For Britain, widely described as the mother of the Commonwealth, it was a maternal change of heart towards Sri Lanka. First was the official announcement last Friday that Prime Minister David Cameron would attend the Colombo summit. The next came three days later when Buckingham Palace declared that Queen Elizabeth II would, however, not come. Instead, [...]


The staggering deals for the showpiece summit

  • Lanka may buy 50 RR limousines at Rs. 37.8 million each, Rolls Royce faces corruption charges on others fionts
  • India to get clearance for US$ 500 million Trincomalee power project despite objections by Minister Ranawaka and engineers
  • 19th Amendment being drafted, TNA won't take part in polls if land, police powers are taken away

For Britain, widely described as the mother of the Commonwealth, it was a maternal change of heart towards Sri Lanka. First was the official announcement last Friday that Prime Minister David Cameron would attend the Colombo summit. The next came three days later when Buckingham Palace declared that Queen Elizabeth II would, however, not come. Instead, it would be Prince Charles who will deputise for his mother.

Commonwealth Secretary General Kamalesh Sharma lost no time in issuing a statement. It clearly reflected the sycophantic legacy of the increasingly irrelevant grouping of the former British raj. He said: “the decision reflects the wish of Her Majesty at this time in her reign to limit her long distance travel.” Sharma then went on to “pay tribute to the continuing dedication and deep sense of duty the Queen brings to her role as Head of the Commonwealth, and to advancing our shared values as embodied in the Commonwealth Charter recently signed by Her Majesty.” He added: “We warmly welcome Her Majesty’s decision to be represented by The Prince of Wales at this year’s Commonwealth Heads of Government Meeting reflecting as it does her unwavering devotion to the Commonwealth.”

Those announcements, no doubt, ended weeks and months of speculation that Britain would join its western allies, mainly Canada, in boycotting the Colombo event. They were co-sponsors of the second US resolution against Sri Lanka at the UN Human Rights Council in Geneva. As is well known, it called for the implementation of the Lessons Learnt and Reconciliation Commission (LLRC) recommendations, further action on reconciliation and alleged violations of international law. The reason given in diplomatic circles in London for the early announcements was Queen Elizabeth’s annual speech to the House of Commons on Wednesday. There were other reasons too, like the friendly overtures from India towards Sri Lanka. The Conservative Government had to go into hurried damage control mode in so far as its domestic constituency was concerned, after going public with the news.

Alastair Burt, Minister of State in the Foreign and Commonwealth Office for some countries including Sri Lanka, met a delegation from the London-based Global Tamil Forum (GTF) headed by Suren Surendran. British Conservative Party leaders have strongly backed the GTF and many of its leaders took part in the GTF’s anniversary sessions in a room in the House of Commons late last year. They were now red in the face that Premier Cameron would attend. “(The) accusation of Rolls Royce diplomacy is an unfortunate coincidence. It came at the same time,” Burt told Surendran, referring to the exclusive revelations in the Sunday Times about the re-fleeting programme of SriLankan Airlines with British-made Rolls Royce engines.

Rolls Royce under fire

The Cabinet had on April 18 given approval for the national carrier to purchase six A 330-300 aircraft with Rolls Royce Trent 700 engines. It also granted approval four A 350-900 aircraft with Rolls Royce XWB engines. SriLankan Airlines will also lease three more A 350-900 aircraft. The purchase of Rolls Royce engines after rejecting offers from General Electric from the United States meant revenue for Rolls Royce. The Guardian newspaper which quoted the Sunday Times said campaigners for a venue shift were urging the Conservative Government not to influence its diplomatic position over human rights issues in Sri Lanka through what the newspaper called “Rolls Royce diplomacy.”

Photo from the UK Prime Minister's Office shows the Queen with Premier Cameron and Deputy, Nick Clegg. It was taken when the Queen addressed the House of Commons on Wednesday.

Equipping brand new Airbus aircraft with Rolls Royce engines was not the only deal for Sri Lanka with the British-based manufacturing giant. Talks are already under way to buy at least 50 Rolls Royce limousines for the Commonwealth summit. Each vehicle, officials say, would cost around US$ 300,000 (or more than Rs. 37.8 million), without the duty component.

Thus, the enormous cost would add to the colossal expenditure the Government would already incur with the added purchase of new Airbus aircraft. This is at a time when the Treasury has already introduced a 30 per cent cut in funds for ministries in the budgetary allocations for the current year. The move is because the Government is cash strapped. An example of this situation — payments to contractors engaged in road construction projects have been long overdue.

Another disturbing development came this week when the head of Rolls Royce aerospace division quit his job, just four months after being promoted to the post. He is at the centre of bribery and corruption allegations over securing contracts. Before taking over as head of the aerospace division, Mark King had headed the civil aerospace division. This is where bribery allegations relating to contracts in “China, Indonesia and other markets have come to light”.

According to British media reports, Dick Taylor, a former Rolls-Royce employee has alleged that the company gave the son of Indonesia’s former President twenty million US dollars and a car to persuade the national airline, Garuda, to order Rolls-Royce Trent 700 engines. Rolls Royce, which is “co-operating with the SFO (Serious Frauds Office) has appointed Lord Gold, the City lawyer and Conservative peer, to review its compliance procedures,” one report said. Other reports quoted Rolls Royce Chief Executive John Rishton as saying that they would not tolerate “improper business conduct”. He told a meeting of shareholders recently that it had been “particularly disappointing to discover matters of concern.”

Yet, there are questions on how the head did not know what the hand was doing, said a London aviation expert familiar with the workings of Rolls Royce. Unlike the United States where there are rigid controls over bribery and corruption, in Britain, the rules were easier and that was how “business is promoted,” he said speaking on grounds of anonymity. The US aircraft manufacturer Boeing has long complained that its main European competitor Airbus always had an edge in the procurement of aircraft in developing countries because of its flexible offer of commissions. Not that US manufacturers are squeaky clean either. Some years ago, Lockheed was caught bribing people as high up as the German Defence Minister and Dutch Prince Bernhard – an act which nearly brought the downfall of the company. Airlanka bought Lockheed aircrafts at the time.

“Rolls Royce and SFO,” media reports said “are reportedly close to reaching a civil settlement to halt the bribery inquiry. Any agreement may involve a multimillion-pound fine, but avoid criminal charges.” According to the aviation expert, settling the issue out of court prevents details of the deal as well as the names involved from becoming public. Rolls Royce has said it was on track to report good growth in underlying profit in 2013, after a strong first quarter from civil aerospace unit, including a US $1.6 billion from IAG, the British Airways owner, for its Trent XWB engines to power 18 new Airbus A 350 jets.” Needless to say the income from providing engines to SriLankan Airlines would further boost Rolls Royce’s revenue.

Northern polls and the TNA 

The Commonwealth summit is not the only priority for the Government in the coming weeks and months. An even more important issue, the conduct of the Northern Provincial Council elections, has taken centre stage. As detailed out in this column last week, the polls are the direct outcome of Government’s new commitment to normalise relations with India. A diplomatic exercise with New Delhi has already paved the way for the Commonwealth Ministerial Action Group (CMAG) to clear any impediments for the summit to be held in Colombo. By the conduct of the polls, the Government acknowledges the 13th Amendment to the Constitution as a means of devolution of power. The future of the Indian-brokered 1987 amendment was at one time in doubt with calls for its repeal, from the highest quarters of the administration. However, President Mahinda Rajapaksa’s repeated public assurances that came in the wake of thawing relations between Colombo and New Delhi have put paid to such moves.

Yet, partners in the Government, particularly the National Freedom Front (NFF) and the Jathika Hela Urumaya (JHU), are strongly opposed to the conduct of the elections. NFF leader Wimal Weerawansa and JHU General Secretary Champika Ranawaka voiced strong views in this regard last week. They are equally opposed to land and police powers remaining in the 13th Amendment. As a compromise, UPFA leaders want to ascertain the possibility of introducing a 19th Amendment to the Constitution sans the two subjects and also incorporating a few other issues. President Mahinda Rajapaksa was consulting both partners in his Government as well as senior cabinet ministers to seek their views on the matter. He left on a three-day visit to Uganda yesterday and is to resume the dialogue upon his return.

A critical issue for President Rajapaksa in making changes to the 13th Amendment to the Constitution is to ascertain whether the Government would receive a two thirds majority. Partners other than the NFF and the JHU may not favour the idea. So do some key ministers in the Cabinet. On the other hand, the Sunday Times has learned that the Tamil National Alliance (TNA), the principal player in the NPC polls, will not enter the fray if constitutional changes are made. The NPC polls, at India’s behest, now expected to be held on the first Saturday of September, are viewed as part of the process of reconciliation. Hence for the TNA, the largest Tamil political group in Parliament, contesting the NPC would be an acknowledgement that it is accepting the NPC elections as part of the reconciliation process. Such a move is salutary to the Government to deliver a message to the international community that the process is under way. However, there is still scepticism in a formidable section in the Government.

“We are yet to decide on any constitutional amendment. We are consulting a broader segment including even those from the Northern and Eastern Provinces,” Economic Development Minister Basil Rajapaksa told the Sunday Times. He is also the national organiser of the Sri Lanka Freedom Party (SLFP), the largest constituent party in the United Peoples Freedom Alliance (UPFA), and the one who organised the massive May Day rally of the party. He said: “We have to first obtain a clear idea of what we need to do. Hence there is no final decision though the newspapers have said to the contrary.”

Minister Rajapaksa also clarified reports that the UPFA would launch a team of independent candidates. “To the contrary,” he said, “we have decided that UPFA candidates for the Northern Provincial Council would comprise three broad categories.” One would be members of the SLFP, the other from partners in the UPFA with interest in the North and the third will comprise professionals, academics and persons of standing from amongst those in the North. Rajapaksa said that Tamil newspapers in Jaffna would today carry advertisements inviting these categories and “even others” to send in their applications to the SLFP headquarters. The ads call for ushering in a development revolution in the North. “We will screen every application carefully and select the most suitable,” he said. The UPFA has not made any formal decision on who its Chief Ministerial candidate would be. It is likely the issue would be left open until the elections are concluded. In such an event, the candidate on the UPFA side polling the highest preference vote would qualify for it if there was victory for the UPFA.

TNA leader Rajavarothayam Sampanthan, who returned from India on Friday, went into a hurried three-hour meeting with the constituents of his grouping. Ahead of the elections, his main task was to keep his partners under the officially recognised Ilankai Thamil Arasu Katchi (Ceylon Federal Party) instead of seeking formal recognition from the Commissioner of Elections for the TNA. Though they are commonly identified as an alliance, for all official purposes they function under the ITAK banner. Sampanthan who is a remaining front runner of the ITAK has said this was not the time for them to function as TNA.

However, four other partners who together with the ITAK form the alliance hold a different view. They are the Tamil Eelam Liberation Organisation (TELO), the Tamil United Liberation Front (TULF), the Eelam People’s Revolutionary Liberation Front (EPRLF) and the People’s Liberation Organisation of Tamil Eelam (PLOT). Yesterday, Sampanthan and his parliamentary colleagues were in Mannar where Bishop Rayappu Joseph was using his ‘good offices’ to resolve differences between the ITAK and the four constituent parties. TELO National Organiser M.K. Sivajilingam told the Sunday Times that discussions with the ITAK leadership on Friday night regarding the registration of the TNA were positive. “In principle, the ITAK has agreed to register the TNA as a political party. We will be signing a Memorandum of Understanding within a week regarding the registration of the alliance and future political work’, he said.

Whilst a decision on constitutional amendments is pending, a draft 19th Amendment is now on the drawing boards of a cabinet minister. In view of the political nature of the changes, it has not been referred to the Legal Draftsman’s Department. The changes, at least in the proposed draft are not confined to the deletion of police and land powers from the 13th Amendment. Several other elements are also being incorporated. One is to reduce the present term of office of the President from six to five years. Another is to enable a President to seek re-election when he has completed three years in office instead of the existing four. This factor has fuelled speculation in UPFA circles of a possible presidential election next year (in 2014), coming as it does after the glory of hosting the CHOGM. Yet another is to restrict the term of office of the Chief Justice to three years. The pivotal issue on which the constitutional change hinges is whether the Government will be able to obtain a two thirds majority for all these changes. That again will depend on how many in the Government and how many of its partners will vote for changing the 13th Amendment to exclude land and police powers. Even more importantly, in a sense, is how New Delhi, which Colombo is already set to pacify, would react to such a move.

Trincomalee power project and problems

It is in this backdrop that the ministers, at their weekly cabinet meeting on Thursday, were set to make a historic decision — the final go-ahead for the 500 Megawatt (2 X 250) Coal Fired Indo-Sri Lanka power project in Trincomalee at a cost of more than US$ 500 million (more than Rs. 63 billion). The matter was put on hold for a week after Minister Patali Champika Ranawaka raised strong objections. The former Minister of Power and Energy (and now Minister of Technology, Research and Atomic Energy), a source said, had raised technical issues.

The project has been in limbo over several issues until a Sri Lanka delegation went to New Delhi on March 26; just five days after the UN Human Rights Council had adopted the second US resolution. The delegation comprised M.M.C. Ferdinando, Secretary to the Ministry of Power and Energy, and Prasad Kariyawasam Sri Lanka’s High Commissioner in New Delhi. The thermal power project was to meet the energy demands of Sri Lanka through a joint venture. That was between the Indian Government-owned National Thermal Power Company (NTPC) and the Ceylon Electricity Board (CEB). On that occasion Ferdinando said the project would meet the growing demand for power in Sri Lanka and would “strengthen the traditional friendly relations between the two countries”.

This meeting resolved two main technical issues raised by the CEB since 2011. One was the heat rate spelt out by it should be applicable immediately after the first year of commercial operation. The other is operation and maintenance charges. Sri Lanka held the position that such charges shall be based on audited expenditure certified by the joint venture company. Such expenditure is to be effected retrospectively from the date of commercial operation of the plant. Earlier, President Rajapaksa had directed Ferdinando to resolve the dispute over the two outstanding issues.

Power and Energy Minister Pavithra Wanniarachchi told her cabinet colleagues that “there was no consensus reached between the CEB (Ceylon Electricity Board) and the NTPC due to reluctance on the part of the NTPC to open the already finalised PPA (Power Purchase Agreement).” She said the project did not move forward and “the signing of the PPA (Power Purchase Agreement) and the IA (Implementation Agreement) was postponed indefinitely, although the JVA (Joint Venture Agreement) was executed on September 6, 2011 and the JV (Joint Venture) Company was incorporated on September 26, 2011.

Minister Wanniarachchi said: “Pursuant to the directives of H.E. the President and Hon. Minister of Economic Development, and the advice of the Secretary to the Treasury, Secretary of my Ministry intervened as a ‘facilitator’ on behalf of the CEB, with a view to get the agreement of the NTPC to amend the already agreed heat rate, O & M (Operation and Maintenance) rate and the ROE (Return of Equity) and to explore the possibility of implementing the project without further delay…..”

Minister Wanniarachchi sought cabinet approval:

  • To extend the validity of the Memorandum of Agreement dated December 29, 2006 up to the end of June 2013 to keep the MOA alive until the Power Purchase Agreement and the Implementation Agreement are signed by the parties.
  • To approve the Power Purchase Agreement which has been finalised and initialised by the CEB having obtained the legal clearance from the Attorney General on February 11, 2011 subject to amendments agreed at the discussions
  • To authorise the CEB to proceed with the execution of the Power Purchase Agreement subject to changes made with the NTPC.

After President Rajapaksa was voted to office in 2005, one of the major tasks of his Cabinet (on December 21, 2005) was to go for a joint Indo-Lanka coal fired power project in Trincomalee. Follow up action came up for discussion at least at five different cabinet meetings but was not pursued. Then a proposal was made for a Memorandum of Aqreement. Though it came up for discussion in at least at five different cabinet meetings it was not pursued. The last was August 24, 2011. Thereafter, follow up action came in March, this year.

According to Minister Wanniarachchi, the CEB Chairman, the Vice Chairman and the senior managers are in agreement with the draft Power Purchase Agreement she has prepared for approval by the cabinet. She has said they were in favour of implementation of the project with some “suggested” amendments. She has not specified what they are. “Since there are no further impediments either legally or technically for the CEB to start the implementation phase of the project, and to meet the looming power shortage by 2016, the Board of the CEB at its meeting held on May 3, this year resolved to proceed with the implementation of the project by signing the PPA….” Minister Wanniarachchi has told her cabinet colleagues. She has added, “…the Indian Government has further consented to effect all changes agreed as aforesaid, by amending the already finalised Power Purchase Agreement.” This was the result of a telephone conversation held by Ministry Secretary Ferdinando with Indian officials on May 5 and also the outgoing Indian High Commissioner Ashok Kantha.

In a letter to Ministry Secretary Ferdinando, CEB Chairman W.B. Ganegala on May 3 said the Board would accept the two contentious issues on the following basis:

Heat Rate: To accept the heat rate as given in the draft PPA (Power Purchase Agreement) and thereafter to use the heat rate as proven through a time-bound (within the first year of commercial operations), successful Performance and Guarantee Test adjusted by multiplication by the factor 1.065.

It is relevant to mention that the engineers in the Ceylon Electricity Board have challenged this issue. OPERATION AND MAINTENANCE CHARGES: As decided at the meeting held in New Delhi on March 26, 2013 to accept the O & M charges for the initial three years of commercial operation which shall be provisionally same as agreed in the initialled Power Purchase Agreement. Thereafter, the O & M charges shall be at actual cost based on the O & M expenditure as audited and certified by the JV (joint venture) company. Such actual O & M Expenditure will be effected retrospectively from the date of commercial operation of the plant for the first three years and if the O & M charges to be paid to the JVC through the tariff as per draft Power Purchase Agreement figures for such period is more than the actual O & M charges established by audited accounts, JVC shall pay the difference of the O & M charges to the CEB.

Ganegala has added that the CEB has resolved to request the Secretary to incorporate the contents of the supplementary agreement in the PPA to be signed by both parties after obtaining the clearance from the Attorney General and the approval of the Cabinet of Ministers.

Sri Lanka’s average electricity production per day, both through hydro and thermal power generation is 2050 MW. However, consumption rises to 2150 MW during hot days. Power requirements in the coming years are expected to be much higher and Minister Wanniarachchi has warned of a shortage by 2016. Even by today’s requirements, the joint venture project’s capacity meets a quarter of Sri Lanka’s power requirements.

Inherent national weakness

This week’s developments show that costs notwithstanding, the conduct of CHOGM in Colombo in November is high priority in the Government’s agenda. At least for two years, the prestige of being the Chair-in-office of the Commonwealth falls on Sri Lanka. For that, the Government has so successfully embarked on normalising relations with India. Provincial Council elections will be held in the first week of September and India’s help is being obtained to augment Sri Lanka’s national grid with electricity through a joint venture project in the strategic city of Trincomalee.

Whatever the merits or demerits of those measures, it clearly highlights an inherent national weakness. The absence of a quick and pragmatic response to issues raised by the international community, particularly before the UN Human Rights Council, was clearly a contributory factor. Now, in the wake of a CHOGM, an all-out effort is being made to adopt just the opposite position in the hope that cries against Sri Lanka would be over. The confusion is better underscored by what a UPFA politician told a western diplomat. “How do you see things playing out in the next one year,” the diplomat asked. The politico shot back; “If you tell me what is going to happen in one month, I will answer your question.” That explains the uncertainty.

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