Financial Times

Troubled PERC to come under PM

The government is considering revamping the controversy-ridden Public Enterprises Reform Commission (PERC) and is to transfer the organisation to the Ministry of Policy Development and Implementation under Prime Minister Ranil Wickremesinghe.

It is also likely that Chrisantha Perera, chairman of Forbes and Walker and former chairman of the Sri Lanka Insurance Corporation, will be the new chairman of PERC, which is in charge of restructuring and privatizing state-owned corporations and businesses, informed sources said.

The move comes after a series of criticisms levelled against the privatization body, which is now under the Ministry of Economic Reforms, over the way it has handled deals with local and foreign private sector business groups in the privatization of state enterprises.

These accusations include failure by PERC officials to adhere to proper procedure in privatization agreements, lack of transparency in these deals, and reluctance among senior PERC officials to provide information to the public despite repeated requests by the media.

The mass resignation of several senior managers from PERC recently was interpreted as an indication that something was wrong with the organization.

The sources said the government had noted the criticisms made against PERC and was concerned about the charges as they could tarnish its reputation.

The UNF government under Wickremesinghe has made repeated assurances that it would eliminate corruption and strive to be transparent.

One recent controversy involving PERC was the privatization of six cluster bus companies and the handover of a 39 percent stake in them to the British Ibis consortium.

Prime Minister Wickremesinghe is closely monitoring the deal and the government has put off signing the final agreement with Ibis because certain outstanding matters, such as the granting of a government guarantee, have not been finalised.

The controversial deal has been criticised for the way in which government procedures were apparently violated and for lack of transparency.

"This is probably the last such deal PERC will handle the way it is presented constituted," one source said.

PERC also came in for criticism in the privatisation of Sri Lanka Insurance Corporation with one of the unsuccessful bidders, Janashakthi, complaining that proper procedures had not been followed since they did not get back their financial proposal unopened despite their rejection on the grounds that the technical proposal was flawed.

PERC's privatization deals under the previous People's Alliance government too were criticized at the time.

The government's thinking on revamping PERC is still at an early stage and decisions on how it would be restructured are expected to be made shortly, the sources said.

Opposition parties have alleged that the authorities, which handled the Ibis bus transaction, extended several times the deadline for Ibis to pay up and did not cash the bid bond when the consortium failed to do so before the deadline as they should have done according to PERC rules relating to the deal.

Bartleet’s directors in DC mess?

Two directors at a Bartleet group company have been questioned by the Criminal Investigations Department (CID) in connection with a fraud at another company they have been managing that deals with dessicated coconut.

T. Jayatunga and I.G. Samarasinghe, directors at Unitrades Ltd, gave statements at the CID office on Wednesday after being asked to report to the police.

CID chief, DIG Lionel Gunatillake confirmed statements of the two were recorded but denied there was political pressure involved in the case. "We have recorded their statements which we will send to the Attorney General for a ruling."

Other sources said, however, that some ministers attempted to influence the CID out of concern that the two would be detained and produced in courts.

The probe follows a complaint made in around March by Malinga Wickremesinghe, a London-based Sri Lankan businessman, who owns Island Products, a Colombo firm involved in DC exports.

Nalin Dissanayake, lawyer for Wickremesinghe, said his client had complained to the CID of a major fraud worth $ 8 million in the company involving Jayatunga and Samarasinghe, also directors at Island Products.

About three years ago, Wickremesinghe entrusted the management of the company to the two men. The London-based businessman was however responsible for obtaining all the orders for the company.

Wickremesinghe - during a trip to Sri Lanka - discovered that export remittances for 13 shipments made by the company had been directed to the account of Unitrades Ltd. He then complained to the CID alleging a fraud in the company.

Samarasinghe, when contacted by The Sunday Times FT, refused to comment on the allegations or being questioned by the CID. Jayatunga was not available for comment.

Who's fooling whom?

By Akhry Ameer
Serious questions have been raised over the entry of Mundo Gas, the Commerce's Ministry's official backing of this project and doubts as to whether it has began distribution as claimed after many months of promises and excuses.

Port and industry officials dispute claims by Mundo that they are already distributing LPG. The accusations came amidst recent media reports that a second consignment of 80,000 tonnes of LPG was expected at the Galle Port on Friday.

"How can they talk of a second shipment when the first shipment has not been released to the market?" questioned an industry source. The source added that Mundo Gas has done nothing but mislead the public with empty promises.

Mundo Gas has allegedly declared to the Customs that the barge berthed at the Galle Port was empty when it was brought in originally.

Questions are being raised in various quarters by port officials over the safety of such a barge being berthed permanently and the feasibility of transferring LPG to the filling plant through a flexible pipeline. An official appointed by Lloyd's Shipping is also said to have inspected the barge and is yet to submit a report on its conformance to International Maritime Organization (IMO) safety codes.

Many port officials declined to speak on the record about the operations of Mundo, giving rise to suspicions of a cover-up.

Another player in the LPG industry, LAUGFS Lanka Gas, is closely monitoring the situation as it has obtained an injunction preventing other operators refilling their cylinders. The notice has been duly conveyed by the Commercial High Court to Mundo Gas, according to W.K.H. Wegapitiya, Chairman of LAUGFS, who has threatened action through courts if the company goes against the said injunction.

Commissioner Janaka Sugathadasa of the Department of Internal Trade, asked about the legality of his public statement permitting consumers the multiple use of cylinders marketed by Shell or LAUGFS, said it was "perfectly legal" and that any party wishing to dispute this may take the matter to court. He also questioned the ownership of cylinders other LPG operators have laid claims to.

Dominant operator Shell Gas Lanka said it planned legal action against other operators who refill their cylinders and raised concerns of safety standards.

The industry source also said the highly-publicised launch ceremony by Mundo Gas at the Galle Port two weeks ago was a farce. The ceremony was meant to pacify the 60 or so dealers who have each paid a deposit of Rs. 1 million and are pressurising Mundo, and also to please government politicians. The cylinders used for the ceremonial handover are said to have been empty.

Sources questioned the possibility of Mundo Gas operating a filling plant when the machinery that has been imported is yet to be installed.

Mundo Gas chairman Ariyaseela Wickramanayake was not available for comment and another senior company official in Galle declined to comment.

Tea buyers accused of exploitation

Demand for Ceylon tea surged at the Colombo auction last week indicating an end to the low prices and unsold volumes caused by the Iraq war crisis which producers alleged had been exploited by some buyers to buy their teas at cheap rates.

There was wide participation by most Middle Eastern buyers as well as Russia and other CIS countries, said Niraj de Mel, CEO of the Tea Association of Sri Lanka.In many catalogues more then 95 percent of the teas were sold, brokers John Keells managing director Lalith Ramanayake said.

Anil Cooke, senior vice president of brokers, Asia Siyaka Commodities, described it as "an excellent sale" but said these prices were yet lower than pre-crisis levels.Producers accused some big buyers of exploiting the crisis by not bidding at the auction and buying teas as out lots at much cheaper rates. "We sold because we were strapped for cash and needed money to pay New Year advances," said one source.

Colombo Tea Traders' Association chairman, Mahen Dayananda dismissed the allegations. "To the best of my knowledge buyers did not exploit the situation but had to put off orders due to uncertainty in the Middle East and lack of money."

Ratmalana airport to close, new hub at Aluthgama

The government is considering closing down the Ratmalana airport to make way for a housing project and building an entirely new domestic civil aviation hub near Aluthgama.

Airports and Aviation Authority of Sri Lanka chairman, Hemasiri Fernando said a feasibility study for the project, mooted by Prime Minister Ranil Wickremesinghe, is to begin shortly.

The proposed greenfield airport has been located near Aluthgama, in the Mathugama electorate, because of its proximity to tourist resorts on the west coast as well as the new southern highway that is being built, he said.

"The idea is to have connecting flights between the proposed airport at Aluthgama and the Katunayake International Airport," he said. "It will cut down travel time for tourists. Also, the proposed new airport will be five minutes from the new southern highway intersection."

The southern highway is expected to be ready by the time the new domestic airport is built near Aluthgama, speeding up travel time to and from Colombo.

Lengthy road trips from the Katunayake international airport to tourist resorts are considered to be one of the key impediments to the development of tourism.

The new domestic civil aviation hub and the new network of highways that are planned are expected to cut down travel time significantly.

Fernando said about 4,000 hectares of land is required for the project, which is to be funded with foreign aid.

"Prime Minister Ranil Wickremesinghe wants to close down the Ratmalana airport where land is very valuable and convert it into a housing project," Fernando said.

According to government's thinking, the air force bases at Ratmalana and Katunayake could also be shifted to the new site near Aluthgama.

The international airport at Katunayake is also slated for expansion with a second runway and new terminal building under consideration as part of long-term modernisation plans for which the existing airbase would have to be shifted.

Fernando also said the government was planning to investigate a site at Wellawaya for the proposed second international airport.

This could meet the urgent requirement for an alternative runway to the one at Katunayake to handle international flights in case of emergency such as bad weather. The alternative runway has to be in a different climatic zone, preferably in the dry zone.

International airlines now use south Indian airports as their alternative runway but this means planes have to carry excess fuel, making it a more costly exercise.

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