The Political Column

31 March 1996

Tender matter figures in transparency

By Our Political Correspondent

The judgment delivered by the Court of Appeal on Wednesday invalidating the dissolution of the two UNP-held Provincial Councils has caused ripples in government circles.

As soon as government leaders heard about the verdict, they began questioning as to who was responsible for the matter. It is likely that the government would appeal against the order made by the Bench comprising Justices Asoka Gunawardene and Asoka de Silva.

It was widely agreed that the Provincial Councils were dissolved on wrong advice received by the government through a private attorney.

At that stage former Attorney General Sibly Aziz had apparently disagreed with the views of this private lawyer. But the government at this point decided to put by the views of the chief law officer of the state.

On Wednesday minutes before the judgment was delivered in Courts, Sabaragamuwa Governor Saliya Mathew had a chat with the UNP's General Secretary Gamini Athukorale.

Mr. Mathew thought the judgment would probably be in favour of the UNP. Mr. Athukorale quipped that in any case the UNP was expecting to win the case.

As soon as the judgment was delivered, Mr. Athukorale got through to UNP leader Ranil Wickremesinghe who at the time was addressing a party youth seminar at "Sirikotha". When Mr. Wickremesinghe was given the news he said, "I thought as much." Mr. Wickremesinghe's hopes would have been riding high when senior counsel for the UNP, K. N. Choksy gave him an assurance the previous evening that the UNP was going to win the case.

Mr. Athukorale told Mr. Wickremesinghe that the media was urging him to make a statement. They agreed to meet at "Sirikotha" and draft a statement. In the meantime Mr. Athukorale directed the Chief Minister to get the Court order then and there and proceed to their respective areas to form the provincial administrations again. The parliamentarians who were present in Court hurriedly telephoned their electorate officers to organise rounds of fire crackers when the radio made the announcement.

Later at "Sirikotha", Mr. Wickremesinghe met Karu Jayasuriya, Karunasena Kodituwakku and Mr. Athukorale to draft a statement. Later the statement was issued by the General Secretary.

When all this was taking place in a jubilant atmosphere, Gamini Athukorale received a telephone call that NWP Chief Minister G. D. Mahindasoma while proceeding to Anuradhapura had met with an accident at Galewela. After satisfying himself that the Chief Minister was out of danger and that he could be treated at Kurunegala, Mr. Athukorale telephoned some Provincial Ministers in Anuradhapura to tell them to look after the work till Mr. Mahindasoma recovered.

There were many reasons why the UNP decided to contest this case.

Primarily, it was because the government claimed that the President had a plenary executive power by virtue of her being the Executive President.

This claim was based on Article 4 (b) of the Constitution which states that the executive power of the people shall be exercised by the President.

The UNP, however, took up the position that the Constitution regulated exercise of the executive power and the President herself was bound by the Constitution.

It was of the view that matters such as the appointment of the Chief Minister and Ministers of Provincial Councils and dissolution of PCs were matters for which express provisions had been made by the 13th Amendment to the Constitution, which established Provincial Councils, and both the President and the Governors were bound by this.

The UNP pointed out that these provisions tend to limit the executive powers exercised by the President.

In the course of the argument of the case it was pointed out that if the President had an unlimited executive power then the President could over-ride several provisions of the Constitution.

Then there will be a Presidential dictatorship and not a constitutional democracy, the UNP argued.

The Court upheld this argument. It said that the Governor, in dissolving the Provincial Councils, must act on the advice of the Chief Minister as provided in the 13th Amendment and that he had no right to consult the President and act on the Presidential directives.

The second argument put forward by the UNP was that the dissolution was contrary to the spirit of devolution which the government was also contemplating at the moment.

Thirdly the UNP felt that the government's claim that there was corruption in the two Provincial Councils and steps taken to dissolve Councils on that pretext was a ruse because the pradeshiya sabha elections were pending and the government would resort to dissolve all five Councils on the same ground.

The Tamil parties seem to be happy over the Court decision, since it gives the minorities a guarantee that Provincial or Regional Councils could not be dissolved at the whims and fancies of the government though the provision enabling dissolution of Provincial Councils by the President is incorporated in the present set of proposals to devolve power among the regions.

Though the Tamil parties are not likely to make a big issue out of the clause incorporated in the present set of proposals empowering the President to dissolve Councils under abnormal conditions prevalent in a region the President seems to be unhappy with the attitude of the Tamil parties.

In a recent interview with the 'THE HINDU' newspaper President Kumaratunga had a few digs at the leaders of the Tamil parties.

She said the moderate Tamil leadership, despite initially praising her efforts to peacefully end the protracted conflict, was no longer supporting her government's devolution measures announced in August.

"I think there is a lot of dishonesty among the Tamil leaders," she said.

"The Tamil leadership should come out and tell their people that the only solution to the Tamil problem is not (Velupillai) Prabhakaran's murderous politics but a political solution," she added. "Now they are not doing it."

When a top UNP politico learnt about the President's interview with Malini Parthasarathy of "The Hindu" he called Dr. Neelan Thiruchelvam and asked what he felt. Dr. Thiruchelvam said he heard about the interview, and the matter ended there. The TULF is apparently unable to go against the President or criticise openly the government's role since most of them have become political refugees of the Kumaratunga administration. Most of the Tamil political leaders in Colombo are being provided with armed escorts and their houses are guarded by the Sri Lankan Security Forces, thus wittingly or unwittingly they are compelled to toe the government's line.

In this backdrop, a TULF delegation headed by M. Sivasithamparam met UNP leader Ranil Wickremesinghe and A. C. S. Hameed on Thursday to discuss the devolution package.

At this meeting, the TULF delegation took up the position that there should be at least seven Ministers in a Provincial administration and that the Governor of a Province should be appointed in consultation with the Chief Minister and the leader of the opposition. They also insisted that the Governor of a Province should not be an agent of the Central Government.

The UNP agreed to consider their proposals but Mr. Hameed told the delegation it would be better if the parties in the People's Alliance government could come to a broader understanding on the matter.

A UNP committee comprising Ranil Wickremesinghe, A. C. S. Hameed, Wijeyapala Mendis, K. N. Choksy and Gamini Athukorale also discussed issues regarding Prime Minister Sirima Bandaranaike's civic rights.

They discussed the options available for the UNP on the government's resolution to invalidate the 1980 motion which stripped Ms. Bandaranaike of her civic rights.

Resolution invalid

The UNP feels that the resolution itself indicates that the government has no confidence in the report of the Special Presidential Commisison of Inquiry.

Accordingly, the opinion of the UNP is that the resolution as it stands now, is not legally valid.

Neither the Constitution nor the Standing Orders of Parliament permits Parliament to say that an earlier Parliament should not have passed the resolution imposing civic disabilities.

There is no such procedure known to the law and therefore the resolution is illegal.

The government through Minister G. L. Peiris had made overtures to the UNP on this matter and the UNP has indicated that the correct procedure would be to repeal Article 81 of the Constitution under which the resolution was passed in 1980. Simultaneously the UNP had agreed to give the government the 2/3rd majority in the House needed to repeal Article 81.

The UNP's position is that the government could not have it both ways - passing the resolution exonerarting the Prime Minister and at the same time keeping the Constitutional provision under which Parliament could impose civic disabilities on citizens found guilty of various offenses such as misuse and abuse of power.

The government disagreed with the UNP's decision. Nevertheless it has given notice of this resolution and fixed the matter for debate on April 8.

Though the UNP raised questions about former Secretary Nihal Jayawickrama, Health Minister Fowzie and former UNP MP, Dr. Jalaldeen who also were subjected to civic disabilities, Minister Peiris had not responded in favour of them.

Minister Fowzie's civic rights were taken away by a Bill in Parliament on the recommendations made by a Commission on local authorities. However, it seems that President Kumaratunga dislikes the idea of including Nihal Jayawickrama and others along with her mother.

The aim of the government appears to be to put the UNP and the President's estranged brother Anura in a difficult position while exonerating Ms. Bandaranaike. But Mr. Bandaranaike has already expressed his view on the matter.

He says he would not do anything against the new resolution for political and personal reasons. He was optimistic that the UNP would not take an adverse decision on the matter.

Mr. Bandaranaike's stand on the matter will be discussed at a UNP group meeting scheduled for April 4 and it is likely he could be given a free hand under the "conscience clause" of the UNP Constitution which allows a member to vote and speak freely according to his belief and will.

The UNP group will also take a decision as to what position they should take as far as this resolution is concerned. The options are many.

In another development involving the recent Thawakkal debate in Parliament, Minister S. B. Dissanayake has lodged his strong protest with President Chandrika Kumaratunga and Speaker K. B. Ratnayake over the censoring of his speech by an all party committee which examined the video tapes of the debate.

Speaker K. B. Ratnayake the previous week appointed a Parliamentary Committee to edit the video tapes on the Thawakkal debate so that they could be telecast by the TV stations.

This decision was taken after the UNP opposed a move by the Government to give a live telecast of the Thawakkal debate in Parliament.

In all, the committee has censored six speeches including that of Deputy Minister Jeyaraj Fernandopulle and UNP's Dr. Rajitha Senaratne and Sarath Kongahage.

During the debate on the Thawakkal scandal many speakers made vociferous deliveries slinging mud at the opponents with Minister Kadirgamar at the centre of the controversy. Mr. Kadirgamar himself made a brilliant speech while having some snipes at Anura Bandaranaike who opened the debate for the UNP, but soon after the debate Minister Kadirgamar left for Kuwait on an official visit and was back only on Wednesday morning to attend the Cabinet meeting.

He drove straight from the airport to Temple Trees to attend the meeting where he was congratulated by most of the Ministers for his masterpiece.

Mr. Kadirgamar also won accolades from President Chandrika Kumaratunga who said, "I thought you left for Kuwait the same night, that's why I did not call you".

Many Ministers congratulated him including C.V. Gooneratne, who had a long chat even preventing Minister Srimani Athulathmudali from congratulating Mr. Kadirgamar on his speech. Ms Athulathmudali waited for sometime to talk to Mr. Kadirgamar but Minister Gooneratne kept on talking.

Prime Minister Bandaranaike was among the first to congratulate Minister Kadirgamar.

She told him "I told that boy (Anura) not to speak on this debate, I think the UNP is taking him on a ride".

Besides the non-dissolution of the two provincial councils and the Thawakkal issue, the current power cut takes a prominent place in the day to day life.

Some concerned engineers of the Ceylon Electricity Board had suggested that the government should impose an hour's power cut from December last year, after having learnt that the hydro reservoirs and their catchment areas would not experience sufficient rain to provide for the whole country during the early part of 1996 .

But instead, the government carried advertisements in the electronic media, suggesting that there was no necessity for a power cut since it would not be the solution to an energy crisis.

The CEB spent well over ten million rupees on this advertising campaign but now the question posed by the concerned people is as to who is responsible for the current power crisis.

Again, industrial ventures which must consume substantial electricity had responded to a last minute proposal of the CEB to import generators duty free provided the shipment was received by the 31st of March.

In the short period of time available, many industrialists have found that supplies of generators have not been able to keep to the deadlines promised and shipping delays in particular have caused delays in the arrival of the generators in Colombo.

The CEB however is insisting on its earlier deadline and industrialists are aggrieved that the CEB is not sharing good faith in the matter.

CEB Chairman Leslie Herath told the state media last week that since the people had not cooperated, the CEB would have to extend the duration of the power cut.

But members of the public question the CEB for putting the blame on the people, while blacking out its own follies and bad planning.

As Mr. Herath puts it, the public had altered their workshifts in such a way as to beat the power cuts.

The Board understandably had hired a 20 MW power generator from Netherlands, but when it arrived it was found that the capacity was only 2 MW. The government has spent nearly Rs. 500 million for this and eventually the consumer will suffer.

At present the Ministry of Power and Energy is planning to have another barge mounted power house for two years at a cost of 50-60 million dollars.

Meanwhile, Minister Anuruddha Ratwatte has forwarded a Cabinet paper to appoint a Cabinet Approval Tender Board (CATB) to negotiate with Barclay Mowlem of Australia to construct a coal fired power plant in Trincomalee.

In September last year the Cabinet decided to cancel the letter of intent given to Mihaly International (Canada) Ltd. for the construction of this power plant.

The Minister's proposal was to negotiate with a company which did not submit its proposals when tenders were called originally for the setting up of a coal fired power plant in Trincomalee in 1992.

According to available records Barclay Mowlem of Australia had shown some interest at the latter stage after three other companies made their bid for this BOI project.

The original advertisement inviting proposals to set up a coal fired power plant first appeared in March 1992. In response to this the government received three proposals.

I. Mihaly International (Canada) Ltd.,

II. P G. Enterprise India, and

III. Anglo-Japanese Australian consortium.

When the three companies were asked to forward proposals, only Mihaly International did so. Subsequently Barclay Mowlem of Australia had expressed interest in the matter. At this stage former Ministry Secretary Akiel Mohamed had informed Barclay Mowlem Construction and on 3rd December 1992 to submit its proposals before end of March 1993.

But according to the procedure, Mihaly International (Canada) being the only company to come up with a proposal was granted a letter of intent by the previous regime.

The present PA Government cancelled the LOI given to Mihaly International. The Ministry then sought Cabinet approval to negotiate with Barclay Mowlem which submitted its proposals at a later stage.

In another Cabinet paper the Minister has given reasons for not calling fresh proposals after canceling the letter of intent granted to M/s Mihaly International Ltd., the only construction company to put forward a proposal.

The Minister states that the letter of exclusivity (LOE) granted to Mihaly International was terminated on October 31 after obtaining the advice of the Attorney General. However, he states there were indications that Mihaly International would take the matter to courts and he was of the opinion it may not be opportune now to call for fresh proposals for the development of the coal fired power plant at Trincomalee.

More importantly the Cabinet paper stated that the prevailing situation in the North East was unlikely to attract serious investors and may severely limit competition.

The Minister in August 1995 through a Cabinet Memorandum has spelt out the reasons for the cancellation if LOI granted to the Mihaly International Ltd. He suggested new proposals for the same but this was ignored and later came the proposal to negotiate with Barclay Mowlem.

The Cabinet Memorandum reads thus:

2 X 150 MW Coal Fired Power Plant - Trincomalee

"1. The letter of Intent (LOI) granted to M/s Mihaly International Canada Ltd., ("Sponsor") for negotiations for the development of the above mentioned project on a Build - operate Transfer (BOT) basis was extended on the basis of the Cabinet decision of 13th July 1994, by Letter of Extension (LOE) dated 20th July 1994, subject to achievement of certain milestones by the sponsor. The sponsor had failed to achieve the milestone No. 1 (viz Submitting of Memoranda of Understanding, executed by all Lenders, Debt and Equity partners) on the due date of 31st August 1994. The Documents submitted by the sponsor in fulfillment of this milestone were not sufficient to be considered as firm commitments by lenders, debt and equity partners in financing the cost of development of the facility, as observed by Ceylon Electricity Board and the Hon. Attorney General. Hon. Attorney General further observes that, the termination of exclusivity granted to the sponsor will not result in any liability to the Government (Observations are annexed).

2. Notwithstanding the above, a subsequent round discussions were held in January 1995 and March 1995, where CEB had requested the sponsor to submit a firm Financial model on their project proposal. The sponsor had only been able to provide CEB with a Financial Model containing indicative figures, which is of limited use at this stage of the project. The sponsor had failed to abide by the ultimatum given for them up to 31-05-1995 by the Committee on Power Related Issues on 24th April 1995. It is further evident from their Financial Advisor's letter dated 27th April that no firm commitment are still available from either Lenders or Export Credit Agencies.

Site dispute

3. CEB had further requested during the meetings in January 1995 that the Delivery Point for power should be at Habarana and not at Trincomalee. The sponsor had not accepted CEB's proposal to deliver power at Habarana. In view of the current ground situation in the Transmission line route, the CEB is unable to bear the risk of accepting energy at Trincomalee, since with the 70% minimum of take guarantee as requested for in the PPA, any outage of the Transmission Line will mean CEB's inability to accept energy, which would result in heavy payments to the sponsor, even without accepting any energy.

4. In accordance with para 4 of LOE, the Project and the contract details are subject to finalization of details of construction of the 220 KV Transmission Line from Trincomalee.

5. It is noted that the original letter of Intent had been issued on 16th February 1993, and already a total of 28 months has been available to the sponsor to finalize his financing arrangements for the Project. Ceylon Electricity Board cannot delay this project further, for finalization of financial package by the sponsor, which would require a further extension.

6. In view of the above, Cabinet approval is sought:

(i) to terminate exclusivity granted to the sponsor (m/s. Mihaly International (Canada) Ltd.). by a Letter of Intent (LOI) with respect to development of 2 X 150 MW Coal Fired Power Plant at Trincomalee. Considering the legal implications the letter of Termination will be drawn up in consultation with the Hon'ble Attorney General.

(ii) to request for fresh proposals from private investors to submit proposals for development of Coal Fired Power Plants. The request for proposals should also incorporate proposals for alternative sites in the Western and Southern Coasts of Sri Lanka. The procedure for invitation of these proposals will be based on the guidelines which will be formulated by the Ceylon Electricity Board, with the assistance of Secretariat for Infrastructure Development and Investment."

"The pertinent question that arises from the latest decision is whether the government should have negotiated with Barclay Mowlem in that calling for fresh tenders where the Barclay Mowlem could also participate.

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