14 August, 2022

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Basil’s India Visit & The Economic Fallout

By Rusiripala Tennakoon –

Rusiripala Tennakoon

Events become more important and focused in the context of their after effects. Criticism levelled before-hand will only be conjectures yet to become realities. Diplomatic initiatives demonstrate how a small neighbor state can successfully move towards a pro-active bilateral relationship interacting with other countries in the neighborhood OR even in the region, within the confines of available economic space.

Finance Minister Basil Rajapaksa’s move to initiate a dialogue with our Immediate neighbor INDIA is an extremely wise and timely move in keeping with the important components of governance principles of diplomacy. This is so, considering the essential need for re-affirming the mutual trust between the two states and how a nation could act with a drive to become relevant, influential and acceptable in its bilateral relations with another big country, specially when the latter is playing a significant role in quickly transforming itself into a fast growing nation in the global scenario. It appears that the move and the conclusions reached awaiting finalization is a disposition of trust and confidence vital for the mutual national interests of both countries.

The growing economic strain we are experiencing right now is compelling us to look for immediate relief measures to seek remedies which do not affect our core interests due to interactions with powerful players. The choice of non -controversial scopes is also an important factor being mindful of the credibility issues and long term effects while addressing short term relief as a priority in such accords. Let us now examine the areas of concern and the basis of understanding to be reached as already announced in a media release about the Finance Ministers proposals from our side. It also has to be acknowledged that this early release of the relevant information will dispel any skepticisms and avoid misrepresentations and distortions.

1. Food and health security package on an urgent basis that would envisage the extension of a line of credit to cover the import of food, medicines and other essential items from India to Sri Lanka.

It needs no emphasis to explain the essential nature of food imports from India to our day- to- day food requirements. India has been a main source for Several items of a staple nature over a ling period and any disturbance to this line of supply will be critical to the daily routines of our people. Sri Lanka’s Trade Share with India alone is approx.. 2.5 Billion US $ per year. Food items and medical supplies largely account for our imports from India. Funding imports is a problem due to the prevailing depleted balances in our foreign exchange resources. Hence the negotiation of a facility on extended payment terms for the (imported) supply of these items becomes extremely important to prevent any shortfall or disruption in the supply of essential drugs and consumer food items.

2. Energy Security Package that would include a line of credit to cover import of fuel  from India, and an early modernization of Trincomalee tank farm

Fuel and Energy are so vital to our day to day lives. We do not have any access to Crude Oil supplies or refined Oil other than importing them. Our annual Fuel import Bill is averaging between US$ 3800 to 4000 million.

A days black out in the supply of Electricity in the country which we experienced very recently indicated how essential it is to have a smooth supply of uninterrupted electricity supply. Besides the denial of the luxuries of Air-conditioning, instant lighting, lift-systems, building escalators we saw the water supply too getting affected in certain areas raising alarm signals. Hospitals, operation theaters and even traffic light signals were disturbed. While the Public cannot condone any action upsetting their daily routines the power failure signaled a severe warning to all about the need to run it as an essential Public Service. Fuel is a predominant factor playing an important part in the energy supply equation.

In a situation where our Reserve balance has gone below 1.4 Billion US$, we have to take adequate safe guards in maintaining the supply position considering it as a national priority.

Finance Ministers choice of approaching India becomes appropriate due to many reasons particularly to address our fuel issue with Indian support. The two countries already have an ongoing business relationship in the field of Fuel supply in the country. India is very advanced in the Oil Refinery industry and it is interesting to examine their involvement in the Fuel Industry.

Petroleum refining

With a total refining capacity of 69.2 million tonnes per year, the state-owned Indian Oil Corporation was the largest refiner in the country by capacity. Indian Oil’s refineries processed 69.001 MMT of crude oil in 2017–18.

In September 2021 the total installed capacity of the Oil Refinery Industry stood at 246.9 million metric tons and their Crude Oil production was 32.2MMT in addition to their importing volume of 4.54 Million barrels.

India aims to commercialize 50% of its strategic petroleum reserves to raise funds and build additional storage tanks to offset high oil prices.

This gives a clear picture of the Oil Industry of our neighboring country. There is a big potential arising out of the need to increase their Crude Oil storage facilities.

And this provides an ideal opportunity to put into best use of our Gold valley in the form of a dormant Oil Tank Farm located in a unique strategic geographical positioning in Trincomalee.

There is a strong possibility for a highly win-win situation for both countries to gain advantages from a suitable agreement.

Sri Lanka should use all its bargaining skills to enter into an agreement where the price fluctuations of Oil Products is given due consideration, for both countries to share the benefits in a fair manner with due weightage given to our sovereign ownership of the golden property.

At this moment I recall the Rubber /Rice agreement we reached many years ago and the basic concepts and principles underlying that agreement such as the consideration of a discounted price for the rice on account of the exclusive supply arrangement we tied ourselves into. In a similar gesture our Oil tanks could be the pivotal focus for a special price for our domestic consumption requirements of fuel.

3. Offer of a Currency Swap to help Sri Lanka address the current balance of payments issues;

India has given us such support and help several times and with the economic package that is in the center of the negotiations it will not be difficult for the Reserve bank to consider this in our favor.

4. Facilitating Indian Investments in different sectors in Sri Lanka that would contribute to Growth and expand employment. This will build on recent trends in that respect

We have to recognize the technological advancement India has made both in the fields of Industry and Agriculture helping them to a high position of placement in the order of GDP growth rates, occupying the highest place in Asia. Their experience, progressing technical advancement, closeness of our Geographic locations in addition to our traditional and historic cultural relations will be to the mutual advantage of both countries to be taken into seriously in reaching an accord. There are several areas of harnessing the resourcefulness of both countries to share the values in offering unique services in many fields hitherto unexploited.

All these will no doubt pave way for a rational settlement of any minor prickly issues that we may have had between the two countries due to geo-political alienations. Nevertheless we have continued our relationship with India all these years with a History of Sacrifices and commitment each country has extended on many controversial issues. Sri Lanka’s involvement during the period of Mrs. Sirimavo Bandaranaike to intervene in the Indo-China conflict, our accords with India on the Migrant Indian labour and Kachchitive island matter are memorable milestones in this regard.

We look forward to a successful conclusion of the MOU reached following the visit of Minister Basil Rajapaksa and hope for its best outcome to the mutual satisfaction of both countries.

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Latest comments

  • 4
    0

    Part I
    Dear Rusiripala
    Your article as usual is well researched
    and expertly expressed. Formalities.over
    Let us look at the direction and state.of the nation.Its bismal to be polite , bloody bad putting it crudely
    The economic growth in most cases zero or negative since the start of the pendemic. In tourism the took a big hit so also on the Apperal garments Industrial and agricultural output too recorded an all time low.
    One of the biggest foreign exchange earners was the Expatriates remittance to Lanka mainly from the Middle Eastern Arab nations.. It amounts to between 6 to 8
    US dollars .This is big deal considering the overall size our economy.
    To be continued in part 2
    Ratnam Nadarajah

    • 1
      0

      I have said this many times, but I will repeat it again. This country has never been independent of the various Indian kingdoms and empires of the past. Most “Sinhala” kings were of Indian descent. Our predominant religions are Indian. Our dress, culture, are Indian. Till 1947, there was free movement between the countries. Till 1984, there was visa-free access. Even the Karawa and Salagama are Indian migrants.
      Given all the foregoing, it baffles me why our ruling classes insist on a separate identity which never existed. At times like these, it becomes clear where we actually belong. Reality is a great teacher. Let’s not in a few years let rabid politicians and racist monks tell us that India is a foreign country. We are as much Indian as Hong Kong is Chinese.

    • 1
      0

      Correction:
      Should read 6-8 billion US$
      R N

  • 2
    0

    Minister Basil still has sufficient common sense to join with neighbor India rather than another debt trap with China influenced with a threat and personal gift. This region does not understand that free energy is available from the creator expressed through zero point energy but blocked due to rejecting the creator gift. Hence the crazy money craving which grips leaders and which has to be left behind anyway. Solar energy too can be harnessed. Power and energy needs for electric cars and batteries is not from renewable energy sources. Find non kali honest professionals able to find free energy and release to nation.

  • 5
    0

    Mr Rusiripala Tennakoon,

    If the name Basil is changed to Ranil ……. you would’ve written the exact opposite of what you’ve written.

    Is it any wonder the country has gone backward for 73 years?

    Even at this late stage try to sort out your insecurities!

    If you cant ……. for the sake of the country, lock yourself in Angoda …….. and throw away the key ………….

    • 3
      0

      Mr NF,
      .
      Let me call you with prefix Mr from this day on.
      .
      You deserve it. Your comments are so true. This guy Rusi Tennakoon et al was among the few cherry picked panelists in the promotion of so called BOND-SCAM drama by SIRASA under the order of former president PULLIGONA Sirisena.
      .
      Not once several dozens of times, the bugger et al gathered to show that the architect of the BOND scam was RW. However, at the time, Arjuna Mahendran was posted to the SLCB governor nothing was known to anyone as he should be branded as a bank robber. AH had obtained his degrees from Oxford and had worked as a senior banker for several banks in Middle East and Honkong to my information.
      .
      Ajith Cabral and Mahinda Rajapakshe (most corrupted combination) was the architect of the BOND scam – no doubt abou that. If RAJAPAKSHEs hands are clean, they would have brought Arjuna from Singapore to the same manner they did it with their cousin – Udayanga BP Weerathunaga who was then proved to have grabed millions of dollars from that MIG purchase deal. WIth this being the reality if anyone would trust mlechcha Rajapkshes today, they should go to the nearest PSYCHOLOGISTS and have their brains checked.

  • 6
    0

    Rusiripala, for a minute I was taken aback, because before the election when the Yahapalana Govt was in power you were against the Indian investment projects in SL. What made you change your mind, new wisdom?

  • 1
    0

    Why can buddhists not accept hindus and be reconciled so that sinhalese and tamils can live together in harmony regardless of land ownership. In the city of Colombo they live side by side and even marry each other as humans and not be classified according to religion or ethnicity. The church is a place where both groups are accepted as equals and gets persecuted for this godly reason.

  • 0
    0

    Rusiri, just a week ago you warned “to beware of Anti Lanka establishments / IMF/Countries” which may offer Loans. Now you seem to be singing a different tune. Make up your mind , people are starving. Cabrrrral said “he will not get down on his knees (because of arthritis) and beg desperately for loans.” You too were repeating his debt restructuring blah blah. When we approach Geneva sessions there will be more visits by Rajapaksas.

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