Possible disruption in fuel supplies as claimed by trade unionist symptomatic of far bigger economic crisis – former Governor

‘Why not arrest Minister Gammanpila for predicting collapse of banking sector’

By Shamindra Ferdinando

Former Governor of Uva, Southern and Central Provinces Rajith Keerthi Tennakoon says the arrest of UNP trade union leader Ananda Palitha over his disputed claim that the country would soon run out of both diesel and petrol unless fresh orders were placed immediately highlighted the economic crisis.

The SLPP government couldn’t solve the impending fuel shortage or suppress the truth by taking Ananda Palitha into custody, Tennakoon told The Island. Although the statement had created panic buying, he stood by Palitha’s statement, Tennakoon said.

The civil society activist pointed out that Ananda Palitha highlighted the daunting challenge in ensuring uninterrupted fuel supplies whereas the overall situation was far worse. “The crisis highlighted by Ananda Palitha is just one factor or symptom,” Tennakoon said, urging the government and the Parliament to examine the situation thoroughly or face the consequences.

Ananda Palitha’s statement actually meant that the country was in dire straits due to USD shortage, Tennakoon said.

Responding to another query, Tennakoon said that those who had lodged a complaint with the Criminal Investigation Department (CID) against Ananda Palitha owed an explanation as regards the government’s failure to settle oil import bills during the past 16 months.

The former Executive Director of an independent polls monitoring body Caffe claimed that Sri Lanka couldn’t attract suppliers for the last two crude oil tenders. Subsequently, about three weeks ago a ship carrying crude oil had to be anchored outside the Colombo harbour due to the government’s failure to make necessary payments. Tennakoon said that fuel stock was unloaded after the government made what he called other arrangements with the supplier.

Citing the fact that a significant 18 percent of Sri Lanka’s total import bill was for fuel, Tennakoon pointed out how the government conveniently forgot the recent crisis caused by shortage experienced by Laugfs customers. If the CID arrested Ananda Palitha on a complaint lodged by the Energy Ministry as regards warning of an impending fuel shortage, Laugfs Chairman W.K.H. Wegapitiya, too, should be taken into custody, Tennakoon said. Wegapitiya repeatedly declared there would be a gas shortage unless the government agreed to an immediate increase in gas prices, Tennakoon said. Having inconvenienced Laugfs customers by delaying the price increase the government finally gave in, Tennakoon said.

Tennakoon pointed out that the government owned Litro Gas, too, had asked permission from the government to increase price of its domestic and industrial products though some ministers repeatedly vowed to maintain the current price levels regardless of Laugfs increasing its prices. Then Litro Chairman, too, had to be arrested for seeking a price revision, Tennakoon said, adding the government owed an explanation regarding its response to milk importers threat to stop importers unless the government granted them a price increase. Noting that instead of granting price increase the government slashed duty on milk food imports, Tennakoon said that the SLPP government’s biggest blunder was slashing the entire range of taxes and duties immediately after forming the government.

Tennakoon said that SLIC owned Litro suffered nearly Rs 1.4 bn losses by selling gas at a loss.

Tennakoon alleged that the Treasury lost well over Rs. 500 bn due to a controversial decision to do away with a range of taxes, including PAYE (Pay As You Earn), NBT (Nation Building Tax), Withholding tax, Capital Gain tax imposed on the Colombo Stock Exchange, Bank Debit tax and unprecedented reduction of VAT (Value Added Tax). Tennakoon pointed out the 15% VAT and the 2% NBT which amounted to 17% imposed on all goods and services were unified and reduced to 8%, effective from the first of December 2019. According to him the decision was taken at the first cabinet meeting of the incumbent government held on Nov 27, 2019.

As a result of foolish government decisions taken without proper study, revenue plummeted drastically, Tennakoon said.

Referring to the Central Bank Report 2020, Tennakoon said that the total revenue for 2018 and 2019 had been Rs 1,950 bn and Rs 1,900 bn, respectively, whereas it dropped to Rs 1,373 in 2020. “The SLPP is responsible for this situation,” the civil society activist said, urging the Opposition to take up the issue both in and outside parliament.

Tennakoon said that if Ananda Palitha could be arrested for warning of a fuel shortage, Energy Minister attorney-at-law Udaya Gammanpila too should be taken into custody for predicting the collapse of the entire banking sector unless the government increased fuel price. Minister Gammanpila repeatedly warned of catastrophe due to disparity in world market and local prices.

Referring to President Gotabaya Rajapaksa’s statements to the nation in late June and last Friday, Tennakoon said that no less a person than the President admitted the difficulty in making loan/interest payments amounting to USD 4 bn annually.

Tennakoon said that the SLPP government couldn’t suppress the truth. Referring to a press conference organized by the President’s Media Division (PMD) a couple of weeks ago, Tennakoon said that Treasury Secretary S.R. Attygalle refrained from responding to The Island query on the Treasury losing over Rs 500 bn due to tax and duty slash. Did the SLPP consult the Treasury Secretary before slashing taxes and duties? Tennakoon asked.

Tennakoon reminded the government how it suffered massive revenue losses by slashing duty on sugar in Oct last year. That racket was followed by slashing of duty on milk food imports recently, Tennakoon said, pointing out Dr. Gunadasa Amarasekera accused a section of the government of facilitating milk food import scam.

“Take the public into confidence. Tell them the truth. Ask people to cut down on consumption. We are in a messy situation,” Tennakoon said, calling for review of fiscal policies. Tennakoon urged the parliament to address issues raised by watchdog committees COPE, COPA and COPF before formulating its response to the rapid deterioration of the economic situation. Tennakoon emphasized that the government should consult the parliament. Remedial measures should depend on consultations as unilateral decisions could worsen the situation further, Tennakoon warned.

Tennakoon said that the government should address the crises without further delay. The recent cabinet reshuffle revealed the government lacked even the basic understanding of the current crisis and still believed people could be deceived by utterly stupid actions.

Thank you

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