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Tuesday May 30th, 2023

Sri Lanka parliament nods to remove tender process in power projects amid protests

Sri Lanka passed amendments to its electricity legislation to grant power projects on unsolicited basis without any competitive bidding

ECONOMYNEXT – Sri Lanka passed amendments to its electricity legislation to grant power projects on an unsolicited basis without any competitive bidding amid resistance from opposition lawmakers and industry trade unions.

The amendments to the Sri Lanka Electricity  Act were passed with 120 votes in favour of the amendments against 36 in the 225-member parliament amid strong resistance from power sector trade unions in the state-run Ceylon Electricity Board (CEB).

Some opposition and trade union members have said the government was rushing through the amendments because it wants to give large renewable energy deals to India’s Adani group, which has signed an unsolicited government-to-government agreement to build a 500 MW wind power plant in the island nation’s northern coast.

The main opposition wanted projects beyond 10 MW capacity projects to go through a competitive bidding process, but the majority of the ruling party lawmakers voted against the clause in separate voting.

Many ruling party legislators argued that many renewable energy projects have failed to take off the ground because of the long tendering process.

“I welcome the adoption of the Sri Lanka Electricity (amendment) bill. This allows rapid deployment of cost-effective renewable energy to the grid,” Prime Minister Ranil Wickremesinghe said on his Twitter platform.

The amendments proposed to change the clause regarding the new generation plants and overhead lines with an aim to fast track renewable energy projects. Sri Lanka is facing daily power cuts across the country because it has no dollars to import fuel to generate power amid very low contributions from renewable energy because many projects have been delayed.

“The tender process is also being used by a mafia group. It is also a good (money-making) deal,” Power and Energy Minister Kanchana Wijesekera told the parliament before the voting.

“The company is selected through a tender process for its lowest price. But it first wins the tender and then see for the seller to sell the tender. Then they go for investors. After 2-3 years, they come back to CEB and say they can’t do for the same price and demand prices be revised up.”

The CEB’s engineer trade union announced a strike from 12 midnight on Wednesday in protest against the amendments which the union officials said were brought without much discussion and consensus. However, President Gotabaya Rajapaksa declared the electricity supply an essential service and forced all CEB employees to work without any protest.

Opposition Leader Sajith Premadasa asked to allow power projects with less than 10 MW capacity without tender process.

“We are not against any renewable energy projects. This is not a progressive bill. Without competitiveness, how can it be a progressive bill? It is a regressive bill,” Premadasa said.

“The competition is good because it reduces the cost and it benefits the consumers and the country. When there is no competition, it leads to the corrupt mafia.”

Former Energy Minister Udaya Gammanpila said Prime Minister Ranil Wickremesinghe agreed to have the competitive bidding during the early discussions.

“This is like showing renewable younger sister and then give force the corrupt elder sister to the consumers,” Gammanpila told the parliament before the voting.

“We are against this because this will lead to corruption,” as there is no competitive bidding, he said.

“No competition will be lost with these amendments. With this, it will only accelerate the work process under the sustainable energy authority.” Wijesekara told the parliament.

Wijesekara said due to the restrictions in the act, investors that are interested in investing in projects using their own lands without using government lands are being held off.

The original Sri Lanka Electricity Act was passed in 2009 before being amended in 2013. The act said, “no person shall proceed with the procuring or operating of any new generation plant or the expansion of the generation capacity of an existing plant, otherwise than in the manner authorized by the commission.”

The new act raised fears of politicians in the government giving power projects to their close allies for kickbacks.

However, Duminda Dissanayaka, a former state minister for the renewable energy process is a waste of time.

“When you go for tender, they drag it for years and we will be compelled to buy diesel on which some (corrupt) officials want.” (Colombo/June 08/2022)

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Sri Lanka food producers on countdown; 6-months to reduce trans fat content

ECONOMYNEXT – Sri Lankan food manufacturers only have another six months to reduce the amount of trans fat in food items as the government plans to ban high trans-fat food from January 2024 onwards, an official said.

“A six-month grace period has been given to existing manufacturers, sellers and distributors whose products contain trans-fat,” an official of the Ministry of Health told EconomyNext requesting anonymity.

According to a Ministry of Health gazette issued on… a person shall not sell, offer for sale, expose or keep for sale or advertise for sale, any packaged food product containing trans-fat unless the total amount of trans-fat of such food product per 100 grams or 100 milliliters of the food product is declared on the label of such packaged food product.

However, these regulations will not be applicable for export oriented food products.

Trans-fat is a type of fat that has certain chemical properties and is usually found in processed foods such as baked goods, snack foods, fried foods, shortening, margarine, and certain vegetable oils.

Eating trans-fat increases blood cholesterol levels and the risk of heart disease.

Meanwhile, the World Health Organization (WHO) has praised Sri Lanka for enacting a legislation on trans-fat to protect health and prevent premature deaths from coronary heart disease, a statement from the WHO said.

“Eliminating trans-fats from food supplies is a cost-effective measure with enormous health benefits,” the statement quoting Poonam Khetrapal Singh, Regional Director, WHO South-East Asia said.

“By enacting legislation on trans-fat, Sri Lanka has once again demonstrated its resolve to protect and promote the health of its people”.

The regulations are coming into effect as Sri Lanka is struggling with food insecurity as the country recovers from its worst economic crisis.

However, an improvement in food security across all provinces has been recorded, according to an assessment by a Crop and Food Security Assessment Mission (CFSAM) of two UN agencies. (Colombo/ May 30/2023)

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India extends under utilized $1 bln credit facility to Sri Lanka by one year 

ECONOMYNEXT – India has extended a $1 billion credit facility to Sri Lanka by another year after the loan that was given to help the crisis-hit island nation to continue import of essentials was not fully utilized in the 12 month period originally agreed, officials said.

Sri Lanka faced with a looming sovereign default signed the credit facility in March 2022 for one year through March 2024. However, the full $1 billion had not been utilized yet.

The Facility has been used for urgent procurement of fuel, medicines, food items and industrial raw materials, as per the requirements and priorities of Sri Lanka.

“The initial agreement was signed in 2022 March and out of the 1000 million US dollars allocated materials were imported for $576.75 mil,” Shehan Semasinghe, State Finance Minister said in his official twitter platform.

“The agreement is extended for the remaining $423.25 mil. We will prioritize the import of essential medicines till March 2024.”

Indian High Commission in Colombo said the State Bank of India (SBI) has extended the tenure of the $1 billion Credit Facility provided to Sri Lanka in response to a request from the Government of Sri Lanka.  (Colombo/May 30/2023)

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Sri Lanka President cleared to discuss cancelled LRT after soured Japan relations

ECONOMYNEXT – Sri Lanka’s Cabinet of Ministers approved a proposal by President Ranil Wickremesinghe discuss resuming a Japan funded. Light Rail Transit (LRT) project cabinet spokesman said, as the island nation is in the process of mending ties with Tokyo.

However, any such deals are likely to take place after the debt restructuring and Sri Lanka starts to repay its foreign loans to come out of default, analysts say.

Former President Gotabaya Rajapaksa unilaterally cancelled the 1.5 billion US dollar LRT and East Container Terminal (ECT) projects in 2021. Japan agreed to fund the LRT project while it was one of the tripartite members of the ECT project along with India and Sri Lanka.

The abrupt cancellation hit the diplomatic ties between the two countries and Sri Lankan government officials have said Japan had given the project to Sri Lanka at a very lower financing cost.

President Wickremesinghe returned from Japan late last week after having met top officials of the Japanese government including its prime minister.

“In recent history, due to the stopping of several agreements and proposals suddenly, President Wickremesinghe went to Japan after creating the background to clear some of the worries we have,” Cabinet Spokesman Bandula Gunawardena told the weekly media briefing.

“Before he went, he got the approval from the cabinet to resume the discussion on the light railway project. He got the approval from the cabinet to get parliament approval for bilateral agreements signed or any other investments project. Any change or cancellation of a project could be done only with the approval of the parliament.”

Japan has backed Sri Lanka under Wickremesinghe’s presidency after the island nation declared sovereign debt default. (Colombo/May 30/2023)

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