By Rajan Philips –

Rajan Philips

Parliament had one of its rare, better moments last week. It also had one of its routine bad moments. On Thursday (October 20), 179 MPs voted resoundingly to pass the 22^nd Amendment (subsequently renamed 21^st Amendment) to the Constitution. On Tuesday (October 18), not even 100 MPs showed up for the vote on the Petroleum Products (Special Provisions) Amendment Bill that too was passed but rather quietly with 77 government MPs voting for and only 17 opposition MPs voting against. It is disquieting, however, that only 94 MPs would show up in parliament for a legislation on petroleum products, the mismanagement of which turned the country upside down in a matter of months this year. 

Neither the 22^nd Amendment nor the Petroleum Products Amendment Bill are masterpieces of legislations. The 22^nd Amendment is not a significant constitutional improvement. It rescinds the 20^th Amendment but does not fully restore the 19^th Amendment, let alone address 19A’s shortcomings. It is not the content of 22A that is significant but the implications of the vote divisions for the unfolding Wickremesinghe presidency and the folding down of Rajapaksa politics. The Petroleum Bill will do nothing to foster proper management of the petroleum sector, but underscores the point that in the absence of real infrastructure and supporting policy regime, there is no legislative, regulatory or constitutional way out of the crisis in the petroleum sector or any other economic sector. 

Tragically, however, for all the political tumults about the supply and delivery crisis of petroleum products there has not been any corresponding ‘agitation’ in parliament either at the level of soliciting and securing up-to-date information on the supply and delivery status of petroleum products, or at the level of having some serious discussion about the petroleum crisis, its causes and potential solutions. With no one in parliament showing any serious interest in these matters, and the executive running around like a headless chicken, it is left to the Supreme Court to step in to fill the void. 

But filling voids is not solving the crisis and it is not the business of the Supreme Court to solve anything. Nonetheless, the Court’s ruling on the amending bill provides a good summary account of the “existing legal framework” for the regulation (I would add ‘and deregulation’) of the petroleum sector, beginning with the Ceylon Petroleum Corporation Act, No. 28 of 1961. The ruling also lays down the obvious markers to indicate where things could easily go wrong and slide into the opaque world of corruption and kickbacks with half-baked privatization attempts. 

Petroleum Saga

The current Minister who is now claiming that his new law will eliminate the monopoly of the Ceylon Petroleum Corporation, should know from the Supreme Court ruling (if he is not directly familiar with the CPC Act) that the 1961 law that nationalized the petroleum industry has always included provisions permitting the supply or distribution of petrol, kerosene, diesel oil or furnace oil by non-CPC entities with the approval of the Minister  or CPC Board of Directors. 

These provisions were not utilized by governments not because, as was suggested during the Court hearing, the CPC Act did not ‘contemplate’ regulatory measures for their application but because no government before 1977 contemplated using them for the import, supply or distribution by non-CPC entities. This included both the governments of the Left and the Right. In fact, it was the UNP government of Dudley Senanayake that entrenched the monopoly of the CPC by building a new refinery in Sapugaskanda with the capacity to meet virtually the entire domestic demand for petroleum products by importing and refining crude oil from Iran. 

Contemplations to use non-CPC sources for the import, supply and distribution of petroleum products began after 1977 with the changes in economic direction and philosophy, under a different UNP government led by PM turned President, JR Jayewardene. His government enacted the Petroleum Products (Regulation and Control of Supplies) Act No. 34 of 1979 to provide for the regulation and control of the distribution and use of petroleum products. Nothing much came out of it, and the JRJ government baulked from making a serious and considered decision about the petroleum sector (and the electricity sector) – whether to continue the CPC monopoly, ‘liberalize’ the whole sector, or selectively ‘unbundle’ it to create a healthy blend of both public and private sector involvement. 

The next set of laws came after more than 20 years, in 2002, when Ranil Wickremesinghe was Prime Minister, co-habiting with President Chandrika Kumaratunga. There were three pieces of Legislation – the Energy Supply Act, the Petroleum Products Act and the Public Utilities Commission of Sri Lanka Act, all enacted in 2002. The Energy Supply Act was enacted to purportedly deal with the emerging energy crisis in the country, and the Act enabled the creation of a new Committee, the Energy Supply Committee, but it also  provided for the of regulation of “activities  of  persons  engaged  in  the  importation, exportation, storage, distribution and supply of petroleum and petroleum products.” 

The Court ruling suggests that the Petroleum Products Act (PPA) “sought to regulate the downstream petroleum sector by removing the monopoly of the CPC and providing for the issue of licences subject to prescribed conditions.” With respect, I would say that in policy parlance the PPA legislation actually sought to achieve the opposite: to deregulate the petroleum sector! Pertinent to the new amendment to the PPA legislation, the latter provided for the licences for the import, export, sale, supply or distribution of petroleum products to be issued by the Minister on the recommendations of the Energy Supply Committee. The new Amendment is replacing the Energy Supply Committee by a new Committee. 

The question now is what difference is the new amendment going to make to the operation of the petroleum sector? The Minister might think that he now has a freer hand to break the monopoly of the Ceylon Petroleum Corporation and get non-CPC entities to import and supply petroleum products for local distribution. If the Minister, or the government, wants to really end the monopoly of the CPC, even though there is no monopoly now anyway, it must bite the bullet and privatize the CPC. That way whoever is willing to take over the CPC can use its infrastructure the same way the CPC used the infrastructure of the multinational oil companies after their nationalization. In trying to create a parallel system besides the CPC, the government is only leading the country into the worst of both (public and private) worlds. The same way the JRJ government destroyed the bus industry and the school system. Very soon there might be an international university on climate change headed by a new Jennings from Norway! 

As for falling into the worst of both worlds, the Supreme Court ruling has laid down the markers to indicate where things could easily go wrong. The most important marker by the Court is striking down the whole Bill as inconsistent with the Constitution insofar as (original) Bill provided for the new Committee to be kept outside the purview of the Bribery Act. The Court directed the Bill to be changed to include the Committee as a Scheduled Institution under the meaning of the Bribery Act. Why was it excluded from the purview of the Bribery Act in the first place? 

The answer is because the real intent behind half-baked attempts at licensing is to create the path of least obstacles to local importers and their foreign suppliers. Even with privatization, it is the responsibility of the government to ensure that proper processes are in place for setting criteria and standards, for competitive bidding, and for the granting of licenses and contracts. That has not been the case at all in Sri Lanka, starting from 1977 and made worse after 2010. That will continue to be the case so long as the current Wickremesinghe presidency continues to be under the shadow of the Rajapaksas. 

22A Vote and Ekwa Negitimu 

After their sneaky attempts to keep lurking in the shadows, the Rajapaksas would seem to have got emboldened to extend their shadows more openly, thanks to the security crackdowns that President Wickremesinghe has been enforcing on their behalf. Their most blatant attempt to make a comeback is the Ekwa Negitimu (let us rise together) campaign. It really is an attempt to rise together with Ranil Wickremesinghe but on their terms. The evidence of collaboration came in the reported long distance conversations between Ranil Wickremesinghe and Basil Rajapaksa to consummate a no-contest electoral marriage between the UNP and the SLPP for future elections. That it will have to be on their terms again became evident with Basil Rajapaksa’s insistence on changes to the 22^nd Amendment in return for SLPP’s support for its passage in parliament.

Not surprisingly, nothing seems to be over for the Rajapaksas even after everything is over for everyone else. Ekwa Negitimu is no where near the Mahinda sulanga that sprang in Nugegoda in 2005. The architects of Nugegoda are now dead set against the Rajapaksas. Even with them and with the mood the country is in, it is highly unlikely that Ekwa Negitimu will find any political traction. The vote on the 22^nd Amendment shows that Basi Rajapaksa might also be losing his clout in parliament. After inspiring political foretelling last Sunday that Basil Rajapaksa is all set to decide the fate of the 22^nd Amendment (either change it, have it withdrawn, or defeat it), the Rajapaksas were reduced to a pathetic no show on Thursday, when parliament passed the 22^nd Amendment with 179 votes for and a solitary vote against. 

The solitary vote of course was that of Sarath Weerasekera, still standing by his “sapatha kara kiyanawa” pledge to put an end to Provincial Councils. With or without the President’s blessing, Foreign Minister Ali Sabry played the smart IMF card that without 22A, Sri Lanka can forget about any international bailout to help with its debt obligations. That certainly would explain the Rajapaksas choosing to stay away from the vote rather than voting against 22A. Even the usually patriotic Justice Minister Wijeyadasa Rajapakshe seemed constrained to go along with his creative cabinet colleague. Where does all this leave President Wickremesinghe?

The clever man he is, Ranil Wickremesinghe has been trying to keep the Rajapaksa insurance in parliament, and even extend it electorally in the country, while being constrained, and potentially pretending, to pursue a legislative agenda  that would be anathema to the Rajapaksas, but utterly necessary (though not sufficient) for the country. The President is still not open about his legislative agenda except in generalities and his mantra about an all party government. For all his talk about all-party government, not to mention the ‘national council non-starter, the President has not seriously engaged any of the opposition parties, either individually or collectively, to reach some agreement over what could be done by the current parliament working with an interim president. 

The reason for this ‘stalemate’ is that no opposition party will talk with the President without a commitment from him to have an early parliamentary election and about the future of the presidency itself. The President cannot do either without reconciling himself to being an interim President on a crucial but limited agenda. As a self-acknowledged crisis president Ranil Wickremesinghe should not have an electoral agenda beyond the current terms of the legislature and the executive. At 73, and given the state of his Party, he can easily do without one and commit himself totally and exclusively to laying down the groundwork for a new parliament to build on for Sri Lanka’s economic recovery. The vote on 22A should liberate the President from Rajapaksa clutches and let him focus solely on his mission as a crisis president without electoral distractions or ambitions.