due to the hardships faced by private bus operators. He said they are discussing with private bus associations representatives, spare part dealers and the Finance Ministry to assess the kind of concession that can be given to private bus operators to increase the bus fares at a minimum level.

The State Minister said they would be able to reach some consensus within the next few days.  

Following are excerpts of the interview.

Q: Fitch ratings, in a rather hasty move, downgraded Sri Lanka’s international sovereign rating on December 17, demonstrating its failure to recognize the positive developments taking place in Sri Lanka in an environment in which the entire world is grappling with multiple waves of the Covid-19 pandemic. Your views?

A: Those ratings are based on all sorts of financial points. I don’t think when they consider the ratings, vaccination and health programmes are taken into account. Obviously, we have a problem with regard to international sovereign ratings and there is nothing to hide. Though we have been eating through our reserves, we have been able to keep the people alive which is the most important thing that a government has to do.  

There are problems which have come up with the third wave of the post Covid-19 situation.

Therefore, all these are post-Covid-19 repercussions where any country has to face.  There is no way that we are not going to be affected when the entire world is affected. Unfortunately, the Opposition and certain groups always try to highlight the negative side of it.

There is a problem not only with the sovereign rates but also with foreign currency. There is also a severe inflation issue. I am sure we should be able to manage it. But there is no doubt that this situation will prevail until April next year.

Q:  How do you view comments by the Opposition that Sri Lanka’s foreign reserves have dwindled and the country is facing a massive economic crisis?

A: Our foreign reserves have come down and there are no two words about it. There was not even a single US dollar made as foreign remittances for the past two years. With that I don’t understand how anyone expects the foreign reserves to go up other than going down. That is a thing that anyone would understand. The issue is managing the low reserve situation.

That is what we are doing right now. I am sure with low reserves, it is a matter of survival. So, the government has the responsibility to see that the public survives. Then there are certain restrictions that you have to impose. Such restrictions have been made by the rest of the world as well.  Likewise, there are repercussions that we have to face. I am sure we would be able to manage this and most probably get out of it next April.

Q: The Attorney General told the Supreme Court last week that the affidavits produced by Ministers Vasudeva Nanayakkara, Udaya Gammanpila and Wimal Weerawansa over the Yugadanavi power plant agreement are unconstitutional and they had disregarded their collective responsibility. Is there any conflict with the coalition parties of the Government regarding the Yugadanavi power plant issue?

A: There is a conflict and you can’t say no. However, this issue had been brought to the Cabinet for its approval. The conflict is that if these Ministers are not in agreement, why did they approve it in the Cabinet? Now they are trying to criticise it outside the Cabinet whereas they should have actually done that in the Cabinet.

Then obviously it wouldn’t have been passed. There are certain bilateral problems as well. If you take the fertiliser issue, whatever the wrong decision was taken, it has affected the reputation that we had with China to a certain extent.

As per these bilateral or international agreements, there would have been an agreement and a request from us for 40 percent of the shares to be sold.

Then this American company had bought the shares and the Cabinet had approved. When the Cabinet approves, you can’t go back and tell a multinational company that we can’t sign the agreement as three Ministers are against it.

It is not a baby’s play. If they had opposed it in the Cabinet, even the Finance Minister could have said we wanted to do this but the Cabinet is not approving this.

When certain Ministers approve these agreements at vital Cabinet meetings and oppose it outside, then it is a very tricky situation. You cannot invite the people to open bids and suddenly cancel them.

The fertiliser issue is a very good example of what happened. It is not a government to government shipment. However, the government is not too happy with what happened to the Chinese shipment.

  When you go for this kind of share issue and get it approved in Cabinet and later go outside and speak against it.  

That can be done in our country but the government cannot go back and say there are people approving it in the Cabinet and opposing it outside. We have to stop that. Otherwise, there will be repercussions.  

Q: The final report of the Committee appointed to look into the recent incidents related to the Liquefied Petroleum Gas (LPG) cylinders, was handed over to the President on December 20. Will the government be able to overcome the current situation based on the recommendations?

A: I am sure they would be able to do so. That was an expert panel appointed by the President and they have submitted whatever the reasons which had led to those explosions.  There was another shipment which was cancelled on the way due to some technical matter. That was a very unfortunate situation. There were also a couple deaths due to those explosions. We seem to be a bit late. I think based on the Committee report, they should take action. Even if it is a government company or not, if somebody is held responsible for these changes of the composition of gas cylinders, I think they should be taken to task.  

Q: Civil organisations have alleged that a large number of people, including restaurant owners and self-employed entrepreneurs such as short-eat makers, have lost their livelihoods due to the current liquefied petroleum gas crisis. What remedial measures have been taken by the government to address the situation?

A: When you have a single company shipping in gas and have a technical problem like these gas explosions, then obviously there is going to be a short supply. There is another shipment which we have turned away and that is also going to be affected.

These problems arise from time to time. When one whole shipment was faulty, then we had to stop the next shipment as well. These are problems that arise from time to time and there are certain sections of the people that get affected. These are not purposely done by anyone.

If it is the company or even the government, we cannot wash our hands off and say it is not our responsibility.

The President will go into the findings of the expert committee report and see whether some changes have been made to the composition of the LPG. If it is with the foreign company which supplied the stuff with some sort of wrong composition or whatever, then they should be claimed for compensation. I think that task should go on.

Q: The Opposition and the people are highly critical of the decision taken by the government to increase the fuel prices when the people are faced with severe economic hardships. Your comments?

A: As the Ministry of Transport, we have also faced severe problems with the recent fuel price hike. Once again, it might affect all other sectors but it seems they have gone their lowest rate especially on diesel which affects most of the areas. There are two problems that we have to face at the moment. One is the oil prices in the world market and the other thing is the rupees we have to pay for the dollar. This affects everything.

So, there is a bit of a crisis situation but we might have to manage it. Especially in the transport sector, we are not planning to put the entire burden on the passengers. We are discussing with the bus operators to see whether we could give them some sort of concessions so that they could keep their operation afloat. 

The fuel prices hike and rapid increase of spare parts due to the dollar fluctuation are the two key issues faced by the transport sector.

Actually, this is what we are trying to address. We will discuss with the private bus associations, spare part dealers and the Finance Ministry to provide some sort of concession to private bus operators with the intention of increasing the bus fare from a minimum level. I hope we would be able to come to some sort of consensus within the next few days.  

Q: There are media speculations that the Cabinet and the government parliamentary group are divided on whether to seek an IMF bailout for the current balance of payment crisis. Would you like to comment?

A: It doesn’t matter if it’s the IMF, ADB, World Bank or whatever country; India or China. It is how we manage through this crisis. I think our Finance Minister and Central Bank Governor will go with the best option. There are options. We are not out of options. The IMF is also one option.  

There are certain countries that have promised to help us as well. The simple logic with finance is whatever the option, you have to go with the best one. The IMF comes with a lot of conditions. We have to see whether those conditions will affect the public.

At the end of the day, whatever loan taken has to be paid back and the conditions should not affect the day today life of the people. Because the third wave of Covid-19 has seriously affected the people. So, we should go with the best option.

Q: UNP Leader Ranil Wickremesinghe has said that trying to solve the dollar problem without approaching the IMF would mean that the people will have to face hardships. Your views?

A: That is not true. They were in the driving seat for the past four years. With the assistance of the IMF or not, they managed to drive the economy down the hill even without Covid-19. The national security was also jeopardized. There was also an economic downfall and the GDP came down from 6.8 percent to 3.2 percent.  All this was without the Covid-19 pandemic or any other problem in the country. So, I don’t think Wickremesinghe, who was in the driving seat at that time, is the best person to get financial advice from as he has proved himself that he is wrong.

Q: The JVP says the government had no moral right to make the payment of US$ 6.7 million from public funds to the Chinese fertilizer company as the members of the public were not involved in the transaction. However, some senior government ministers have defended the decision to pay US$ 6.7 million to the Chinese fertilizer company. Your views?

A:  You can defend. But when you get into financial contracts, you cannot just withdraw when you want. If there is some sort of problem, we should be able to tell the public the correct situation.

The problem with this fertilizer issue was that someone for some reason had opened the LC before the technical or the quality report was out. It may be a mistake but this is the whole problem.

Everyone knows what a LC is. When you sign a LC, it is assumed to be paid. It is a very trustworthy document and it is the same as money. Therefore, a LC cannot be defaulted. When you default a LC, there are repercussions that you have to face because no other country will obey or take your LC seriously.

Then all transactions, imports and exports can stall at one moment.  Since the LC has been signed, if they went for arbitration, the verdict would have been in favour of the Chinese company.  I think this is what we have to negotiate and come to some sort of settlement. If there is a fault somewhere and if the quality was not up to standards, the LC shouldn’t have been signed.

But for some reason, the LC has been signed and it is a valid legal document. Once it is signed, there is no way out. The only way out is either to purchase the stuff, make the full payment or come for a settlement. It seems that this is the settlement that can be made. I think the Minister in charge would have gone by the best package but it has cost the country a certain amount of money.