Joint investments to develop Trinco port, set up oil refinery, LNG plant and piped-gas projects Hambantota deal to be signed soon; AG’s Dept. says Ranatunga’s objections not valid Massive SLFP youth convention today as Sirisena prepares to give mid-term report at May Day rally Cabinet changes soon after National New Year; test of popularity at [...]


Lanka-India finalise MOU for mega development projects


  • Joint investments to develop Trinco port, set up oil refinery, LNG plant and piped-gas projects
  • Hambantota deal to be signed soon; AG’s Dept. says Ranatunga’s objections not valid
  • Massive SLFP youth convention today as Sirisena prepares to give mid-term report at May Day rally
  • Cabinet changes soon after National New Year; test of popularity at three PC elections this year

Prime Minister Ranil Wickremesinghe who chairs the Cabinet Committee on Economic Management (CCEM) greeting India's High Commissioner in Sri Lanka, Taranjit Singh Sandhu at a Colombo event on Thursday.

By Our Political Editor
Sri Lanka and India will jointly make investments to develop the Trincomalee Port and establish a petroleum refinery and other industries there. They will also encourage Indian companies to invest in a Container Terminal in the Port of Colombo.
These are highlights of a Memorandum of Understanding to be signed this year between Sri Lanka and India for “cooperation in economic projects.”

For Sri Lanka, the “focal points for effective implementation,” the MoU notes will be the Ministry of Development Strategies and International Trade. The Indian counterpart is yet to be identified.

The final draft of this MoU has been approved by the Cabinet Committee on Economic Management (CCEM) which is chaired by Prime Minister Ranil Wickremesinghe. It now awaits the formulation of a ‘road map’ for implementation by an official committee. The MoU reaffirms the “traditionally close and friendly relations between the two countries and their continuing endeavours to enhance bilateral relations through increased economic, investment and development co-operation for the mutual benefit of their people.”

The MoU says the objective is “to achieve greater economic, investment and development cooperation in a progressive manner, through joint ventures and other cooperative activities that ensure the wellbeing of the people of the two countries on the basis of equality and mutual benefit.”

The “areas of scope and cooperation” incorporate the mutual agreement both Colombo and New Delhi have reached on the different projects. They are:

  • To set up a Liquefied Natural Gas (LNG) fired 500 Megawatts capacity LNG Power Plant as well as LNG Terminal/Floating Storage Regasification Unit (FSRU) in Kerawalapitiya.
  • India to assist Sri Lanka in the enhanced usage of Natural Gas including the setting up of piped gas distribution system in Colombo and in suburban areas in Sri Lanka; retail outlets for the supply of Compressed Natural Gas (CNG) to the transportation sector in Sri Lanka; and conversion of fuel-based power plants to LNG power plants, jointly with the Ceylon Petroleum Corporation (CPC).
  • To set up a 50 MW (extendable to 100 MW) Solar Power Plant in Sampur.
  • To form a Joint Venture to develop the Upper Tank Farms in Trincomalee, while signing a land lease agreement for 50 years in favour of Lanka Indian Oil Corporation (LIOC) Ltd. for the Tank Farm.
  • To make joint investments in the development of Port, Petroleum Refinery and other industries in Trincomalee.
  • To carry out a Feasibility Study on the proposed Petroleum Refinery Joint Venture by Ceylon Petroleum Corporation and the Indian Oil Corporation referred to above.
  • To set up Industrial Zones/Special Economic Zones in identified locations in Sri Lanka.
  • To develop Dambulla-Trincomalee road as an Expressway through joint investments by India and Sri Lanka.
  • To develop roads in Sri Lanka including Mannar-Jaffna and Mannar-Trincomalee highways.
  •  To develop railway sector in Sri Lanka including new projects of track upgradation and purchase of rolling stock, and
  •  To encourage Indian companies to invest in a Container Terminal in Colombo Port, considering that majority of transhipment in Colombo Port is related to India.

Provision has been made in the MoU to amend or supplement provisions by the two sides agreeing to them in writing. Whilst disputes are to be settled “through mutual consultations,” either side would be entitled to terminate the agreement by giving three months’ notice.

One of the significant ventures is the joint project to develop the World War II vintage oil storage tanks. Built by the British, the 99 tanks in 850 acres, each with a capacity of a million gallons, remain in good order. Of the 101 tanks, one was destroyed in 1942 when a Japanese kamikaze bomber dived into it. Another was damaged in 1960 when an Air Force aircraft crashed on it. Lanka-India Oil Corporation (LIOC) has been using 15 tanks, facing the sea area, for petroleum storage. It operates a string of fuel stations countrywide.

If the North Eastern port city of Trincomalee, ten times the size of the Colombo Port, is to be developed with assistance from India, the Government’s efforts to develop the southern Port of Hambantota with a Chinese firm has turned out to be time consuming. Though the Cabinet of Ministers has decided that the project should go ahead and approved a Concession Agreement with a Chinese firm, there are snags still to be overcome. The latest is another note circulated by Ports and Shipping Minister Arjuna Ranatunga, contesting the legal validity of provisions in the Concession Agreement. He wants the Attorney General to examine these positions both vis-à-vis the Sri Lanka Ports Authority Act and other prevailing laws. In addition, the Sri Lanka Ports Authority (SLPA) has also given a separate note to all ministers. Minister Ranatunga has argued that in terms of the Act, there was no provision for the SLPA to cede an entire port to any party. It was also empowered to do so only in respect of a terminal or other facility, it was argued.

However, in February, this year, the Attorney General’s Department in a two page letter to E.M.S.B. Ekanayake, Secretary to the Prime Minister, said it held the view that the SLPA could sign. Additional Solicitor General Sanjay Rajaratnam who was responding for the Attorney General declared in a letter: “I am of the opinion that the Cabinet of Ministers are constitutionally empowered to take decisions on the Hambantota Port Project on behalf of the Government of Sri Lanka and in doing so, they could direct subservient Government institutions such as the Sri Lanka Ports Authority to adhere to policies formulated therein in accordance with the applicable laws.”

The AG has taken up four positions in respect of queries raised by the Premier’s Secretary. They are:
(a) I am of the opinion that the Cabinet of Ministers are charged with the direction and control of the Government of the Republic and are constitutionally mandated to take decisions on behalf of the Government of Sri Lanka, to decide on authorised signatories to the agreement and directing subservient institutions of the Government to adhere to the policy formulated by the Cabinet of Ministers. It is also stated that the Cabinet of Ministers could determine on the authorised signatories since they are signing on behalf of the Government of Sri Lanka, also as the said agreement involves the paramount interest of the Government of Sri Lanka in the Hambantota Port project. It is noted that the Minister of Ports and Shipping who is the Minister in charge of the Sri Lanka Ports Authority is also a cabinet minister and is bound by collective responsibility as stipulated in Article 42 (2) of the Constitution.

(b) I wish to opine that in terms of Article 42(1) of the Constitution, the Cabinet of Ministers are vested with authority pertaining to subservient institutions of Government to comply with policy decisions formulated by the Cabinet. However, when intimating such decisions of the Cabinet of Ministers it should be within the ambit of the applicable laws of the country. The amendments to such legislation are only required when the existing laws cannot cater to situations when implementing such decisions of the Cabinet of Ministers. I am of the view that at this state of signing the Concession Agreement there is no necessity to amend any such existing legislation.

(c) There is no Constitutional requirement to evoke the provisions of Article 157 of the Constitution, as it is not warranted in the given circumstances. However, in the agreement so executed could be placed before Parliament only for the purpose of information and good order as being part of the responsibility of the Cabinet of Ministers as per Article 42 of the Constitution.
(d) As regards amendments to the relevant (SLPA) Act, the usual procedure enshrined in the Constitution should be adhered to.

At last Tuesday’s weekly ministerial meeting there was another detailed discussion on the Hambantota Port deal including the Concession Agreement to be signed with China Harbour Port Holdings Company (CMPort). Once again, there were strong views expressed for and against. Minister Patali Champika Ranawaka was to point out that losses at the Hambantota Port were relatively lower compared to other institutions. If this port suffered a loss of four billion rupees, the Ceylon Electricity Board (CEB) lost eight billion rupees per month and SriLankan Airlines has suffered losses amounting to Rs 22 billion. Corrective action to cut these losses was imperative, he noted. Minister Arjuna Ranatunga was a strong critic and raised issue over a variety of matters in the Concession Agreement. Minister Dayasiri Jayasekera also expressed reservations. President Sirisena was to note that the cabinet subcommittee was going into some aspects. In fact, Ranatunga made representations during its deliberations. Finance Minister Ravi Karunanayake was to insist that a delay in signing the deal would only mean that the Sri Lankan rupee would depreciate further vis-a-vis the US dollar.

Prime Minister Wickremesinghe interjected at one point to emphasise that all matters relating to the Hambantota Port were now in order. He made reference to a Court action against the project, now pending before the Supreme Court and asked how a letter issued by President Sirisena has found its way into the different documents filed in court. As reported earlier, one of the major reasons that underscore the conclusion of the Concession Agreement for the development of the Hambantota Port is the income of US$ 1.1 billion. The signing of the Concession Agreement, a Government source said yesterday, would be concluded in a matter of weeks. “This is after the Cabinet subcommittee deals with outstanding issues raised by Minister Ranatunga,” the source added. Minister Ranatunga was not available for comment. Calls to his mobile phone went unanswered.

Finance Minister Karunanayake hinted that there was an urgent need for funds to meet the debt crisis. “We need US$ 11 billion. For critics to claim that the Hambantota Port deal bringing in just over US$ 1 billion is going to solve our problem is foolish. This is the legacy we have inherited from the Rajapaksa administration,” he told the Sunday Times.

Minister Ranatunga also had a one-on-one meeting with Premier Wickremesinghe on the Hambantota Port deal on Thursday. They are learnt to have discussed in detail some of the concerns raised by Ranatunga. The urgent measures to overcome a debt crisis are not the only priority for Sirisena. This week, he told a meeting of Chief Ministers that he would re-shuffle the Cabinet of Ministers immediately after the National New Year holidays — the first time there has been some official confirmation of the move. “The President said there needs to be a change in some of the portfolios as there were issues in some ministries. He said he hopes to make changes after the Sinhala-Tamil New Year,” Southern Province Chief Minister Shan Wijelal de Silva told the Sunday Times. This notwithstanding, some UNP ministers expect the move to come before the National New Year.

According to Chief Minister de Silva, President Sirisena has declared that he hopes to conduct Provincial Council elections to the North Central, Sabaragamuw and Eastern Provincial Councils. Their terms end this year. This is whilst trying to expedite the conduct of long overdue local council elections. Government sources hinted yesterday that they may first go for polls in the three PCs in a bid to test their overall popularity. It is only thereafter that the Government wants to move towards the local council elections, the source said.

The final report of the Committee which reviewed the demarcation of electoral boundaries in local council wards was gazetted on February 17, but there still appears that more work has to be done before going for local polls.  Local Government and Provincial Councils Minister Faiszer Musthapha has now conceded that another gazette notification on the number of members allocated for each local body needs to be issued. In addition new amendments, mostly technical ones, need to be incorporated into the Local Authorities Election (Amendment) Act.

The proposed amendments have been made by the Elections Commission. They cover inclusion of Grama Sevaka divisions by name. The Ministry has appointed a two-member Committee to look into these amendments. As a result of the delay in conducting the local council polls, some of the councils have been minus their local representatives for more than two years.

The UNP ministers who met Premier Wickremesinghe on Monday also discussed a variety of issues. Foreign Minister Mangala Samaraweera was to remark that some in the Government were making contradictory statements at Cabinet meetings and when speaking outside. He said this had prompted former President Mahinda Rajapaksa to claim that the remote control of the Government was in his hands. He said once a decision was made by the Cabinet of Ministers, ministers must all stick by that decision. In the 1990s when it was decided to privatise the telecommunication sector, there were threats of strike and sabotage. “However, we all stuck together as one,” he pointed out. He said that similarly a decision has already been made on the Hambantota Port. It was the duty of all ministers to abide by it. Even the organisations that come under the ministry concerned should follow suit, he pointed out. Conspicuous by his absence at the meeting was Justice Minister Wijeyadasa Rajapakshe. Premier Wickremesinghe, in keeping with President Sirisena’s earlier request, already earmarked the changes that should be effected among UNP ministers.

Sirisena will today address the SLFP’s youth members at a meeting at the Sugathadasa Indoor Stadium. Although the organisers planned to invite 10,000 youth, they have come up against a problem. The indoor stadium, they learnt, could accommodate only 8,000. Hence, the organisers are now placing large screen projection equipment around the premises so the other members could view the proceedings inside on large screens. With the exception of Colombo District, electorate organisers have been told to bring 100 members. From the Colombo District there would be 200 representing each electorate. A string of resolutions will be adopted at the youth convention, a precursor to the SLFP’s May Day rally in Kandy.

If there will be enhanced development cooperation with China and India, there will also be enhanced military cooperation with the United States. Just concluded for this purpose is the Acquisition and Cross Servicing Agreements (ACSA) between Colombo and Washington. This agreement is designed, among others, to facilitate reciprocal logistic support between the United States and Sri Lankan Military primarily during combined exercises, training, deployment, operations, or other cooperative efforts, and for unforeseen circumstances of exigencies in which one of the parties may have a need of logistic support, supplies and services of the military forces of the other party. Such support in the form of relief and supply operations were carried out by troops of the US Pacific Command during the devastating tsunami of 2004. They carried out airlifts of those marooned, cleared large extents of debris and moved food stocks.

Under the ACSA, not eligible for transfer are weapons like guided missiles, naval mines and torpedoes and other military items. The loan of general purpose vehicles and non-lethal items is also included. Underscoring this increased cooperation are the joint military exercises that are taking place. Here is a statement from the United States Embassy on the subject:

“USS Comstock (LSD 45) departed Sri Lanka today following a week of exchanges with the Sri Lankan Navy and Marine Corps. These exercises focused on improving humanitarian assistance and disaster relief efforts and coordination, the third such military-to-military exchange between U.S. Sailors and Marines and their Sri Lankan counterparts in the past 12 months.
“We hope to build upon past successes and do what we can to exchange best naval practices for regional security and humanitarian assistance, and to ensure a bright future for further bilateral engagements like this,” said Commander Bradley Coletti, commanding officer of the USS Comstock.

“U.S. Ambassador to Sri Lanka Atul Keshap noted, “Our growing military-to-military cooperation reflects the progress Sri Lanka has made on reconciliation and justice. As Sri Lanka continues to make progress in implementing its commitments to its people and the international community, this will form the basis of further cooperation between our militaries.”
“Approximately 325 U.S. Sailors and Marines joined 175 participants from the Sri Lankan Navy and Marine Corps as part of this exchange. U.S. Marines embarked aboard the USS Comstock helped introduce the latest tactics and equipment for the Sri Lanka Marine Corps, including life-saving skills; convoy operations; humanitarian assistance and disaster relief training; and amphibious vehicle familiarization.”

“During the visit, the Sailors and Marines of the USS Comstock and embarked 11th Marine Expeditionary Unit (MEU) also experienced the rich cultural sites of Sri Lanka. In addition, military personnel joined members of the U.S. Embassy to donate toys and renovate children’s dormitories at the Ceylon School for the Deaf and Blind in Ratmalana.

“We are grateful to all of the Sailors and Marines for spending a few days helping hearing-impaired Sri Lankan students at the Ceylon School,” said Ambassador Keshap.”

“USS Comstock, assigned to the Makin Island Amphibious Ready Group, and embarked 11th MEU are on scheduled deployment to the U.S. 7th Fleet and 5th Fleet area of responsibilities.” In Honolulu, Hawaii where the US Pacific Command is based, Sri Lanka’s second Consul Kusuma Cooray was presented with the Distinguished Public Service Award last month by Admiral Harry Harris, head of PACOM for helping to bring about closer US-Sri Lanka relations. This token of appreciation by the US military was a significant signal in the current context of geo-political developments in the Indian Ocean with specific reference to Sri Lanka’s geographic location.

Among the many projects, the Government is granting priority to the signing of the Concession Agreement with the Chinese firm to develop the Hambantota Port. This is expected to yield the urgently needed US $ 1.1 billion. However, this alone, as Finance Minister Karunanayake points out, would be insufficient. A further US$ 10 billion would be required. He has initiated talks with the International Monetary Fund (IMF) for a third tranche from its extended fund facility.

If President Sirisena’s latest forecast that the ministerial re-shuffle would take place soon after the National New Year holidays, the upcoming May Day will see the emergence of a reshuffled Cabinet of Ministers. It is known that portfolios of ministers in both the SLFP and the UNP are among those listed to be changed. Going by credible accounts doing the rounds, there is little doubt that there would be a number of surprising upsets. With that in place, Sirisena is set to tell the country during the May Day rally about his new programme of action as he passes his mid-term as President.

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