16 October, 2021

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Taiwan’s & Sri Lanka’s Power Sectors

By Kumar David

Prof. Kumar David

There is no reason, except Cabinet and Ministerial mismanagement, government meddling and political corruption, why the electricity supply sector is a mess in Mother Lanka but successful in, say Taiwan. But then the same is true of these two economies almost in every way. Lanka’s population is 22 million and Taiwan’s 26 million, our land area of 65 thousand sq. km is quite a bit larger than Taiwan’s 36 thousand and both countries lack significant deposits of oil, gas or mineral resources. Taipei, latitude 25 degrees north of the equator is more temperate than Colombo’s 6 degrees north. The economic indices however are as far apart as paradise is from purgatory; Taiwan’s nominal GDP and GDP per capita are US$ 760 billion and US$ 32,000, respectively, while the corresponding numbers in Mother Lanka before Covid were US$ 88 billion and US$ 3700; though in the first decades after the Second World War we started with a notable handicap in our favour. People wistfully recall Lee Kwan Yue’s lament about similar early disadvantages that Singapore had to start from. Taiwan in those days after the civil-war in China was a bigger laggard.

 

These differences show up sharply in the electricity supply sector. The size of the sector in Taiwan with the corresponding number for Sri Lanka in parenthesis is; installed capacity 49 GW (4.1 GW) and electricity generated 270 TWh (20 TWh). A TWh (terra watt hour) is a thousand-million kWh and a kWh in common parlance is a unit. Taipower, Taiwan’s CEB owns the world’s largest gas-turbine power-station, the 4.4 GW Tatan and the world’s fourth largest coal-fired station, the 5.5 GW monster Taichung, nine times bigger than today’s Norochcholi. And, Taipower manages without provoking too big an uprising by irate environmentalists and without blanketing the nearby countryside with fly-ash to an unbearable extent. Taiwan’s breakdown of generation by energy source is 35% coal, 32% gas, 10% nuclear, 9% renewables and 8% oil. Allow me to remind you that in Sri Lanka the averages – hydro varies with rainfall and modifies all other annual percentages – is about 40% coal and 25% major hydro, other renewables including minor-hydro, wind, solar and biomass add to about 5%. The rest is oil-fired (private and CEB). Renewables will increase in the coming years in absolute terms but not much as a percentage because demand too will rise as the country’s economy (hopefully) improves.

Taiwan as one of four Asian Tigers is credited with an astounding economic trajectory; but the other three are easier to understand. South Korea is the biggest and Korea has the longest modern history, it also sports a complex and chequered relationship with Japan. Singapore’s upswing is half a century and going; it is a meritocracy of singular distinction, a place where racial bigotry is officially despised and there is English. Hong Kong from the post-revolution Shanghai money pots and after that in Deng’s days it was a sophisticated hub of the world’s soon to be largest economy. But Taiwan is different! It was colonised and raped by Japan from 1895 to 1945, and in 1949, kicked out of China, Chiang Kai Chek established himself as dictator till he died in 1975. Forty two years of Martial Law on the island ended only in July 1987 and thereafter the territory gradually emerged as a thriving if cantankerous democracy.

In the next three to four decades Taiwan evolved into a thriving economic powerhouse. What is the answer to this enigma? Let me try to explain. First, Taiwan was in the frontline of America’s anti-China policy and a magnet for American investment and finance. Second, a treasure-trove of Chinese talent fled to the island with Chiang in the late 1940s and carried with it a mother-load of historical and artistic treasure and money. Thirdly, Deng’s opening up of China benefitted Taiwan as much as it did Hong Kong.

However there is another reason which is no less important for us in Sri Lankan. Religion, language and ethnicity count for bugger-all and Taiwan has no “national conflict” to speak of; it is pretty cohesive. Mandarin is the unofficial national language and after the removal of Japanese was made compulsory in schools. It is a more natural lingua franca in Taiwan than English or Hindi are in India. True, though related, in everyday life nearly 70% speak Hoklo (Hokkien) and 20% use Hakka; aboriginals have their own languages. The point however is that the government recognises and fosters many languages and dialects. A second huge advantage that Taiwan has over Sri Lanka is that religion has no clout in public life and plays no official role. No Mahanayakes or Ganasaras rally their forces, no Cardinals gather their flock and there is hardly a ‘madarasa’ school in sight. Thankfully, 20% of Taiwan’s population is officially atheist. Among the majority about 35% each are Far Eastern Buddhists and Taoists and 4% Christians. Nearly 10% belong to a rainbow of faiths though unfortunately Animists (a better lot than the religious) have died out even among the remoter indigenous peoples. The lesson to me seems clear; though admittedly language, race, ethnicity and religion aid social cohesion, communication and culture, none can dominate the show and boss others in political-space. Now you fill in the blanks.

Let me get back to the electricity sector which I chose because it is topical in Lanka and representative of the point at which I am hammering away. There are reasons some different and some similar why renewable sourced electricity is 9% in Taiwan and 25-30% in Sri Lanka. Taiwan is simply not blessed with big hydro power in the way we are. However, being a small island with an even higher population density than Lanka it simply cannot find the tens of thousands of acres of land needed to generate gigawatts of power and terra-watt hours of electricity using solar panels. Being intelligent the Taiwanese are not living in 70% cloud-cuckoo land.

A crucial matter on which learning from East Asia is vital for Sri Lanka is how to buy LNG on contract and in global spot-markets. Whatever happens to the New Fortress Energy game (I hope a competitive tender succeeds instead) we can be certain that LNG is the way to go. The hard part is that gas and LNG prices have been wildly volatile in 2021 thanks to supply chain disruptions and the unexpected post-Covid pick up of the global economy. And the future’s not ours to see. Therefore, Sri Lanka meaning CEB and CPC need to build LNG buying departments and teams and start training right now. East Asia is the place to send our people for training.

Let me give you a ball-park idea of scale. When the two stations (total 660 MW) now under consideration for LNG fuelling in the Negombo area are in full flow they will need about 35 million-million Btu of LNG a year. Basil’s secretive contract with New Frontier Energy makes mention of the following two pricing options for the Take-or-Pay deal he is pushing: Henry-Hub+115%+$5 per million Btu or Japan-Korea Marker+$1.15 per million Btu. My column last week (3 Oct) carried graphs of Henry Hub and JK-Marker prices in recent months. No one can be sure where they will end up in about two years but these two composites computed on Jan 2021 prices work out at about $12 and $25 per million Btu, respectively. (The big difference may be due to liquefaction and transport costs but the variation underlines a point; we need purchasing people who are on the ball. Otherwise the country will be screwed).

Now as I said these are ball-park numbers to indicate to readers the magnitudes involved. Let me use $15 per million Btu for LNG for my purposes next. The LNG bill for the two aforementioned power stations will be about $525 million per annum – dear God! The CEB’s long term expansion plan to 2037 speaks of a gas-fired generating capacity of about 3000 MW. If all this happens and if prices say more or less the same as my assumption, the outlay on LNG fuel will be in the region of $2 billion to $2.5 billion per year. These numbers will be out of kilter within a decade but one thing is for sure, LNG is the way of the foreseeable future for electricity generation and it brings me back to what I am trying to say: Start inducting a group of blokes with expertise in gas purchasing and LNG spot markets. My two cents worth is that East Asia is an important location for this training. After core teams are built the skills will become self-perpetuating, but get down to training buyers now whatever happens to Basil’s shenanigans.

There is one other matter we need to bear in mind going forward. China’s President Xi announced at the UN a few weeks ago that his country will not build anymore coal-fired plants abroad. Sri Lanka’s only coal plant and the additional unit now being installed are Chinese made and China helped in the financing. Now that road is closed. However, the CEB’s 2020-2039 expansion plan envisages the addition of 1800 MW of coal-fired capacity distributed over five power plants in this period. Pretty surely some projects will go out of the window but the 600 MW plant at Foul Point said to be for 2026 will be re-timed but not easy to replace. Europe and America are not in the power plant construction game but are turbine, generator, transformer and control software providers. This leaves us with India, Japan and South Korea as potential sources for finance and equipment and construction agents as well. Taiwanese plant contractors with equipment sourced globally may also be an option. Is it too cheeky to expect Beijing to finance projects while the province of Taiwan builds them? Ah well, hope springs eternal in the human breast and paupers need to find ever more innovative ways to beg.

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Latest comments

  • 3
    2

    Impressive stats. Anti-corruption laws work. A former President is still in prison.

    But, after the Beijing Winter Olympics next year, China will invade. Will be worse than in Hong Kong.

    • 1
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      we only hear that our men returned to power by end of 2019 are highly corrupted. That was no doubt about going by that “Daizy Grand Ma s – a bag of gems etc” and the mountains of cases against their numersou high crimes incl. murder, money laundering and various others. However, crazy people dominated srilanka voted for them again. Yet today, there are masses would not utter a single word against medamulan CRIMINALs.

      Looking back the manner SOUTH KOREANS did it….. I think… no justice would ever be served to our nation… in any foreseeble times.
      .
      ALL SHAMELESS MEN FLOCKED UNDER – SLPP- TODAY HAVE NO RIGHT TO WEAR THEIR TROUCERS – IF THEIR HEART FEELINGS WOULD RECOGNIZE THE GRAVITY OF FRAUDS; THEY EACH COMMITTED PRIOR TO 2015.


      South Korea’s former President Park Geun-hye has been sentenced to 24 years in jail after she was found guilty of abuse of power and coercion.

      What was she convicted of?
      Park was found guilty of 16 out of 18 charges, most of which related to bribery and coercion.

      The court ruled that she had colluded with her close friend, Choi Soon-sil, to pressure conglomerates such as electronics giant Samsung and retail chain Lotte to give millions of dollars to foundations run by Choi.
      .

  • 3
    1

    The #1 reason for all these problems is the CEB. just like the CPC. They are dens of corruption and inefficiency. Unions and garbage. They should privatize all of them and only have a power and petroleum regulatory body or bodies.

    But good luck trying to doing that.

  • 4
    1

    An interesting comparison between 2 countries.
    *
    However – you’ve missed the most critical difference of all.
    *
    Average IQ Sri Lanka 79
    *
    Average IQ Taiwan 104 (7th Highest in the World)
    *
    This explains everything – it’s not complicated at all!
    *
    The sad truth is that an average IQ of 79 is too low to allow a functioning society to be created.

    • 1
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      What really so is your IQ 11 ?

      • 2
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        a14455 / October 11, 2021

        What else can a man of your nature drop down from your both orifices ?

        You are not a teenager to behave this way. That should be clear to you. at least today.
        :
        Your faith kept on RAJAPAKSHES and their thieves are going down like a glass wall collapses today… nevertheless you the kind of idiots to behave this way ? can only be explained – through a pathological analysis. Get well soon !

    • 3
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      Dear UK Citizen,
      .
      That’s the hackneyed explanation. I’ve already said something different in the comment I made an hour earlier, and has just come on, below.
      .
      I was a teacher all my life. IQ tests have a long way to go before they get over “culture limitations”. However, this dangerous speculation is probably correct. With all you guys, who’ve been academically successful here, migrating to countries that are culturally white, we may be left with the poorest genes. “Dangerous” because, carried to Nazi thinking, it gives results justifying “superiority”.
      .
      However, something more accidental is true: for historical reasons, 85% of Lankans (of all ethnicities) are uncomfortable using English. Their fear of “the kaduwa” is very real. I don’t have that problem, but I can suggest no solution.
      .
      One thing I must say: to get them on to our side we must imply nothing that humiliates them.

      • 0
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        @ Sinhala_Man

        There is a colour coded map of the World showing average IQ.

        There is a definite correlation between IQ and the conditions that exist in certain countries – the map will make that obvious.

        There are studies that link criminal behavior to low IQ.

        My understanding is that IQ tests are designed to eliminate ‘culture limitations’ – but this is not my field of expertise.

        I don’t know what my personal IQ is – but I’ve been raised to treat everyone the way I’d like to be treated and to judge people by the content of their character.

    • 4
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      Hi amarasiri.Now you are UK citizen.Why?

      ps.how do we know how the IQ is calculated?kind of dodgy don’t you think.

      A better reason for the disparity of the countries could be the difference in their competitiveness.Taiwan is ranked 12the while we are ranked 84th.When you go into the 8 pillars and within the pillars the outcomes you can easily find out the reasons we are so sadly lacking in competitiveness.Here you with your superior IQ can try it

      http://reports.weforum.org/global-competitiveness-report-2019/competitiveness-rankings/#series=GCI4

      go to the top right hand corner and click on global competitiveness index

      ps it is not the poor IQ of the people but the poor IQ of the peoples representatives.we are electing modayas to represent us enamoured with their big mouths and big wallets and big ancestries.Of the 225 in the national parliament about 98 are without GCE ord levels simple passes.many peons and drivers and bus conductors are having GCE ord levels but can’t find better jobs.meritocracy is the answer to our woes.

    • 2
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      UKC,
      Actually there is a more significant difference. All the Asian Tigers have a Confucian heritage if not a Chinese majority. This philosophy doesn’t encourage lazily sitting around waiting for the government to feed you.There are many jobs which Sri Lankans won’t do in SL if they have any choice. But strangely, they accept the very same jobs in other countries.

      • 0
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        OC
        China, for its Confucian heritage and Chinese majority, did not do well for a few centuries and down and out for a whole century or more.
        There is a work ethic common to much of East Asia, and pragmatism. Given the correct combination of circumstances these things can work miracles.
        China was once way ahead of the rest of the world with its inventions and innovations, but had little to show for scientific theory. (India was better.)
        *
        The reluctance to do certain jobs is a community-induced caste-based stigma about them. When there is no community to bear on one, the person thinks in terms of survival.

    • 0
      0

      For all the fuss about IQ, what does it really measure?

    • 1
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      UK Citizen,

      We have to agree with you.

      Last week I heard minister of Agriculature arguing to a question raised by a female MP, even if the facts were clearly contracdictory….. I did not see, any kind of corrections, or suggestions were made to stand against him and the like idiots. If that would have been Germany, minister wouild have no choice but to resign. But in our Kunkanda-Garbage Dumps/country made by vicious politicians, repeat their mistakes very often than even in the parliament of CONGO republic. The kind of lethargy and total ignorance were introduced by Mahinda Rajapkakshe and his men, no doubt about that. Melchcha men have mlechcha political cultures.

      Alone about fertilizer issue – even TV presenters dont seem to have noticed the difference between “manure” and “fertilizer”. I happened to watch last night TV news, i guess it should be on Derana TV or Sirasa, they were all mixing it up to the very same manner, majority of lawmakers in current parliament do it with “millions” intead of ” billions”. So called Maharaja, does not know what he has been telling before a gathering. Main thing is to drop down loads of prevarications, no matter the contents would not have any accuracy.

      • 0
        0

        LM,
        You should listen to the debates on the erasure of data at the NMRA. Totally clueless idiots talking about IT, on both sides.

  • 2
    0

    Thank you Dr. KD.
    :
    “Europe and America are not in the power plant construction game but are turbine, generator, transformer and control software providers. This leaves us with India, Japan and South Korea as potential sources for finance and equipment and construction agents as well. Taiwanese plant contractors with equipment sourced globally may also be an option. Is it too cheeky to expect Beijing to finance projects while the province of Taiwan builds them? “
    .
    However, Denmark and other european countries involve several MOUs with India improving their close ties with these days.
    https://www.youtube.com/watch?v=KaHi9LOu0XE

  • 3
    0

    Whatever options for SL to generate electricity to meet future needs, particularly, in consideration of additional mega requirement necessary for the wondaful port city, it all boils down to what is in it for the political rulers & their cronies. By 2030, there will be no more petrol & diesel vehicles in Europe, not even hybrids, but with a ban on imports (for the lesser mortals), SL will continue to pollute the air with ageing internal combustion engines, therefore, future power requirements may not be a priority concern at present with other pressing issues needing urgent attention. Maybe the thinking is that, even if the current coal fired power plants become obsolete, the natural resources SL is blessed with, will be enough to power the Colombo metropolis while the rest of the country is in the dark.

    Perhaps Prof. David should compare SL with Lebanon, a country we have very much in common. Lebanon was also devastated with a civil war, & since, has been ruled by corrupt regimes, where the politicians, including the Governor of the Lebanese Central Bank, have been syphoning billions out. The country is bankrupt & the people are facing food shortages & exponential inflation. Now the country is in a black out with power plants unable to operate without fuel, which the country has no money to purchase with. Is this the writing on the wall for SL?

    • 0
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      “Perhaps Prof. David should compare SL with Lebanon”
      Raj, Lebanon is the victim of excessive foreign meddling. It was a child of foreign meddling in fact. It would have been part of Syria if not for French manipulation.

      • 0
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        SJ
        Certainly, Lebanon, as well as, many other bankrupt countries, such as, Afghanistan, have been ‘victims of foreign meddling’ as you put it but it is the corrupt local politicians who are responsible for the state of affairs, literally milking the country dry but SL is in the same boat without such ‘foreign meddling’.

        My concern is, the trend in SL too, is similar with blatant corruption. Much of Lebanon’s wealth has been syphoned out with the connivance of the governor of its central bank. The result is the country has no funds to operate its existing power plants & now the entire country is in the dark. Considering the fact that the current governor of the SL central bank has a previous bad track record, but whether it was sheer incompetence or corruption, such a political crony should not be in charge of a crucial institution that controls the economy.

        We have elected uneducated yobs & thugs, some even with criminal records, but more than the level of intelligence, I would say its lack of common sense that makes some of us so gullible in promoting & believing ‘fake’ news, or living in denial due to some misguided sense of loyalty in the pretext of patriotism.

  • 2
    1

    Kumar, your choice of Taiwan as foil has been inspired.
    .
    It does much more than explaining the power needs of Lanka. Your identification of the three nationalisms and the four religions that the vast majority of our people imagine are necessary for human existence, is spot on.
    .
    Most human societies believe that these incidentals are necessary.
    .
    How do we demonstrate to the majority of voters that this is not the case? Kumar (now well past retirement age) is in Los Angeles. We who are here in Lanka can do much more. Go out, and tell them the “truth”, which they don’t want to hear.

  • 2
    1

    SL is not Taiwan.

    Taiwan is blessed with single-ethnicity whereas SL is cursed with diversity.

    • 1
      1

      Gatam,
      Taiwan – Republic of China (RoC) is Multi Ethnic and Religious to my understanding with long occupation by Japan until 1945 and other native tribes, the main group being Mandarins, coming from the mainland o the island nation with Chiang Kai Sheik.
      they know very well how to get along for a common cause or common enemy – Peoples Republic of China (PRC)

      • 0
        0

        Mahila
        Thankfully religion is no issue in Taiwan
        Despite ripples caused by the advent of Christianity, East Asia has shown greater religious tolerance than South Asia or the West.
        The notion of China as ‘enemy’ is artificial. Taiwan is divided between those who want to declare ‘independence’ and those who do not– for pragmatc reasons
        *
        The following comment in the ‘Diplomat’ is fair comment:
        “Digging deeper, support for immediate unification with the mainland continues to find no market in Taiwan – it stands at roughly 1 percent – and over 60 percent oppose Beijing’s “one country, two systems” unification scheme. Support for immediate independence also remains in single digits (6 percent). Rather, a majority favors the status quo.
        [https://thediplomat.com/2020/12/more-and-more-taiwanese-favor-independence-and-think-the-us-would-help-fight-for-it/]

    • 0
      0

      GATAM
      little knowledge is more dangerous than no knowledge.You seem to have little knowledge of taiwan and before you put your beak in do some research on it.
      taiwan has an aboroginal indigenoues population of over 2%.so there is some similarity between sri lanka and taiwan in this aspect because we also have the veddhas here who are the aborogines of sri lanka.
      taiwan also has 4% austronesian people who speak the austronesian language.Can’t see anyone of that size in sri lanka.
      people who have not lived in taiwan at all(i have for a total 1.6 years as i have spent my life living for short periods in more than 75 countries as i love other cultures) think that the majority of the han chinese are descended from chiang kai sheks people who fled from mao.They are not.The majority are immigrants from china who came before the 20th century.They are the hoklo ethnic group and speak the hokkien language and are about 70% of the population now and i think we can compare them to the the sinhalese who comprise 75% of the population here but unlike the sinhalese they don’t claim to be the owners of the country and the others as guests.

      contd

      • 0
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        contd
        gatam

        then there is the Hakka who are 15% of the population.They also came with the hoklo before the 20 th century but like the tamils settled seperately in the hills but gradually over time just like the tamils moving to colombo,started to move and live with the hoglos.Just like the tamils they were a persecuted race of people,but it was not in taiwan,but in china it happenned.The chinese massacrd hundreds of thousands of them in china.They were originally from the northern parts of china,just like the tamils are from the southern tip of india,but had gradually moved to other parts of china and that was when the trouble started for them.

        so just like the tamils and sinhalese are 2 branches of the same tree, the hoglos and hakkas are 2 branches of the han chinese tree and constitute 70plus 15% which is 85 % han chinese while we have 75 plus 15 equal to 90% indo sri lankans.We have to call ourselves indo sri lankans because we all except the veddhas can trace much of our ancestry to india.By the way the hakkas have their own language just like the tamils having tamil language and hoglos having hokkien language.

        • 0
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          contd

          gatam

          In addition to this hanchinese of 85% the chiang kai chek’s nationalist army people started to arrive after 1945 fleeing the mao peoples republican army,They came from all parts of china unlike the hoglos and hakkas who originated from specific areas of china,and were known as mainlander han chinese speaking mandarin and constitute 10% of the population.So now the han chinese go upto 95 % of the population but you can see there are 3 branches of the same tree with 3 ethnic groups with their own languages and customs and historical enmities in mainland china but now living peacefully in a prosperous country called taiwn and proud to be taiwanese.How did this happen.Taiwan was under martial rule by chiang kai chek and anyone trying to riot against anyone else would have been swiftly executed.whereas in sri lanka did they execute or even imprison anyone who rioted in 1957,1977.1981,1983 or even in the aluthgama and kandy riots?Therein is the root cause of the problem which is governance,not diversity as you wrongly proclaim.That is why i say misleading others and going in the wrong direction is worse than not opening your mouth at all.Little knowledge is more dangerous than no knowlege at all.You are thinking of han chines as one people.Are indians one people?.

  • 0
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    old codger

    “But strangely, they accept the very same jobs in other countries.”

    that is because when they convert their pay to sri lankan rupees they are able to save something maybe to renovate or build a house as an example or send some money for their poor families.In sri lanka they will not save anything.so it is not the job but the pay that makes them do the jobs.If you pay a garbage collector double the salary that a peon gets then the peon might start considering collecting garbage,and if you triple it then he will definitely take it up.

    • 0
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      Shankar,
      Some garbage collectors nowadays make a lot more than clerks, but the clerks won’t switch jobs.

      • 0
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        old codger

        it might be the stigma.When they go abroad and collect garbage no one will know.

        I am talking in a general way not particularly garbage.Wages are ideally determined by market forces of demand and supply.If there is a shortage of people to do a job there is only 2 alternatives.1.raise the wages2.bring workers from outside.Most developed countries adopt the latter,but if there are unemployed i would prefer the former.Every person has his price.If you raise it high enough they will do it.Pass the extra cost onto the consumers without having unemployed youth.Idle mind is the devils workshop as we saw with the JVP,LTTE insurrections.

  • 1
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    Gatam
    Don’t we know and doesn’t the world understand that ever since independence, the diversity gap – ethnicity wise – has been on the increase? After the parting of the ways, the smaller part will overshadow the larger one like Ireland eclipsing Great Britain as of now.

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