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Govt. defies SC, what next?

  • Cabinet takes hardline on petrol price, UNP plans contempt case
By Our Political Editor

A head-on confrontation between the Government and the Supreme Court over lowering petrol prices became inevitable this week after Ministers agreed there will be no revision. Certainly not for the moment.
After a special Cabinet meeting on Tuesday, the Government said, "all Ministers unanimously agreed to study the directive in depth and present their observations" at the next meeting. "Till then there will not be any change in fuel prices," an official statement said. A copy of the Supreme Court determination on December 15 that the price of petrol be reduced from Rs 122 to Rs 100 per litre from midnight that day was given to every Minister.

In a move that seemed from the ridiculous to the sublime, the Ministers agreed that they should also consult the Attorney General (AG) on the Supreme Court ruling. The decision seemed at first a snub by the Cabinet to the Supreme Court. There was a general fear that this was the embryo state of a clash between the Executive and the Judiciary, and similarities were being drawn with what happened in Pakistan not long ago.

A Felicitation Ceremony was organized by Colombo Race Course Morning Walkers for UNP MP John Amaratunga for 30 years continuously being in Parliament and serving the people at Continental Hotel, Colombo on December 22, President Mahinda Rajapaksa presented a plaque on behalf of the Walkers to Amaratunga. Also in the picture are UNP leader Ranil Wickremesinghe, Dhammika Attygalle and Lal Rodrigo on behalf of the Race Course Morning Walkers.

After the initial stand-off, however, one or two ministers were asked to go on record saying that the Cabinet was going to ask the AG to file objections in the Supreme Court against the order. But, the question remains whether in the interim period, the Government should have reduced the price of petrol straightaway. This is an interim order given by the Supreme Court, and interim relief has been given to the petitioners (and through them, the public) until the Court hears the case proper in the New Year. The Opposition United National Party (UNP) has been quick to pour fuel to fire by saying the Cabinet is in contempt of court for not granting this interim relief.

Compounding the situation is another development this week. The Lanka-Indian Oil Company (LIOC) announced on Wednesday evening that it would once again increase the price of petrol to Rs 122 a litre, i.e the status-quo-ante. That increase came into effect soon after the dawn of Christmas on December 25. It was on December 19 that the LIOC declared that a litre of petrol would be sold at Rs 100 in keeping with the Supreme Court determination. In a motion filed before the Supreme Court this week, however, the company said it was forced to increase the price since the Government was not granting it the tax and levies concessions which the Supreme Court had determined.

LIOC Managing Director Suresh Kumar then told The Sunday Times the decision to lower the price was made to fall in line with the determination of the Supreme Court. He said his company had conveyed the decision to reduce prices to its partner, the Ceylon Petroleum Corporation (CPC). The LIOC, which is an Indian owned company in partnership with the CPC, had been delivered an official copy of the Supreme Court determination by its Registrar.

The LIOC move of December 19 did cause some concern in the dovecotes of power. In fact, some Government leaders suspected it may have been a move engineered by the Government of India, with bilateral relations with Sri Lanka hitting a new low. Embarrassed officials at the Indian High Commission (IHC) had inquired from the LIOC management why they took the decision to lower prices without any informal consultation with them. It was purely a commercial decision intended to honour a ruling from Sri Lanka's highest Court, they were told.

Why then did the LIOC change its mind in a matter of just five days? If indeed, it lowered the price of a litre of petrol to Rs 100, as LIOC Managing Director Suresh Kumar says, to heed the ruling from the country's highest Court, why the volte-face? The Sunday Times learnt that LIOC came under criticism from the Government for deciding "unilaterally" to lower the price without consulting its trade partner, the CPC.
Fearing a possible cancellation of its licence, and in the light of displeasure from the Indian High Commission, the LIOC found the only way to survive commercially is to toe the Government line. When it lowered the price, it is now being argued; it expected the Government to provide it a duty concession in accordance with the court order. That not forthcoming, and with higher demand for petrol from its sheds in comparison to CPC sheds that were selling at Rs. 122, the LIOC was losing out on every litre it was selling to the public. Hence, the company decided, it would raise its prices again. Legal analysts say that the Supreme Court order does not directly bind the LIOC. But to play safe with the Supreme Court, LIOC filed a motion on Friday saying that the CPC had not reduced the price of petrol it was buying off them, and the LIOC had suffered losses for the days it sold petrol at Rs. 100.

The change of stance by the LIOC came as the first formal indication that the Government was not inclined to lower petrol prices. Ministerial sources said most of them were of the view that heeding the SC order to lower petrol prices would only lead to a new precedent. They argued that all pricing policies would thus become a prerogative of Courts, a purported usurpation of the Government's powers - even though this case was not setting that precedent. The SC has already lowered prices of gas, telephone and electricity.

The Supreme Court determination, without doubt, is a measure that has won wide acclaim with the public, and in a sense, placed the UNP and even the Janatha Vumukthi Peramuna (JVP) in a bind. Some UNP leaders tried to round up three-wheeler scooter taxi drivers to stage a protest in Colombo. The response was lukewarm. It was a signal to the UNP that though the tri-shaw drivers were unhappy with the Government's reluctance to reduce the petrol prices, they were not prepared to go against the Government openly either. Nor was the UNP able to organise a protest meeting in Colombo by rallying crowds from the outstations. Though the JVP threatened to take to the streets to show its displeasure, it has not been successful either. On the contrary, what it saw was a good slice of its MPs formally join the Government in an alliance in what the official JVP called was a marriage legalised long after consummation.

The urgency on the part of the UNP not to let go an excellent opportunity to take on the Government was evident. On Christmas day, of all days, one of the party's spokespersons, Kandy District Parliamentarian Lakshman Kiriella, held a news conference. There he accused the Government of pressuring LIOC to once again increase the price of petrol. Opposition and UNP Leader Ranil Wickremesinghe wrote to Speaker, W.J.M. Lokubandara, to summon an emergency session of Parliament on the matter. The fuel issue was one of the matters he had wanted to raise but the Government dismissed his request, and refused to agree to a date. Wickremesinghe, however, is preparing himself to make some significant revelations on this issue as well as many others.

The party is in consultation with other smaller political parties and trade unions to launch a major protest demonstration in Colombo on January 7 to enforce the fundamental rights of the citizens that a Government cannot impose unfair taxations on them, a fact that has now been recognised by the Supreme Court.

At the Christmas day news conference, Kiriella made an important point, though. He declared that the Government had acted promptly on the Supreme Court ruling to suspend the CPC's hedging deal. This, he said, quite clearly meant the Government accepted the Supreme Court ruling. However, when it came to the SC determination to lower the price of petrol to Rs 100, the Government was trotting out various excuses. He warned that moves not to comply with the Supreme Court order were clear proof Sri Lanka was becoming a lawless country.

Interesting enough, the Supreme Court ruling to lower the price of petrol to Rs 100 a litre, as widely reported, was taking into consideration the a benchmark price of US $ 56 per barrel of crude oil, based largely on prevailing prices at the time. This week, the price has dropped to US 34, thus helping the Government to make even more windfall profits.

However, a more significant aspect is the observations made by the SC for its determination to reduce the petrol price. Chief Justice Sarath N. Silva noted that with the cancelling of the hedging agreement with the Standard Chartered Bank by the Ceylon Petroleum Corporation (CPC), the Corporation was saving some US $ 46 million (or over Rs 5 billion) just for December. In the light of an earlier SC ruling, the CPC was not required to pay this colossal amount to the bank in question every month. Thus, the SC opined that the lowering of the price of a litre of petrol to Rs 100 would help the public, who are the ultimate consumers. Taken together, it was a win-win for both, the CPC and the public.

In what seemed a Government response to the issue, President Mahinda Rajapaksa declared that any decisions on the prices of essential items had to be taken "with responsibility." His remarks came during an address to Ministers, State Officers and private sector entrepreneurs at a meeting at 'Temple Trees'. He argued that the Government needed revenue for development activities, to conduct military operations against terrorism, provide free schoolbooks, among others.

He said that the needs of a "mere four per cent of the people" using petrol for cars could not supersede the needs of more than 90 per cent of the people who travelled by bus and train. He poked fun at the possibility of some going to Courts to seek relief against 300% duty on cigarettes, arrack, 450 % duty on whisky, or 500 % duty on imported luxury cars. Rajapaksa was to assert that there was a need for an understanding among the Legislature, the Executive and the Judiciary for good governance. He made the point that one should not usurp the powers of the other.

Neither Rajapaksa nor any of his Ministers has convincingly articulated the Government's position with regard to the lowering of petrol prices. This is particularly so in the light of Kiriella's assertions on Christmas day that the Government had openly accepted the SC ruling on the hedging fiasco and thus saved billions of rupees. Issues were raised when it came to lowering the petrol price and passing on only a paltry amount from that huge saving to the consumer.

Firstly, the SC determination is in no way seeking to deny the Government the revenue it needs to develop the country or fight the separatist war. To stress the point, the contrary was so -- it has saved billions in the oil hedging deal. Secondly, the SC has not arrogated to itself the task of determining the prices of essential commodities. The issue here, quite clearly, is one arising from the scandalous oil hedging deal itself. Based on the facts presented to the Supreme Court, it has determined that the matter needs to be investigated by the Criminal Investigation Department (CID). It has ordered the suspension of then CPC Chairman, Asantha de Mel and thereafter the General Manager (Finance), Lalith Karunaratne. In the process, following public interest litigation, it has ruled that a staggering sum of over five billion rupees need not be paid to the Standard Chartered Bank. Instead, it has determined that in the light of dwindling crude oil prices, the SC has merely held that the price of a litre of petrol be lowered to Rs 100. That is on the basis of the world market prices remaining at US $ 56.

President Rajapaksa and his ministers have charged that there was a conspiracy against the Government. Through Courts, such conspirators were trying to dictate how his Government should generate revenue. They have even gone to the extent of saying that the elements involved in such conspiracies were only backing the Tiger guerrillas. This is not the first time the Rajapaksa administration has made such charges and it will not be the last either. However, the lesson that emerges from this latest episode shows that anyone resorting to any legitimate recourse to address public grievances, through established institutions like the Courts, is the latest to be branded as terrorist sympathisers.

In the current stand off with the SC, it is clear some of Rajapaksa's closest advisors have become the UNP 'pole vaulters'. ne is loquacious Rajitha Senaratne, the UNP(D) Kalutara district MP and Minister of Something. Not so long ago, when he was in the UNP Cabinet of then Prime Minister, Ranil Wickremesinghe, Senaratne was a vocal critic of the Presidency. He once threatened to block water and electricity to Janadipathi Mandiraya (President's House) when Chandrika Bandaranaike Kumaratunga was its incumbent. Another is G.L. Peiris, then an ardent peace negotiator with the LTTE. Milinda Moragoda has remained silent and out of the picture.

When the Cabinet meets this coming Wednesday, there will undoubtedly be further discussion on the issue. However, with the LIOC now on board and the state run media setting the stage, it appears that the Government is set to ignore the SC determination. This is in the highly unlikely event of the Government backing out from its aggressive stance in its stand-off with the Supreme Court. Many of the ministers are supporting a full-stop to any further SC interventions into what they insist is their turf - taxing the public. As for the Supreme Court, now on vacation, the matter will come up on February 16, 2009.

These developments come as the country and the Rajapaksa administration prepare to welcome the New Year. The global economic downturn, the ongoing separatist war, expensive both in financial and human terms, no doubt will have a greater bearing on an already troubled economy.

Last Monday, a group of persons calling themselves the Race Course Morning Walkers held a felicitation for one of their fellow travellers. UNP's Gampaha district MP John Amaratunga. This was to felicitate his 30 years in politics. Among those invited for the dinner meeting at the Continental Hotel were President Rajapaksa and Opposition Leader Wickremesinghe.

As the President was coming for the event, the Presidential Security Division (or was it the newly established Presidential Guard) was in place, and everyone, all of a 150 or so of the invitees, had to go through the routine metal detectors and the body-searchers.

When it was Wickremesinghe's turn to speak he started by taking a jibe at the "Morning Walkers" as opposed to the "Evening Walkers" who come to the Race Course for pursuits other than physical exercise. Then, he said that watching the Presidential Security Division and the way they were body-searching businessman Harry Stassen Jayawardene, and even pulling out his purse, and the coins from his pockets, he was wondering whether this was a new ruse of the bankrupt Treasury to collect monies from the public.

President Rajapaksa, himself once-upon-a-time a 'Morning Walker' at the Race Course, especially at a time when his erstwhile Cabinet colleague S.B. Dissanayake, now the joint- National Organiser of the UNP, as then Sports Minister was personally supervising sprint queen Susanthika Jayasinghe, came late for the felicitation. He did not even wait to have dinner, nor did he speak.

However, the organisers quickly had the presentation ceremony, and a photo-op with the two political leaders. Firstly, a plaque was handed over by the organisers to Wickremesinghe to give Rajapaksa to give Amaratunga. Then, Dhammika Attygalle, one of the organisers pulled out an even nicer gift than the plaque. It was an ornate carved box. It was opened for the VVIPs to see. It contained a miniature walking-stick in intricate work. Something relevant to a walker - like one finds in the well-known trade mark of Johnnie Walker, the famous whisky manufacture. And everyone thought that this was the most appropriate gift to someone senior like 68-year-old John Amaratunga.

But to the surprise of many, the walking stick was for President Rajapaksa. One is not sure if His Excellency was amused. But he accepted the gift in good humour anyway. One only wonders whether Rajapaksa will take to heart the original West African proverb which then US President Theodore Roosevelt made famous; "Walk softly, carry big stick, you will go far".

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