Posted on January 24th, 2010

Sri Lanka News

AIRLINES that crashed thanks to the GLOBAL FINANCIAL CRISIS
There are rumours being circulated these days in all kinds of anonymous pamphlets about SriLankan Airlines suffering a loss of US $ 100 million.  Such documents deserve to be trashed. On the other hand, in these times of trial-by-media and “ƒ”¹…”guilty-until-proven-innocent’, it is also necessary that the truth be told and the people’s right to information be affirmed and honoured.   
The following is a partial list of airlines that have suffered losses due to the global financial crisis:
Japan Airlines                          US $ 1,040 million 
Singapore Airlines                   US $ 206 million
Cathay Pacific                         US $ 165 million 
Korean Airlines                       US $ 223 million
British Airways                       US $ 375 million
The main reason for this has been rising fuel prices. Typically, fuel costs account for close to 40% of the total costs incurred by airlines. This went up to 70% during the recent fuel price escalation.  This further aggravated the constraints suffered by the industry on account of the global financial crisis.  Tourism took a huge hit. Airlines, desperate to remain afloat, found themselves in a price war.  Sri Lanka had the added disadvantage of being in the last stages of a brutal war against terrorism.  The truth is that SriLankan Airlines did suffer losses to the tune of US $ 93 million, and not US $ 100 million.  What is of relevance here is CONTEXT.  Leave “ƒ”¹…”context’ out and you get a skewed picture. That’s irresponsible. 
What is irresponsible also is that there is no mention of the fact that the airline has remained competitive and sought to enhance efficiencies without compromising the tourist industry.  It is also irresponsible that no mention is made of the fact that a lady called Chandrika Kumaratunga and a gentleman called Mangala Samaraweera orchestrated the sale of some 14 aircraft for a song.  What is not mentioned is that Mahinda Rajapaksa rescued the national carrier.  SriLankan Airlines served the nation well, through the good times.  It took the blows during bad times over which no one in Sri Lanka had control.  There should be a sense of proportion. Drop it, and you are playing cheap politics.  You can do that, but only one person gets short-changed: the citizen. 
The Uma Oya Project envisages the production of 120 mw of electricity. It will also irrigate some 12,500 acres of paddy land and quench the terrible thirsts that cause so much suffering to the people in the districts of Hambantota, Monaragala and Badulla.  A sick note is being circulated these days claiming that the completed project will see the generation of only 50 mw and that only 5,000 acres of land will be irrigated. 
A scurrilous pamphlet usually deserves to be flushed down the tube; on the other hand blatant lies need to be exposed in these times of trial-by-media and guilty-until-proven-innocent days.
First of all there has been no down-sizing or downgrading of the project whatsoever. 
It is claimed that the total cost of the project has been revised.  It is mind boggling that people forget that prices fluctuate and indeed that in reality the cost of fuel, cement, steel as well as labour more than doubled in the period between 1999 and 2009 (when the project finally took off). 
The more pertinent question has not been asked: why did it take so long for the project to get started? The main reason was that multilateral organizations such as the World Bank had by this time stopped funding such projects.  President Mahinda Rajapaksa, however, used his close and cordial relationship with the fraternal nation of Iran to secure the necessary funding. 
This is the difference between truth and lie, of dams and “ƒ”¹…”damning’.
How can 230 billion be lost when even a single cent has not been spent?
Rumour factories that come into operation in times like this is busy spreading a story that some 230 billion rupees was lost in the hedging transaction.  There has been no serious substantiation of this allegation from anyone so far. Such allegations are usually not worthy of response, but then again, in these times of trial-by-media and days of guilty-until-proven-innocent, some clarification is not out of place. 
Hedging can be defined as a legitimate technique designed to reduce or eliminate financial risk, where it is sought to limit or offset probability of loss from fluctuations in the prices of commodities, currencies or securities. In the year 2007 the price of a barrel of crude oil went up to US $ 147 and it was with the intention of maintaining price stability in a context of volatile oil prices that the Petroleum Corporation opted for a hedging arrangement.  One reason was to insure against the adverse effects of the price of a barrel of oil reaching US $ 200.  Approximately 35% of the oil was subjected to this arrangement.   Agreements were signed with the Deutsche Bank, Standard Chartered Bank, Citi Bank, People’s Bank and the Commercial Bank, accordingly.  As oil prices went up, Sri Lanka received US $ 5 million.  However, oil prices dropped to US $ 30 unexpectedly.  However, the Government has refused to pay any money to the banks citing negligence on the part of the banks on certain counts as well as legality issues.  The amount under question is 43 billion rupees.  The 230 billion figure is nothing less than fiction. 
The truth is that Sri Lanka has not paid one cent so far.  It is the courts that will determine how much need to be paid.  The balance sheet as of today is this: Sri Lanka gained US $ 5 billion; and lost Rs. 0.00. 
Another point has to be made.  The biggest fraud perpetrated with respect to oil occurred during the time Mr. Ranil Wickremesinghe was Prime Minister.  On February 10, 2002, Ranil Wickremesinghe sold rights to Sri Lanka’s oil reserves to a company called TGS NOPEC.  Later, in the year 2006, Mahinda Rajapaksa had to authorize the payment of US $ 10 million to buy back these rights and ensure that our oil remains in our hands and those of our children.  The true balance sheet then is that hedging didn’t cause the loss of a single cent, but that the nation lost US $ 10 billion thanks to Ranil Wickremesinghe’s short-sightedness.  It is no secret that even the subject minister of the time, Karu Jayasuriya, was not aware of this.
When you are the judge and jury, you just have a ball
The Weerawila Airport project was abandoned.  The feasibility study alone cost Rs. 500 million.  This, ladies and gentlemen, is the allegation.  And who is the making this allegation? Well, an authorless, irresponsible, pamphleteer.  We should rightfully treat such allegations with disdain but we are required to answer in these times of trial-by- media and these days of guilty-until-proven-innocent.
The Weerawila Airport Project was a harebrained project of Mangala Samaraweera, the then minister in charge of the subject, and his erstwhile right-hand-man, Tiran Alles, then Chairman, Airport and Aviation Services.  They placed the foundation stone in close proximity to the Weerawila Bird Sanctuary in an almighty hurry without an iota of consideration of the environmental and social costs. 
Subsequent environmental impact assessments affirmed that the decision was erroneous.  That assessment was carried out by a state agency called CCEB and cost a total of Rs. 94 million.  The Rs. 500 million mentioned is pure fiction.  Furthermore, it is astounding that the authors of that story have not mentioned the “ƒ”¹…”glorious’ role of Samaraweera and Alles and that they have not “ƒ”¹…”costed’ the damage to environment and human lives had these “ƒ”¹…”gentlemen’ gone ahead and completed the project. If there was indeed wastage it was wastage that Samaraweera and Alles should account for. 
But then again, when those who engage in media-barbeques try to skewer the public with lie and misinformation, it’s nothing but a case where the miscreant is both judge and jury.  Right?
If the total cost was Rs. 3,979 million, how can Rs, 28,000 million be robbed?
Strange, isn’t it?  Well, ladies and gentlemen, that’s exactly what we are told had happened.  Who is telling us? Well, we don’t know since rumour-factories typically are faceless, owner-less entities.  Still, in these times of trial-by-media and days of guilty-until-proven-innocent, we are required to explain things.  We do so cheerfully. 
It is alleged that Rs. 28,000 million has been pilfered from funds set aside for road development in the North.  Want the truth? Well, the total amount of money spent on road development in the North during the past four years and ending on December 31, 2009, is given below (in millions of rupees:
Mannar bridge                                                 1.73
Karainagar Koddai bridge                              213.77
Parantha-Pooneryn road                                 231.75
Kandy-Jaffna highway (Vavuniya section)    449.10
Murunkan-Silavathura road                            296.41
Vavuniya-Horowpathana road                       150.79
Medawachchiya-Mannar road                        125.77
Jaffna-Point Pedro road                                  49.66
What’s the total cost?  Well, it adds up to Rs. 3,979 million.  Here’s the million rupee question: how can Rs. 28,000 million be robbed from a set of projects the total cost of which comes to just Rs. 3,979 million?  Shouldn’t we be rolling on the floor and laughing? 
There’s more that the general public should know.  While funding has been obtained from India, China, Australia, the Asian Development Bank and the World Bank to construct railways, roads, water supply and sanitation, schools, hospitals, courts and administrative buildings, proper tender procedures have been strictly adhered to and all procedures have been overseen by senior government officials and technical assessment committees. 
One wonders if these allegations are the work of the same people who once burnt to ground the Jaffna Library and that they are trying once again to deny to the North the development it deserves and has been denied for several decades.
Want to fool all the people all the time eh?
Someone is supposed to have robbed some Rs. 3,500 million from 4 flyovers constructed recently.  Well, the allegation is made anonymously, that convenient fig-leaf of the shameless.  Should be treated with contempt of course, but these are times of trial-by-media and days of guilty-until-proven-innocent, we must not forget.
Here are the costs for the 4 flyovers (in millions of rupees):
Kelaniya (double)       1,719
Nugegoda                   745
Dehiwala                     956
Total                            2,620 
Now how on earth can Rs. 3,500 million be robbed from a set of projects that cost a total of only Rs. 2,620 million? 
These flyovers as well as those built in Orugodawatte, Gampaha and Pannipitiya were constructed in record time. It would have cost less of course had concrete been used, but it must be remembered that finishing these projects in just 2-month periods not only eased traffic congestion but saved massive amount in terms of fuel costs; amounts far exceeding that which might have been “ƒ”¹…”saved’ had concrete been used. 
Money has been saved. Time has been saved.  Peace of mind has been recovered.  Some people just can’t stomach it, it seems.


  1. shaz Says:

    Have just resturned from your beautiful country, we flew Sri Lanka airlines. it was a fantastic experience. Airline food is notoriously bad but the chicken curry breakfast was fantastic!! The cabin crew were just right not too friendly but really efficient and friendly and the plane was superb.
    Wonderful flight.wonderfull people. Thank you Sri Lanka.
    with love

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