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Wednesday, August 2, 2017
Hot on the heels of the government inking the Hambantota Port deal, D.J. Rajakaruna, Convener of the Joint Trade Union Alliance in the petroleum sector, speaks about its implications to the country and its economy at large. Excerpts:
- Hambantota Port deal, worse than 1815 Kandyan treaty
- Investment in Ports is the most profitable international business for SL
- We insist on retaining at least bunkering business with us
- SL is astride a main trade artery in the world
- It is unquestionably a viable investment
- This country has potential to develop these facilities
- It is treacherous to lease out Trincomalee harbour to India
- Plans to have talks with CEB, NWSBD TUs to join hands
- More ships are looking to Trincomalee for bunkering services
- Chinese company has lion’s share in as profit earning company
- We should not alienate these assets to US, India or China
- We should not alienate these assets to US, India or China
Unquestionably, it is an economically viable port. Nobody could dispute the construction of it at all. Sri Lanka is astride the main shipping line that connects the Middle-East with the rest of the world. In our view, Sri Lanka is not a country enriched with natural resources. We have oil resources which are still unexplored, though. It is something different. Hence, the best mode of development is the capitalization of its location adjacent to this trade and shipping artery. We have to convert our strategic location to a blessing for the country. On a daily basis, around 300-400 ships sail pass Sri Lanka along this sea-lane. If we tap at least 0.1% of bunkering business available for these ships, we would be able to sell off a tanker load of fuel. It would amount to a business running to the tune of billions of US dollars.
The debt burden will remain. The Govt. is to get US $ 1.2 billion for the transaction. The deal was struck out of greed for such money. The Govt. is to get this amount. But, it is not meant to square-off the debt. The debt level will continue to be thereSri Lanka has the biggest potential for bunker business. A ship coming through Suez Canal has to reach Singapore for bunkering. To reach such a distance, a ship has to carry an additional volume of fuel in reservation. About 8000 tons of fuel should be on reserve for a shipping vessel. Whereas with such facilities are available here in Sri Lanka, a ship may require only half of the reserved fuel. When that is reduced, a ship gets space for additional freight. It would be profitable for the shipping lines’ agents concerned. Hambantota has the greatest potential in this case. Even now, some of the ships sail pass Sri Lanka have a port of call at Galle harbour for crew changes etc. China is the second largest economy in the world. With its economic expansion, it looks to new markets. They have revitalized the ancient silk route one the ‘One Belt, One Road’ project. Sri Lanka is in a vantage point here. Hambantota has the potential to be developed as a cargo transit hub.
We should not alienate these assets to US, India or ChinaThere is a gas line being developed across Bangladesh and Myanmar to link with the Chinese economy. Chittagong is the entry point. Hambantota is to be linked with this. Then, Kra canal is being developed near Thailand to reduce voyage time for ships. The cruise from China to Sri Lanka via Singapore could be reduced by 1600 nautical miles because of this canal. Trincomalee is equally important. We have no other international trade business as viable as port services.
Q As petroleum workers, you struck work crippling the entire country against signing an agreement to lease out the Port to Chinese Merchants Port Holding Company. Though it was said signing would be postponed, it happened. What are you going to do now?
Our demand was to retain the bunkering business with Sri Lanka. In Hambantota, it is difficult to work for six months because it is very windy in the sea areas. That is why it was built as an inner harbour. Two jetties and 11 tanks were built to be entrusted with the petroleum authorities. Our representatives also observed it. We have to admit that it had not been built on par with the most appropriate plan. Our experts in the petroleum sector were not consulted in this case. There was no proper feasibility study. It looks like eyewash. The petroleum sector only should decide on standards and specifications in tank building for fuel storage.
We sensed that the Govt. is trapped by foreign powers. It is difficult for us to please all the super powers at once. The answer is to retain these bunkering facilities in Trincomalee and Hambantota with us, rather than alienating to the US, India or China. We had to sign the Indo-Lanka Accord under compulsions; giving the Trincomalee oil tank farm to India on lease. That happened because of the way we engaged with the US at that time. The Prime Minister accepted it during our meeting with him. Now, how many people have died as the end result of the Indo-Lanka Accord? We insisted that the facilities in Hambantota and Trincomalee should not be alienated. However, the Govt. had reached a point of no return. Therefore, we asked the Govt. to keep the bunkering business at least with us in both these places.
The Prime Minister accepted it during our meeting with him. Now, how many people have died as the end result of the Indo-Lanka Accord? We insisted that the facilities in Hambantota and Trincomalee should not be alienated. However, the Govt. had reached a point of no return. Therefore, we asked the Govt. to keep the bunkering business at least with us in both these placesQ However, the agreement was inked. What is your stand now?
This is a grave betrayal. We were once colonized by the British. After that, this is the next gravest subjugation of our economy to a foreign power.
Q The Govt. says this would reduce its debt burden, making way for economic stability. What is your view?
It is falsehood. The debt burden will remain. The Govt. is to get US $ 1.2 billion for the transaction. The deal was struck out of greed for such money. The Govt. is to get this amount. But, it is not meant to square-off the debt. The debt level will continue to be there.
Q There are two companies to be set up. The Chinese company will hold majority shares. How would it impact the local economy?
The agreement contains provisions that are disadvantageous to Sri Lanka. There are two companies to be proposed. We will have majority shares in one company and work as the service provider vitality. These are not profit earning sectors. In that company, we will be responsible for 51.7% of equity, whereas in the profit earning company, we will have only 15% of shares.
The port has been built now. This is a massive facility. We have to install gantry cranes now for it to take off in full swing. We need an investment for it. That is true. Once that is done, business will flow in. There is nothing much to be developed other than it. The loan is only US $ 1.7 billion taken for it. Actually, we could save foreign exchange because of oil price reductions in the world market. We could have pumped in the saved amount of money in terms of US dollars to install gantry cranes at least for one terminal in Hambantota.
Minister Arjuna Ranatunga once said Sri Lanka Ports Authority recorded a profit of Rs.11 billion even by paying off loan installments. Even bonuses were paid. Only up to 2020, we will have debt serving on a rising scale regarding the port. After that, it will be on a sliding scale. Now, a bulk of the port revenue will be acquired by an external party. A couple of months ago, we did bunkering of 3000 tons of fuel. The profit was Rs.117 million. This is such a small business. We do not believe in the Govt’s argument that the port cannot be run because of debt burden. It is fallacy.
Q In the Cabinet paper, it says port security is a matter for Sri Lanka. However, the Chinese company has majority shares. As a result, won’t it be able to have a stake in security aspects?
Yes, it is possible. I wonder whether we would also have to obtain visa to go to the port one day!
The government is now trying to apportion Trincomalee harbour to India. We can write reams and reams about the importance of the Trincomalee harbour. It is a treacherous act to lease it out to India. Trincomalee should be the capital of our country, in our view. These two resources are big enough to rejuvenate the local economy
Q How do you look at this from a geopolitical point of view?
That is the reason for me to stress that we should keep these facilities with us. We should not alienate them to any super power. If we alienate it to one country, we will have to please the other by another means. This is the entire subjugation of the country’s economy. This is nothing but betrayal. It is even worse than the 1815 Kandyan treaty. On the other hand, the government is now trying to apportion Trincomalee harbour to India. We can write reams and reams about the importance of the Trincomalee harbour. It is a treacherous act to lease it out to India. Trincomalee should be the capital of our country, in our view. These two resources are big enough to rejuvenate the local economy. We can develop the Trincomalee Oil Tank Farm. In fact, we pointed out to the Govt. that the cost could be recovered within one year after starting bunkering business. There are enough and more ships looking to Trincomalee for bunkering services. The Govt. has submitted the Cabinet paper to lease it out to India and it was submitted on the same day. We had to wage a hard battle to stop this.
Q Now, you sought yet another meeting with President Maithripala Sirisena. How are you going to raise all these matters?
Actually we had talks with the President during our strike period. We called-off the strike after the meeting was adjourned till August 1. That is the real story. The President said he would bring an amendment to the original agreement before signing during the period of interval. That is to accommodate our demand. He proposed to talk to the Chinese company. Then, he said it would reduce the amount to be paid by that company for the stake of the port. The Govt. wants quick money; it is virtually starving. So, it clings to any straw to find money. We are yet to read the full text of the original agreement signed. We still place some trust on the President. If he breaches this trust, it would reflect badly on him. We wrote to him saying this is an act of treason. We asked him not to be part of it. We explained him the danger that is lurking in this case.
The next move is to unite trade unions in the other sectors for our struggle. We alone cannot do it. We will talk to the trade unions of Ceylon Electricity Board and the Sri Lanka Water Supply and Drainage Board to join hands.