The imposing exterior of the Apollo hospita. Pic by Athula Devapriya


ADB-LTTE talks to repair A-9 road

By John Breusch
In an unprecedented move by a major donor agency, the Asian Development Bank (ADB) met with senior representatives of the Liberation Tigers of Tamil Eelam (LTTE) two weeks ago to discuss the bank's plans to fund improvements to the A9 highway to Jaffna.

ADB country director John Cooney said the bank would provide a $3-4 million loan to fund the upgrade, which will be carried out by a private firm contracted to the Road Development Authority (RDA).

"One of a number of reasons I went to the north in the last couple of weeks was to discuss with the LTTE how that might be done," he said. "Development finance, loan agreements and what have you are activities that the LTTE wouldn't have very much exposure to." Cooney said the ADB had agreed to redirect the $3-4 million from an old road sector loan that was soon to close.

Those funds will constitute just under three-quarters of the cost of the road works, with the government paying for the remainder. The ADB's contribution would be given under the terms of the original loan agreement, which provided for the works to be carried out by a private firm contracted to the RDA.

"We suggested to the government that we might be able to redirect those funds, if the government wished, to doing a basic level of rehabilitation on the A9 and some of the other critical roads," Cooney said. "That would keep them in shape and fulfilling a basic function until a more substantial rehabilitation programme would come along, which would depend on much more progress on the peace front."

Although he would not identify whom he talked to in the LTTE, Cooney said the April 19 meeting was with "senior representatives" as well as technical staff from the LTTE's rehabilitation arm, the Tamil Rehabilitation Organisation (TRO). "The objective of the exercise was to discuss, in the lowest technical terms, what we're talking about, how we might operate in the context of the loan agreement," he said.

"So we had a long discussion with the LTTE representatives, including technical representatives in Mullaitivu, and they are now thinking about that." "I've also since then discussed this with Prime Minister Ranil Wickremesinghe, with his senior advisers, and the general intention is that this should go ahead."

The A9, which was partially opened two weeks ago after being closed for about 15 years, is still effectively controlled by the LTTE. Asked whether the road works would require the ADB to enter into an agreement with the LTTE, Cooney said: "Exactly how this will work is still being thrashed out."

"But the intention is that it will be done as closely as it can to the way it would be done anywhere in the country in accordance with the terms of the loan agreement."
The improvements to the A9 were essential for not only economic reasons, he said.
"It has a significant role in the cease-fire agreement, so it has a role beyond the pure fiscal, if you like.

"But the ADB - and the others [donor agencies] - probably won't commit too much funds to do more extensive work on the A9 or similar areas until the whole peace process is a lot further advanced," Cooney said. "Firstly, funds are scarce. And secondly, this is still a very fragile process."

Tiger conditions to do business in Jaffna
Anyone wanting to do business in Jaffna would have to tie up with residents of the area, Tamil Tigers rebels have told members of a business delegation from the Ceylon Chamber of Commerce. "We understood that we cannot start any business without the participation of Jaffna residents or merchants from Jaffna," said Roshnie de Saram, a member of the chamber delegation.

She and few others met LTTE representatives while the same point was made to the chamber's 47-member chamber delegation visiting Jaffna two weeks ago, during a meeting with the Jaffna Chamber of Commerce. "This is the understanding we got from the LTTE and the Jaffna Chamber of Commerce," de Saram said. "We would like clarification of this from our government - whether this will be the case if the LTTE is given control of an interim administration if the peace process is successful."

SB, Ravi clash on taxing milk imports
By Hiran Senewiratne
Two government ministries are embroiled in an issue over plans by Agriculture Minister S.B. Dissanayake to raise the tax on imported milk, a move hotly opposed by Commerce and Consumer Affairs Minister Ravi Karunanayake. Last week, Dissanayake said the government intends to impose a tax on imported milk products, except infant milk, in order to encourage the local milk industry. A ten-year strategic plan is being prepared to develop the industry and make the country self-sufficient in milk, he told a meeting organised by the National Farmers' Alliance.

The ministry, he said, is considering a 5-10 percent tax initially. At present there is a ten percent customs duty on imports of full cream milk powder and 25 percent duty on liquid milk. Dissanayake said that in the last few decades local milk production had dropped dramatically because of milk powder imports and the lack of a proper policy for this sector. Sri Lanka has the potential to be self-sufficient in milk within a short span of time once the ten-year policy is implemented, he added.

However, Karunanayake told The Sunday Times Business that he opposed the idea and would never allow prices of any milk product to go up at this juncture in order to protect consumers. He said his ministry is always ready to support local industries but would oppose any measures that would be detrimental to consumer interests. Dickson Nilaweera, Secretary to the Ministry of Agriculture and Livestock, said the proposed tax increase would require the approval of the Tariff Commission.

Chetiya Sri Nammuni, Commercial Director of New Zealand Milk Food, said the Ministry of Agriculture had informed the company of the proposal to impose a 5-10 percent tax on milk product imports.

Apollo hires expat Lankan doctors
By Sonali Siriwardena
Over half-a-dozen Sri Lankan specialist doctors living overseas are to return to the country to form part of the expert team of doctors at Apollo Hospitals, Colombo, the latest entrant to the private healthcare sector in the country. A member of the Apollo Hospitals Group in India, the Rs. 2.8 billion hospital located in Narahenpita, currently has a bed strength of 350 and is to begin operations this week.

An initial batch of 65 Indian nurses has also been brought to Colombo. A group of Sri Lankan nurses is presently being trained in Madras. The hospital's plan to set up a school of nursing here has received government approval. It will train nurses thereby increasing the opportunities for Sri Lankan nurses to seek employment overseas.

CPC cuts down losses
The Ceylon Petroleum Corporation (CPC) has cut losses to Rs. 13 billion from Rs. 21 billion (upto end 2001) through savings on interest payments, staff cuts and passing on world price hikes to the consumer, its chairman Daham Wimalasena said. Wimalasena said the CPC, under a new directorate since December 2001, has reduced its losses and now operates an automatic pricing mechanism. "When world market crude goes up, we increase the rates (unlike before when it was subsidised)."

He said the corporation is renegotiating bank borrowings from state banks and last month, for the first time in years, was able to deal with private banks. "The state-run Bank of Ceylon (BoC) and People's Bank were charging us high interest rates - Libor plus 3.5 percent which then came down to Libor plus 2.5 percent. Private banks have offered us Libor plus 1.25 percent and now BoC is offering us Libor plus 1.75 percent because of the competition."

He said savings on interest payments alone would be at least Rs. 500 million by the end of the year while staff cuts are also underway. "We are in excess of 2,500 staff and we need to cut the fat to meet competition." But he noted that these cost reductions wouldn't have any impact on prices. "Our biggest problem is not the price of world crude but the currency fluctuations. In fact crude in the 1980s was trading at between $ 30 and $ 36 per barrel (compared to $ 20-25 levels now) but the selling price was still much lower then than now because the exchange rate was low," Wimalasena, who also served as CPC chairman in the 1980s, added. The rupee currently at 95 rupees per dollar was around 25 rupees per dollar in the mid-1980s.

The CPC is also planning to resume oil supplies to Jaffna by road - for the first time in years - once the LTTE-controlled A-9 is fully cleared. Fuel to the northern peninsula has been shipped through Trincomalee for more than a decade. There are also plans to rehabilitate CPC's badly-maintained oil pipeline between Colombo port and the Kolonnawa refinery on which 600 squatter families are residing and need to be moved.
"The pipeline is in bad shape and we can't use it at full pressure, thus taking a long time to unload a vessel," he said, adding there were plans to shift 400 families in the Colombo north area under the rehabilitation scheme expected to begin in two months and be completed in six months at a cost of around Rs. 500 million.

"We plan to follow a new route for the pipeline through the new port access road and join up the old pipeline," he said noting that political pressure in moving the squatters had delayed urgently-needed repairs to the pipeline in the past.

Far reaching reforms in tea sector
A task force studying ways to de-regulate the tea industry has recommended the government go ahead with a controversial proposal to allow imports of orthodox teas from other origins for blending and re-export but subject to a prohibitive tariff.

The Regulatory Review Task Force has also recommended that the Tea Board must give quality clearance for such teas before they are cleared by Customs as is now done for CTC and speciality tea imports, official sources said.

Although existing rules allow manufacturers to import orthodox teas by paying a duty of 25 percent such imports had been hitherto banned under a Tea Board directive.
The recommendation to allow imports of orthodox teas is largely cosmetic because the prevailing tariff of 25 percent, meant to protect local producers of Ceylon tea, in effect discourages large scale imports, sources said.

With Sri Lanka's cost of production the highest among the world's tea producers, allowing duty free imports of orthodox teas could affect the commercial viability of plantation companies, they said. "Also, we don't want rubbish to be imported. That could damage the image of Ceylon tea," one source said.

The duty will not clash with World Trade Organisation rules which allow Sri Lanka to have tariffs of up to 50 percent to protect local agriculture.

The task force ascertained the views of all stakeholders in the industry on this highly divisive issue. All tea producers' associations - Planters' Association, Federation of Tea Small Holder Societies and the Private Tea Factory Owners' Association - opposed imports of cheap orthodox teas from other origins because they fear it could depress prices of locally made tea and tarnish the image of Ceylon tea.

Four big export firms also expressed reservations about allowing imports of orthodox teas. The Colombo Tea Traders' Association (CTTA) and the Colombo Brokers' Association remained neutral. It was only the Tea Exporters' Association that supported imports of orthodox teas, the sources said. The task force also recommended the removal of all quantitative restrictions on private sales, forward contracts and direct sales outside the Colombo auction, giving producers an unfettered choice in disposing their teas.

It also said the practice of a Tea Board panel approving prices of teas sold outside the auction should be replaced by an industry panel made up of the selling broker and an independent broker. This panel will monitor prices and, in order to provide transparency, inform the Tea Board and the CTTA the prices at which such teas were sold. The Colombo tea auctions have stood the test of time for over 100 years and provide a free market mechanism for both buyer and seller to trade in tea in a transparent manner, sources said.

"The producer must have the right to sell at a price he considers advantageous to him," one source said. The sale of tea outside the auction would allows producers to convert their crop into cash faster than the six weeks taken now if they go through the auction.

Back to Top
 Back to Index  

Copyright © 2001 Wijeya Newspapers Ltd. All rights reserved.