KAMALIKA PIERIS
Revised 14.9.19
Section 1. SERVICES.
SHIPPING
New
regulations are to be introduced soon to open up Sri Lanka’s shipping sector to
transform the country to a Singapore-style shipping hub, Finance Minister
Mangala Samaraweera announced in March 2019. This sector is at present controlled
by five local companies. They control
the agencies of shipping lines that account for 74 per cent of the global
shipping market.
Budget 2019
will lift Restrictions on the foreign ownership on the shipping and the
freight forwarding agencies, under these new regulations,” he said adding that
it will enable major international shipping lines and logistics operators to
base their operations in Sri Lanka.
According to
the present law, a foreign entity cannot own more than 40 per cent of a
shipping company in Sri Lanka. By introducing new regulations the country would
be able to attract major global shipping companies like Maersk to make an
anchor investment in the country. Companies like Amazon could be attracted for
warehousing for e-Commerce in the region. Support services such as financial
services, legal services and other professional services can flourish in this
environment, he said.
The Ceylon
Association of Shipping Agents (CASA) and Sri Lanka Logistics and Freight
Forwarders Association (SLFFA) vehemently protested against this move, saying
it will not bring in any additional investments or benefits to the country. All
aspects of the shipping industry except for agency including terminals,
warehouse and depot infrastructure, ancillary service infrastructure, etc are already
liberalized.
If this change goes through, all profits of a
shipping agency will be repatriated and not retained and reinvested within the
country, as done at present by local agents. Also, shipping lines will charge
all owners costs to the agency and make it a cost centre, depriving the
government of tax revenue.
There are
currently 130 shipping agents handling 35000 container vessels and 6000 non
container vessels. They employ 12,000 people. These shipping agents will lose
their livelihood by the government’s move to liberalize the shipping sector. Foreign
investors from countries in the region will set up small agency offices for
caller vessels and reduce business available to local small agents.
PETROL (1)
The National Movement for Consumer Rights Protection (NMCRP)
complained in July 2019 that the fuel stations across the country were selling
substandard 92 octane petrol. This had been proved by a test conducted by a Ceylon
Petroleum Corporation (CPC) lab on samples collected from all parts of the
country.”We lodged a complaint with the Consumer Affairs Authority (CAA)
that the 92 octane petrol was of inferior quality. The CAA tested samples at
the CPC lab and the test results show that 92 octane petrol is actually similar
to 90 octane petrol. Some time back the CPC stopped selling 90 octane petrol
due to its low quality. But it seems that we still buy 90 octane petrol.”
PETROL (2)
The government had incurred a loss of Rs. 11.3 million when Ceylon
Petroleum Storage Terminals Ltd ( CPSTL) bought five 13,200-litre oil bowsers
from a bidder who had quoted the highest price, the Presidential Commission of
Inquiry investigating corruption in the current administration was told. The
Commission was also told that four out of the five trucks were being operated
in Kandy and the drivers of those trucks
had complained about various issues regarding the performance and facilities.
The tender board had not selected the second lowest bidder, Senok,
citing the exhaust system in the vehicle it offered was different. General
Manager of Senok said: “In Sri Lanka we usually use Euro 1 and Euro 2
standard. So when these vehicles are brought in, our mechanics make some
changes to the exhaust system to improve vehicle emissions. That’s what the
tender document had mentioned. However we explained in our tender document that
the engine in the vehicle we had quoted adhered to Euro 3 standard. So we
didn’t have to make that change to the exhaust system. Senok had been supplying
UD Trucks to the CPSTL since 1990 and over 140 such vehicles had been sold to
them.
RAJAGIRIYA –
ATURUGIRIYA HIGHWAY PROJECT
The Elevated
Highway Project from Rajagiriya to Athurugiriya, has hit a snag over its
proposed route. The initial proposal of
the RDA was to have an elevated highway over the recently constructed Averihena
Lake, which serves as a flood retention area, and surrounding paddy fields. The
selected area was a part of the Thalangama wetland which was declared an
Environmental Protection Area under the National Environmental Act in 2007.
However Central Environment Authority (CEA)objected to
the project. CEA said, There is a
tank constructed by the Irrigation Department, some paddy fields and a flood
retention area. This area is important in terms of hydrology and it has rich
ecology. The wetland is also the habitat of a large number of bird species. The
entire area is rich in scenic beauty. We fear that the proposed elevated
highway may damage this sensitive eco-system.”
The RDA told us that the elevated highway
would not cause much environmental harm since it is constructed over pillars,
but it is our opinion that there will be significant damage to the wetland when
the construction starts,” CEA said. We
are unable to approve such a proposal. True, it is not a natural eco-system,
but over the years, it has gradually acquired the same status,”
RDA thereafter
proposed an alternative route from
Pothuarawa. For this, the government
will have to acquire 750 land lots . It requires the resettlement of
1,010 families and the demolishing of about 34 shops, 42 shop houses and 42
self-employed business places. The land acquisition will leave 106 structures
partially affected and 634 fully affected. residents
objected. They asked why the RDA chose a highly residential area for
this highway. Many families would lose their properties if the proposed
elevated highway goes through Pothuarawa.
We cannot
understand the rationale of choosing a highly residential area for the project,
shedding the initial proposal which would have caused the least social impact,
residents said. RDA’s initial proposal to have the elevated highway over the
Thalangama wetland will not cause much
environmental harm as claimed by the CEA.It is a man-made environment with
uncultivated paddy fields, a flood retention area and even jogging tracks. The
lands belong to the Sri Lanka Land Reclamation and Development Corporation
(SLLRDC). No private property will be affected if the RDA goes ahead with that
plan. Any development project must be designed to cause minimal impact on the
people’ they said.
GARBAGE
DISPOSAL (1)
The garbage
collection process in Colombo city was abruptly stopped in August 2019, after
the CMC was advised not to send garbage to Kerawalapitiya as it had reached the
maximum limit of garbage intake per day.
CMC was told to send it to Arawakkalu hereafter. There was a delay and garbage started piling up
on the streets of Colombo. In April 2019, People living in Ukwatte were told to
go away as it was unsafe. They
complained on television news that they had nowhere to go except to the temple.
Garbage was still coming in. Derana news of 7.8.19 showed piles of garbage
in many places in Colombo, with
people complaining loudly and angrily about it.
Eventually, after
several days, the necessary agreement was signed, payments made and the garbage went to Aruwakkalu . It was
taken by a private transportation company
and CMC complained that the operation
was costing a mint of money. However,
Derana news of 11.8.19 showed the residents of Aruwakkalu strongly objecting to Colombo garbage coming there.
GARBAGE
DISPOSAL (2)
Prior to the inception of the Fairway Karadiyana Waste Management
project, the landfill consisted of two disposal sites; A and B. A plot of land
in extent of 10 acres was allocated adjacent to Site B, which was being used to
dispose of waste. With the project initiation, the old closed landfill, Site A,
was re-opened by the Waste Management Authority as a temporary measure, for the
project to progress unimpeded. At present, the re-opened site accepts
approximately 60%-70% of the 500 tons per day from 8 local authorities that are
legally allowed to dispose of waste at Karadiyana.
As a result of an extended delay in the implementation of the Fairway Karadiyana Waste Processing Project
the temporary disposal site continues to grow in size and at a rate that is not
sustainable. The slopes of this landfill are becoming dangerously steep,
echoing the memory of the catastrophe that took place at Meethotamulla two
years ago.
The National Building Research Organization (NBRO) recently issued
a report highlighting the precarious situation of the landfill and the danger
of a possible collapse if garbage disposal continues at this site at the
current rate. The report highlights the current situation, the dangers
(steepness of the slopes, geophysical characteristics of the landfill,
potential for gas collection and explosion) and the possible consequences and a
set of recommendations to the WMA that can lead to full closure of the largest
landfill in Colombo district.
The community in the area continues to bear the brunt of the
consequences arising from the landfill and the inaction of the government. The
ground and surface water pollution continues unabated and will only get worse
with the rains. There are dangerous levels of gas build up as more and more
garbage is piled on top. Leachate from the landfill continues to flow into the
surface water bodies around the landfill, namely Weras Ganga that feeds into
the Bolgoda River.
GARBAGE
DISPOSAL (3)
In April 2019, the media reported that the Fairway Waste
Management Project at Karadiyana was at
a standstill. The project has been delayed due to various issues raised by the CEB, followed by the Ministry
of Finance, the Ministry of Power & Renewable Energy, and by the Treasury,
while the importance and urgency of the issue had been pointed out repeatedly
by the concerned authorities.
The developer having spent a total of LKR 1,312 million on the
project from site preparation, engineering design, advanced payments and civil
works (has completed 90% of the piling work), was forced to stop work and
demobilize from the site.
In April 2019, media reported that Fairway was still waiting for
the Ministry of Power & Renewable Energy to act on the cabinet decision
requesting the CEB to sign a PPA with Fairway Waste management. The government
is yet to sign the PPA even after obtaining cabinet approval. The project
remains a standstill, as of now. The developer is still hopeful that good sense
will prevail and that it will be able to continue albeit the losses that it has
incurred.
If the Fairway Waste to Energy project was allowed to proceed as
planned , the facility would have been accepting a limited quantity of waste by
July 2019 and the full 500 tons/day by
not later than November 2019. The project would have provided for the safe disposal of all Colombo
South waste.
The landfill could have been reclaimed as a public space in a
short span of 4 years allowing its use for recreational activities (walking
path, biking and hiking etc.), as have been achieved with many closed landfills
around the world. The inert
byproducts from the facility would have been used as a landfill cover as a
primary step.
The project would have addressed two critical issues that the
country is facing today ,sustainable waste disposal and electricity generation.
The waste processing facility would have provided enough electricity to power
approximately 40,000 households (based on World Bank statistics of average
energy use in Sri Lanka), by supplying approximately 83,000,000 kWh/year to the
grid. The plant would have been considered a base-load facility as it is
designed to operate approximately 8000 hours/year. It would have produced power
at a rate significantly cheaper than what is considered to be paid for
emergency power today.
The Karadiyana waste Processing Project would have been the most
advanced Waste processing plant with integrated biological and thermo-physical
treatment. It is already recognized as a
landmark project and is cited in international industry publications. The
project has met the most stringent environmental, social and Health
requirements required by the World Bank to receive USD 6.7 million through its
private financing arm, the International Finance Corporation (IFC). It is the
only waste project to receive IFC funding.
GARBAGE
DISPOSAL (4)
The idea of a
landfill for garbage at Arawakkalu in Puttalam was first considered in August
2014. The project
involved loading sorted municipal solid waste into sealed containers at a
transfer station built in Kelaniya, to be transported by rail and unloaded at
an engineering sanitary landfill site at
Ganewadiya.
, the project
costing US$ 274 million was to be funded
by Asia Infrastructure Investment Bank (US$ 115 million) the World Bank (US$ 115 million) and
Government of Sri Lanka (USD 44
million). The Environmental Impact Assessment (EIA) and feasibility
reports were ready by December 2014.
Yahapalana government rejected the EIA on
January 2016. Yahapalana said that Ganewadiya
was within the buffer zone of the Wilpattu National Park and
that the Wildlife Department insisted that Fauna and Flora Protection Ordinance
did not permit waste dumps in buffer zones. Also that the site was frequented by wild
animals including elephants. Once garbage comes in, it could aggravate the
human–elephant conflict near the fishing village.
Yahapalana
selected Seerakkuli instead. The public
living in Seerakkuli protested. “Ganewadiya is several kilometres
away. We have no objection to that place, but this has now been shifted to
Seerakkuli. We were told that officials
from the Wildlife Department protested since it would have disastrous effects
on the wildlife. What of us then?”
By August
2018, the Kerawalapitiya garbage site was full and garbage was to go to
Seerakkuli ahead of schedule by road. More than 600 tons of garbage were to be
transported from the Western Province by road daily to Puttalam. They would be
transported by rail from mid 2019.
The public
strongly objected. In august 2019, four tipper trucks transporting garbage from
Colombo to the Arawakkalu garbage dump were attacked twice by an unidentified
group near the 4th km post on the Puttalam – Mannar old road. The tipper
drivers complained that iron poles and rocks were used to attack the tippers
and the protestors had even tried to drag them out of their seats without
success. The four trucks were among a convoy of 29 transporting garbage from
Colombo to Arawakkalu and were escorted by army and police. Four suspects
arrested in this connection were released on bail by the Puttalam Magistrate’s
court.
The protests
continued. Stones were thrown at the trucks as they came in. Puttalam Police were asked to take stern
action against the offenders. Instructions have been given to tighten security
provided to trucks transporting garbage to Arawakkalu, the police said. The
army was also brought in.
In September
2019 the media reported that there were protests in Puttalam town against
dumping of garbage from Colombo at Arawakkalu. Protestors came along
Serakkuliya lagoon, accompanied by Muslim and Catholic priests, they invaded
the construction site and protested. They removed the machinery also attacked
the office of the project. The protest was so strong, the laborers ran away. Police
were summoned .Television news showed the protest. The police anti riot squad was
brought in to quell the protest.
SECTION
2 INDUSTRIES
COIR
INDUSTRY
Sri Lanka’s
coir industry, once a flourishing business that provided a major income to
thousands of people is now in difficulties, the industry said in March 2019.
The small, medium and traditional coir and coir-based industrialists in the
country complain that they are now
compelled to close down their businesses owing to foreign company invasion in
joint ventures with local partners.
Foreign
companies engaged in the lucrative coir-based product exports with local
partners are enjoying unlimited business freedom granted to them by Sri Lanka
government authorities including the line ministries and the Board of
Investment (BOI), they alleged. The local
companies cannot survive in the stiff competition of foreign firms with modern machinery
and resources.
A combination
of factors has brought about a steady decline in the business of local
entrepreneurs, including non availability of raw material, subsequent surge in
input prices, the lack of modern machinery, and failure to mechanize their
manufacturing process.Foreign companies in Sri Lanka have moved ahead with
pre-crushing machines. All necessary facilities and approvals have been given
to them by the North Western Provincial Council authorities.
A stock of
over 2000 metric tons of calcium nitrate chemical fertilizer is being imported
to the country yearly and 90 per cent of it is used for coco peat washing process. These
multinational companies operating in Sri Lanka wash raw coco peat with water
first and calcium nitrate with water thereafter
and discharge effluence to the environment causing severe water
pollution in the area.
The wastewater
produced in the process of removing unwanted elements in the coir substrate
manufacturing process should be managed properly to prevent environmental
pollution. Some companies are maintaining wastewater treatment plants in their
coir factories. However, a Norwegian multinational firm was dumping waste water
to some pits near the river contaminating ground water at Deduru Oya area in
Kobeigane. All these
complaints against such companies have fallen on deaf ears, coir manufacturers
complained.
CANNED
FISH INDUSTRY
Canned Fish
Manufacturing Association of Sri Lanka complained that it has not received support from the present government or the previous government. Mahinda Rajapaksa
government had agreed to purchase their
products and sell them through the Lak Sathosa network granting an Rs 20
concession for each can. However neither Lak Sathosa nor the Treasury has settled the arrears accumulating to Rs. 26
million. This has severely hampered their production ability.
Then in
February 2015, Yahapalana government
reduced the import duty levied on canned fish by more than 50 percent. This had
a negative impact on locally produced canned fish.the Association urged the
government to reinforce the duty on imported canned fish to at least the level
that existed before February 2015.
Four
companies were engaged in canned fish production in Sri Lanka currently and the
country’s capacities were thoroughly under-utilized due to large stocks being
imported from countries such as China, Chili and Thailand. The local canned fish industry has purchased
over Rs 100 million worth fish from the local fishing community for the past
seven months
If the
government supports the local canned
fish industry it could be
self-sufficient, said the Association. With
some relief, we could develop the industry and save the country US$ 64 million
annually which is spent on the import of canned fish from overseas. The canned
fish consumption is approximately 175,000 cans per day in Sri Lanka and we have
the capacity to provide 75 percent of the total requirement.
FISHING
NET INDUSTRY
Northsea Ltd, a government owned fishing net manufacturer, had
taken over the fishing net project of Cey-Nor Foundation . CeyNor had made
fishing nets from material from Toray Industries, Japan. “Toray is
well known throughout the industry and Cey-Nor had asked Northsea to keep using Toray.
Northsea had purchased substantial amounts of material from J.P. Fernando and Sons, between
2014 and 2017. We were approached, in 2014, because we worked extensively with Toray
Industries, Japan. The management that took over after August 2015, following
the change of government, started reducing the purchases. “Towards the end
the purchase order was at retail levels. Still, we delivered the stocks to
Northsea fishnet factories in Jaffna, Weerawila and Lunuwila. However, they
stopped working with us from May 2017 and instead of importing Toray products
directly Northsea started material importing from India.”
Fishnet suppliers told the Presidential Commission of Inquiry
investigating corruption in the current administration that Northsea then systematically
got rid of suppliers of high quality material used in fishnets and started
importing low quality material from India. The owner of Delly Enterprises stated that Chairperson
of Northsea S.T. Parameswaran threatened him in July 2017 after he had taken
part in the bidding process to supply material to Northsea that
year. “He told me that he was the brother of a Jaffna politician and
that I should not mess with him. And, I didn’t want to continue for obvious
reasons.( Island 4.7.19 p 3)
MINERAL SANDS
INDUSTRY
Lanka Mineral
Sands Ltd (LMSL) will be restructured under a public private partnership with a
leading Japanese conglomerate, to take over strategic mineral production,
especially ilmenite at the Pulmoddai deposit, reported the media in January
2019. This firm will manufacture
Titanium dioxide from ilmenite, .This deal was a major outcome of President
Sirisena’s visit to Japan.
LMSL is not
in a position to enter into value added production such as making Titanium
dioxide, as it has neither the financial and human resources or the necessary expertise. The only option is to
enter into a joint venture with local or foreign investors to produce value
added mineral products.
The LMSL
sells its main mineral products such as Ilmenite, Rutile, Zircon, ilmenite, etc
through an international competitive
bidding procedure. LMSL currently exports mineral sand to Russia, Japan, US and
the UK. The present production is
limited to 90,000 tons of ilmenite, 9,000 tons of Rutile and 5,500 tons of
Zircon annually. LMSL has already mined a massive stock of mineral sands over
the past 50 years along the beach from Pulmoddai-Kokilai exhausting mineral
sands and therefore the company is not
making much money at present, it is currently running at a loss and salaries are paid jointly with Treasury.
Employees of
the company are up in arms against this attempt to divest the mineral resources
at Pulmoddai. They say the
agreement with the Japanese company was through an
unsolicited bid. They said that
modification and upgrading of the present plant in Pulmoddai has been
completed, and the company is contributing large sums of money to the national
coffers but it cannot carry out its functions with maximum productivity due to
lack of human resources and other facilities.
They point
out that these mineral sands are public assets. They contain strategic Rare Earth Elements. Minerals and
deposits are found along the eastern coastal belt from Mullaitivu to Pulmoddai
and from there to Kotuwakambi. This is one of the most treasured natural
resources of Sri Lanka.
GARBAGE
RECYCLING INDUSTRY
In July 2019 it was
discovered that a consignment of 102
container loads of garbage consisting of ‘clinical waste’ had been imported
from the United Kingdom. Some loads had had been dumped on high ground at Katunayake and the rest was held at the Colombo Port. They had
remained uncleared for more than 15 months.
On examination, Sri Lanka customs found that
the waste had been imported as used mattresses, but contained bio and
clinical waste, in contravention of international laws on the transport of waste
material. Extremely hazardous” materials were mixed in with mattresses, plastics and
clinical waste. There was a gas emanating which could be harmful and the
stench is unbearable.” This is a well-organized racket that has been
going on since 2017,” said Customs. It
is violating environment laws including the international treaty which prevents import
of hazardous waste,
Minister of
Finance, Mangala Samaraweera told Parliament that these imports had begun in Sept 2017. From
September 2017 until March 2018, 241 waste containers had been imported to Sri
Lanka. The waste included used metal consignments, used mattresses, used
carpets, bird feathers, worms and glass scrap. “Of these containers 111 were detained at Colombo Port. 130 containers
were released by Hayley’s Free Zone Limited. Hayleys has re-exported 17 of them in 2017 and 2018 to
India and Dubai.
Hayleys Free Zone Ltd ,an integrated logistics and entrepot
trading company operating within the Katunayake Export Processing Zone, was
reported as the importer of the consignment of clinical waste. The company firmly denied this. Hayleys said this consignment was sent from
the UK by a company named Vangaard Ltd to be received here by Ceylon Metals Co. Hayleys said that Muthurama Shri
Sashikumaran who was the head of Ceylon Metals had got into financial difficulties, his business operation got stalled and the
consignment had been left un-claimed for the past seven months. Sasikumaran
denied that the containers he had imported contained bio waste.
Sri Lankan authorities said they were going to send the consignment back to the UK. The British
government looked into the matter, and announced that it was willing to take back the containers. The public were told that Indonesia and the
Philippines had also returned shipments of foreign rubbish to their ports of
origin,. Indonesia announced it was sending more than 210 tonnes of garbage
back to Australia and Canada has agreed to accept 69 containers of rubbish it
had shipped to the Philippines between 2013 and 2014.
Gomi Senadhira, former Trade Commissioner, had previously warned
the government of dire consequences of importing of garbage of all sorts in
accordance with the Sri Lanka-Singapore Free Trade Agreement (SL-SFTA)
The Centre for Environmental Justice (CEJ) filed a writ of Certiorari and Mandamus in
the Court of Appeal over the two consignments.. The petitioners said that some
importers have brought in consignments of waste material including clinical
waste, used cushions and mattresses, plant parts, plastic waste and other
uncategorized and hazardous waste into country from United Kingdom in the guise
of importing permitted consignments with the intention of disposing such waste
within the country and such action may cause severe damage to the environment
and serious threats to public health.
The petitioners pointed out
that if any such consignments containing chemical waste are permitted to be
buried here or sent to open dumps, the underground water table and the
surrounding environment will be severely affected. They have
said that such waste imports have been done without adhering to the terms of
the BASEL Convention on the Control of Trans-boundary Movements of Hazardous
Wastes and Their Disposal for which Sri Lanka is a signatory and had ratified
the said convention in 1992.
Petitioners seek a Writ of Certiorari quashing the validity of all
documents/permits granted by any authority to import waste in violation of the
provisions of the NEA. Also a Writ of
Mandamus, directing the Customs Department to act under and in terms of the
customs Ordinance No. 17 of 1869 as amended in taking measures to punish the offenders.
They also seek the court to direct the respondents to take steps to re-export
the waste containers back to United Kingdom, the country of origin.
Foreign garbage is reported to have been brought here for the last
several years thanks to a an amendment passed in 2013 to the Finance Act. This amendment
had removed certain strict restrictions which enabled the Customs to monitor such imports. This was done
to facilitate
imports for BOI ventures.
Under Gazette
notification No. 1818-30 of 2013 any new
enterprise where at least 65 per cent of its total investment has been from
foreign sources of which the total turnover is from export of goods and
services were exempted from certain provisions of the Customs Ordinance,
Exchange Control Act and the Imports and Exports (control) Act. This meant that Sri Lanka Customs has no right to inquire into these
illegal imports or at least to check those containers. . This is in turn meant
that no investigation can be carried out into illegal imports of this nature.”
BOI Chairman disagreed. This
extraordinary gazette notification facilitated trade activities such as
entrepot trade, offshore business, front-end services, operations of the
headquarters of leading buyers and logistic services. Certain goods have been
limited or prohibited from being imported into the country as per the Custom’s
Ordinance. If someone has violated these regulations, legal action can be taken
against them.
He said that the Regulations
to this Act provides for the operational guidelines and the BOI Agreement too
stipulates the conditions the Hub Operator has to fulfill. The Act enables
electronic monitoring of all CUSDECS by Sri Lanka Customs (SLC) and with the
adoption of synchronized procedures by the SLC and the BOI and monitoring of
the cargo movement using GPS there is no room to smuggle anything, leave alone
waste material,” he said. The
government did not see any valid reason to cancel the said extraordinary gazette notification. .the
government did not see any valid reason to cancel said extraordinary gazette
notification.” ( Continued)
