Cannot continue subsidies forever - Dr. Ramesh Pathirana | Sunday Observer

Cannot continue subsidies forever - Dr. Ramesh Pathirana

15 January, 2023

Minister of Plantation Industries and Industries Dr. Ramesh Pathirana said we can’t continue subsidies forever and it won’t do any good for the country. The Minister in an interview with the Sunday Observer said we have been running this system for the past 75 years and it has paved the way in certain sectors such as education but the Government can’t bear this cost anymore.

Dr. Pathirana said the cost reflective price formula on electricity tariff revision is a mandatory requirement and it has to be developed together by the Public Utilities Commission of Sri Lanka (PUCSL) and the Ceylon Electricity Board (CEB). It is up to them to decide and finalise what the proper calculation is.

However, the PUCSL has now turned into a politically motivated popularity seeking agency and its Chairman is not acting in the manner that is beneficial to the country and its people.

Excerpts of the interview

Q: The Sri Lanka Podujana Peramuna (SLPP) and the United National Party (UNP) have decided to form an alliance to contest the upcoming Local Government elections. Has any final consensus been reached upon forming the alliance?

A: As far as I know there is no final consensus reached upon but there is a broad agreement as the UNP at the last Local Government elections had won majority seats in some of the Local Government institutions especially in Colombo and Kandy Municipal Councils and the Puttalam Urban Council. So, the majority of their candidates and some of our candidates will contest for a few selected Local Government bodies along with the UNP candidates. However, our candidates will contest for the majority of the Local Government bodies under the ‘Pohottuwa’ (Lotus Bud) symbol.

Q: A new coalition titled ‘Nidahas Janatha Sandhanaya’ (Freedom People’s Alliance) formed by the Sri Lanka Freedom Party (SLFP), together with several other political parties and the group of independent MPs in Parliament, was launched on Wednesday to contest the upcoming Local Government Election under the helicopter symbol. Will this have any serious impact on the SLPP’s vote base at the election?

A: As of now, it is very difficult to measure their strength because it is a newly formed political alliance. Basically, I don’t think there is any significant deviation towards the breakaway group of the ‘Pohottuwa’ and its alliance.

Q: The Cabinet of Ministers has approved the implementation of the electricity tariff revision effective from January 1, 2023 and the Public Utilities Commission of Sri Lanka (PUCSL) will further study the proposed revision of electricity charges submitted by the CEB. Would you like to comment?

A: The IMF constantly says whatever the subsidies given for fuel and electricity have to be cut off. As far as I know, these are some of the agreements in the IMF Staff Level Agreement. Therefore, we have to abide by that to get some concessions from the IMF. On the other hand, you can’t continue this subsidiary economy forever. We have free education, Samurdhi benefits given for 1.7 million people and subsidised electricity, fuel and water. However, this won’t do any good for the country. We have been running this system for the past 75 years and it has paved the way in certain sectors such as education but the Government can’t bear this cost anymore.

That is why we need to adopt a cost reflective pricing strategy and that is what we are doing. The cost reflective price formula is a mandatory requirement. That pricing formula has to be developed together by the PUCSL and the Ceylon Electricity Board. It is up to them to decide and finalise what the proper calculation is. On the other hand, the PUCSL is also duty bound to ensure that they reduce the power generation cost as there are new power generation schemes that are up and coming.

They didn’t do it all this time. If you could remember, they raised their hands to impose power cuts for more than 12 hours in the country. However, that was not done and it is not the correct thing to do. Now when the Power and Energy Minister is trying his level best to provide a 24 hour uninterrupted electricity to the consumers, the PUCSL is up in arms and this is not the correct thing to do. I think the PUCSL has now turned into a politically motivated popularity seeking agency and its Chairman is not acting in the manner that is beneficial to the country and its people.

Q: The President has told the Cabinet the Treasury is running short of funds, facing a severe financial crisis. Your comments?

A: With the new tax structure, we should be able to generate more in the future. However, this should be done by the end of the first quarter of 2023. Until such time even though there are new tax reforms, there is no income generated as yet. I believe things will ease off gradually within the next few months.

Q: The JVP categorically denies the Government’s claim of lack of funds to conduct the LG elections at this juncture. Would you like to comment?

A: At present, there is a lack of Government funds. However, the Government should have sufficient funds as it is requested by the Election Commission to conduct the LG elections. So, even with difficulties, the Government might be able to find that allocation.

Q: There is an allegation by the Opposition that the Government is attempting to regulate social media hoping that the people will once again come on to the streets and protest against the Government. Your comments?

A: On a long term basis, there has to be some sort of monitoring mechanism which is not a controlling mechanism to ensure that this system works in a fair manner to all of us.

Q: The JVP led National People’s Power is growing in popularity among the people and they say they are confident of capturing power of a large number of Local Government bodies at the upcoming LG elections. What is your view in this regard?

A: Let us be very honest about it. In certain areas especially among the urban middle class population there is a growing dissent among the people and they were not happy about some of the activities that happened during the last year under the then Government. There is a slight upward movement in some of the urban areas but I don’t think they will be able to capture power in Local Government areas. However, we have to wait and see until the election results are announced. I personally believe they blow this out of proportion.

Q: Is the SLPP confident of winning the forthcoming Local Government polls?

A: I think we will be able to get the majority at the upcoming LG polls.

Q: Earlier, the SLPP and UNP were at two rival camps. What led the two parties to join hands and reach a consensus to contest the LG polls? Won’t this have any adverse effect on the SLPP vote base?

A: As of now we govern together. That is why we decided to form a common platform in certain selected areas. I don’t think this particular issue will have any adverse effect on the SLPP. Because of the difficulties encountered by the people during the last year, the SLPP made a decision at that time. Now we have come back and told the people the truth of what really happened and it has paved the way to strengthen our political basis.

Q: Canada has imposed sanctions on four Sri Lankan State officials, including former Presidents Mahinda Rajapaksa and Gotabaya Rajapaksa over alleged human rights violations during the battle against terrorism. Your views?

A: I think they have imposed politically motivated sanctions 14 years after ending the battle against terrorism in the country. The Canadian Government is moved by a large section of the Diaspora who is very influential in those countries. This is what these developed countries do to developing countries. They don’t want for us to come to a certain level especially economically so that they put different barriers. Apart from that there is nothing that they have justifiably said on whatever the wrongdoings of the former two Presidents. So, what we can say is this is politically motivated because of the influence of the Diaspora living in that country and that is what we believe.

Q: Serious concerns were raised on the letter issued by the Public Administration Ministry Secretary directing all District Secretaries to temporarily suspend accepting deposits for the Local Government election, which was later recalled. Would you like to express your views?

A: The Public Administration Secretary withdrew that letter. Simply, he has no powers to issue such a letter. Having realised that, he withdrew that letter.

Q: The industrial sector has faced severe hardships due to the prevailing economic condition in the country. What are the steps being taken to address these issues?

A: The industrial sector is going through a difficult time especially because of the electricity tariff hike. However, we had constant discussions with the Minister of Power and Energy. He assured that he will not charge a higher rate from the industrial sector. So, that increase wouldn’t be that much for the industrial sector. Even now the electricity is subsidised for the industrial sector. When an electricity generation costs Rs.48 per unit, the industrial sector is given at the rate of Rs. 20 with a subsidy of Rs.28. This time a unit price will go up to Rs.26 and it is an increase Rs.6 from the earlier price. That will also have a significant impact but we have to face certain difficulties. Hopefully things will ease off by the end of this year.

Despite difficulties our people have strengthened themselves and we must salute them. At present, there is an import ban as the import cost has gone up due to the depreciation of the rupee. So, the local manufacturer is becoming more strengthened now. Despite difficulties they are performing well. That is why our exports have grown. The full credit should go to the industrialists of the country. That is the way forward. If we are to develop as a country, we have to strengthen small and medium sector entrepreneurs and industrialists to stand on their own.

Q: At present, the people have to undergo immense difficulties owing to the current economic crisis. Has the Government laid emphasis to provide them some sort of relief to overcome their hardships?

A: As I said earlier, historically we have been providing relief to the people of this country. We are providing Samurdhi and other social benefits to nearly 7.5 million people. In addition, they also have been given Rs.5,000 from January with the help of the World Bank to mitigate the difficulties which is not sufficient. But we have to come out from this subsidiary mentality one day. The Government doesn’t have sufficient revenue. We didn’t have enough taxes imposed in this country.

The people don’t pay their taxes properly. We have been spending billions of rupees for security, free health, free education and infrastructure. Actually, that money has come by the means of loans. We have taken loans and developed our roads, schools, universities and provided electricity and drinking water. All these have been done by obtaining loans. That is why we have got stuck and we need to pay for them. So, the message is very clear and loud that you can’t run forever with this subsidiary mentality. Therefore, it has to be proved again and again on a futuristic basis whether somebody needs real support from the Government.

There has to be a social safety network and we agree with that. On the other hand, there has to be a balance of it. Everybody has to work hard, pay their taxes so that the Government can run smoothly. That applies to everyone including the Government servants who don’t work hard. So, we have to work hard as a nation to come out from this debacle.