‘Achcharu’ – Sri Lanka’s political pickle
View(s):While Kussi Amma Sera and Serapina have dominated these columns with their juicy gossip and ‘handy’ column ideas, this time it was the turn of another equally, belligerent woman to steal the show.
Thursday was a rainy morning and a no-show by Serapina for her usual garden “tete-a-tete” with Kussi Amma Sera. The rain was pouring cats-and-dogs and looking at the gloomy skies I realized that rain would be a spoiler in trying to gather a column idea.
Then, in comes Kussi Amma Sera with the morning tea, in a high-pitched voice saying, “Budu Ammo, Mahattaya. Hari wedak wuna.” (My god Mahattaya. A fine thing happened.)
Pausing in thought, I asked: “Aei?”
“Apey Mabel Akka, honda kathawak quewa eeye (Mabel Akka, told us a good yarn yesterday),” she said, placing the tea cup on the office table and adjusting her “redda” for better leverage.
I braced for a long harangue. For the record, Mabel ‘Rasthiyadu’ is the duo’s bosom pal and well-known, down-the-lane gossip. While KAS and Serapina might be gossip legends in their own domain (as domestic aides and in their village) they are no match for Mabel.
Relating the conversation on Wednesday between the three, KAS described Mabel’s angry outburst:
“Welanda polata giyoth … achcharu.” (If we go to market….a pickle.)
“Kade giyoth … achcharu.” (If we go to the boutique…..a pickle.)
“Ispirithale giyoth … achcharu.” (If we go to hospital…..a pickle.)
“Aanduwe kanthoruwakata giyoth …. Achcharu.” (If we go to a government office……a pickle.)
“Hema-thenama (everywhere)… achcharu.”
It was unclear, I was in a pickle (nope, achcharu) and since I had a puzzled look, KAS went on: “Mahattaya, Mabel Akka-ge achcharu adahas, apey ratey tattvaya gena.
Api katha-kere ihala yana mila ganan gena.” (Mabel’s ‘pickle ideas’ are about the situation in the country. We were talking about the rising prices.)
Apparently the trio had been in a heated conversation on rising prices based on the latest hike in fuel prices. Not an unusual conversation anyway as this is the latest talk-of-the-town and ideal fodder for news-hungry journalists and columnists.
It’s not rising oil prices, hesitantly passed to consumers which appear to be the problem. Listen to this conversation at a bank where I had gone to check my finances:
“Appoi Sir, don’t wear that shirt,” said the friendly bank-teller. “Why,” I asked, again puzzled, in today’s parlance “like a tube-light”. Then it dawned on me, my green shirt (colour of the UNP). For balance, I showed her my lunch “pettiya” wrapped in a blue bag. “Not that too, Sir,” she replied with a smile. More focused on her work and good-natured banter with customers, she didn’t realise that she was also wearing a green saree!
Her grouse and a common curse today is that while people are not opposed to the changes in fuel prices (and willing to make sacrifices) to reflect global oil prices which are around US$78 per barrel and likely to hit $100, they are angry about the extravagant spending by government politicians, parliamentarians and on costly ‘development’ projects. Similar complaints come from industry and commerce.
“Paying taxes is fine and no country can run without taxes. However, while the people make sacrifices, are the politicians making that sacrifice? Look at the cars they import, look at the extravagant spending? Is that where our tax money is going,” said another consumer at a local market, pointing out to the ‘costly toilet’ renovations at the Colombo Mayor’s bungalow and sarcastically saying this would be in line for first prize as the best-maintained government toilet!
Oil prices are surging and the authorities have no option other than to resort to a formula that reflects ‘real’ import prices instead of doling out subsidised fuel.
Eventually, these losses (from subsidies) have to be forked out by the people in a cheap-now-pay-later scheme. Our fuel prices are like buying petrol or diesel or a luxury item with a credit card. You don’t have immediate cash but resort to credit and end up paying more, later!
Politicians on both sides of the fence are at each other’s throats: One side says prices must reflect global oil pricing trends while the counter is that prices should have come down when international prices were low. Both arguments are valid. So is the one that if taxes are reduced (an opposition claim also articulated by a former UNP finance minister), oil prices would be much lower.
However, all sides conveniently forget that governments over the years have resorted to high taxes and subsidised fuel to appease the people to win votes. Capacity constraints due to the need for urgent but costly refurbishment of the refinery at Sapugaskanda, Kelaniya of the Ceylon Petroleum Corporation (CPC) result in more refined oil imports which are costlier than raw crude oil.
While there are various tools that could be used in assessing future prices and buying options, the CPC burnt its fingers in the infamous oil hedging saga in 2008. The culprits are still at large, while the country coughed out millions of dollars to foreign banks in foreign arbitration cases. Hedging is still an option, if done properly.
While the argument is that local prices should reflect overseas trends, governments present and past have not always followed this route. Rising government spending is funded by taxes and some taxes are often a tactic to reduce consumption (cigarettes or alcohol) but it never happens that way. It is the “nice guy” approach: Committed to reducing consumption of a health hazard but on the other hand, handy to collect revenue. In the case of fuel taxes, high prices rarely reduce consumption since people cannot reduce daily travel in inefficient public transport (despite the entry of private buses) or cut cooking gas usage at home.
For the sake of clarity (and without comment), we examined the price of petrol and diesel per litre versus oil price per barrel in the period 2000 to 2017 (based on Central Bank data), to get an idea of the relationship between overseas prices and fixing local rates.
In 2000, fuel was US$28.78 per barrel with petrol at Rs. 50 per litre and diesel Rs. 24.50 per litre; 2001 – $24.62, petrol unchanged and diesel Rs.26.50; 2002 – $25, Rs. 49 and Rs. 30 respectively; 2003 – $24.41, Rs. 53 and Rs. 32; 2004 – $37.45, Rs. 68 and Rs. 42; 2005 – $52.92, Rs. 80 and Rs. 50; 2006 – $64.28, Rs. 92 and Rs. 60; 2007 – $72.01, Rs. 117 and Rs. 75; 2008 – $97, Rs. 120 and Rs. 70; 2009 – $63.93, Rs. 115 and Rs. 73; 2010 – $79.52, local prices unchanged; 2011 – $108.59, Rs.137 and Rs. 84; 2012 – $114, Rs. 159 and Rs. 115; 2013 – $109.84, Rs. 162 and Rs. 121; 2014 – $104.53, Rs. 150 and Rs.111. Since 2015, when oil was $54.80 (2016 – $46.30 and 2017 – $57.79), local prices have been unchanged.
In January 2018, oil was pegged at $72 per barrel while on Wednesday (May 16), it was traded at $78. On May 10, the Government introduced the widely-touted, IMF-based fuel pricing formula, pushing petrol to Rs. 137 and diesel to Rs. 109.
An analysis of the taxes imposed on petrol and diesel also provides some interesting reading. Check our analysis on Page 1.
Worthy economists like my good friends Sirimal and Wije are likely to tear down these arguments but you cannot beat the down-to-earth, kitchen-style theories of KAS, Serapina and now Mabel Rasthiyadu that make or break Governments!
Tired of the fuel debate? Then make a beeline to an interesting discussion on ‘The future of Sri Lanka (innovation-wise)’ organized by the Sunday Times Business Club.
Few invitations available. Maybe they have a new remedy for Sri Lanka and a spicier recipe for achcharu!