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Serving Sri Lanka

This web log is a news and views blog. The primary aim is to provide an avenue for the expression and collection of ideas on sustainable, fair, and just, grassroot level development. Some of the topics that the blog will specifically address are: poverty reduction, rural development, educational issues, social empowerment, post-Tsunami relief and reconstruction, livelihood development, environmental conservation and bio-diversity. 

Thursday, July 27, 2006

Sugar, ethanol and economy

The Island: 27/07/2006" by Dr. C.S. Weeraratna, Chairman, Sugarcane Research Institute

Sugar is one of the main food items consumed in Sri Lanka. The per capita consumption of sugar in Sri Lanka is around 30 kg which is high when compared to average sugar consumption in the world. About two decades ago, sugarcane was cultivated in about 25, 000 hectares. There were 3,800 ha in Kantale, 5,600 ha in Hingurana, 4,500 ha in Pelawatta, 4,600 ha in Sevanagala and 5,700 ha in Moneragala. The total production of sugar in Sri Lanka at that time was around 114,000 t annually representing around 20 % of the local requirement. Kantale and Hingurana sugarcane plantations were closed due to various reasons, and at present only Pelwatta and Sevanagala sugar factories function. The total extent under sugarcane at present is around 15, 000 hectares. About 4,000 hectares are in Sevanagala, 9,000 hectares in Pelwatta., and 2,000 ha in other districts mainly Amapara, and Badulla Distrcits, cultivated by smallholders for production of jaggery, sugar syrup etc.

The total annual requirement of sugar in the country is around 500,000 t but only about 60,000 t are produced locally. The balance has to be imported. During the last few months sugar prices in the world market have increased substantially from around 300 US$/t to 450 US$/t . This is mainly because the world sugar supply has decreased attributable to the greater emphasis on using sugarcane to manufacture alcohol than sugar. With increase in demand for alcohol as a fuel additive, it is likely that the price of sugar will continue to increase from the present price which is around Rs. 60 /kg in the local retail market. The foreign exchange involved in importing our sugar needs is around Rs 12 billion. A number of by-products from sugarcane are also imported involving around Rs. 5 billion annually. Hence, developing the local sugar sector, will save foreign exchange up to around Rs 17 billion or even more. It will also increase employment opportunities in the country leading to socio-economic development. Large extents of land, suitable for sugarcane cultivation are found in Badulla, Moneragala, Galle, Kurunegala and Hambanthota Districts. Sugarcane Research Institute has initiated activities to promote sugarcane cultivation under coconut in Kurunegala District


One of the important by-product of the sugarcane industry is ethyl alcohol (ethanol) which is made from molasses. This is the portion of the sugarcane juice which contains sugars other than sucrose (what is normally consumed) and a number of other organic compounds. One of the compounds formed during fermentation of molasses is ethanol which is becoming extremely important as a fuel additive, in view of high prices of fossil fuel.

Many countries are either producing and using ethanol in large quantities or are providing incentives to expand ethanol production and use. Prompted by the increase in oil prices in the 1970s, Brazil introduced a program to produce ethanol for use in automobiles to reduce oil imports. Brazilian ethanol is made mainly from sugar cane. Pure ethanol (100% ethanol) is used in approximately 40 percent of the cars in Brazil. The remaining vehicles use gasohol blends of 24 percent ethanol with 76 percent gasoline. Brazil consumes nearly 4 billion gallons of ethanol annually. In addition to consumption, Brazil also exports ethanol to other countries. Some Canadian provinces promote ethanol use as a fuel by offering subsidies. India is initiating the use of ethanol as an automotive fuel. In France, ethanol is produced from grapes that are of insufficient quality for wine production. Sweden has used ethanol as a fuel substitute and as a result, Sweden’s crude oil consumption has been cut by almost half since 1980. Ethanol-blended gasoline is being considered as a viable alternative to further lower emission levels. The US now uses more than 15 billion gallons of cleaner, ethanol-blended petrol a year, totalling 12% of fuel sales in the US. Most of it is a 10% blend, but 85% and even 95% blends are now being tested. Ethanol blends are also increasingly used in South Africa and a number of other countries. Use of ethanol tends to reduce environment pollution caused by oxygenates such as tetraethyl lead, MTBE and ETBE used in petrol.

Use of Ethanol in Sri Lanka:

A high expenditure on petroleum will have many undesirable effects on the country’s economy. Hence, it is extremely important that we start producing and using alternatives to petroleum. As indicated earlier, ethanol is one of the alternatives used in many countries as a fuel. In Sri Lanka, ethanol is made mainly by fermenting molasses which is a by-product of sugar industry. At present, around 10 million litres of ethanol are produced annually in the country as a by product of sugar industry. This amount would increase considerably, to as much as 30 million litres if Hingurana and Kantale sugarcane factories operate at full capacity. Ethanol can also be made by fermenting and then distilling starch/sugar obtained from crops such as maize, sorghum, potatoes, cornstalks, fruit and vegetable waste. These crops are cultivated in Sri Lanka.

The ethanol obtained by fermenting molasses contains 3-4% water. If it is converted to anhydrous alcohol, it could be used to blend petrol,, as done in many other countries, thus reducing the use of imported fuel resulting in saving of foreign exchange. Studies conducted at NERD centre, Sugarcane Research Institute and at Open University show that petrol engines can run on 95% ethanol presently produced in the country. However, the long term effect of using hydrous alcohol is not known.

The financial viability of using alcohol as an alternative would depend on the taxes, duties etc. on petrol and alcohol, which influence the market prices. The landed cost of petrol and cost of production of alcohol are almost the same. However, the socio-economic benefits of using locally produced alcohol as opposed to use of imported petrol need to be realised when their competitive advantages are considered. .

A sub-committee of the Plantation Cluster of the National Council of Economic Development (NCED) has initiated studies, in collaboration with the Dept. of Mechanical Engineering of Moratuwa University and Ceylon Petroleum Corporation to examine the different aspects of using hydrous alcohol in three wheelers. The Minister of Science and Technology also has appointed a committee to examine the use of alcohol and other fuel additives in vehicles. If these endeavours produce positive results, it would be possible to use locally produced alcohol, at least in three wheelers and motor bicycles, resulting in a considerable saving of foreign exchange. At present there are about 250,000 three wheelers and 650,000 motor cycles. Hence, the total amount of petrol used by three-wheelers and motor cycles would be substantial.

Fuel and Economy: We spend a large sum of money in importing petroleum to Sri Lanka. With the rapid increase in fuel prices since mid last year it is likely that the 2006 annual fuel bill will be around Rs 200 billion. This constitutes almost about 25% of the value of our imports and is about 30% of our total exports which is Rs. 600 billion.A high expenditure on petroleum will widen our annual trade deficit, which is around Rs. 200 billion.. We are now importing crude oil on credit from India and Malaysia. We need to be concerned of the very high level of indebtedness, which stands at around Rs. 1200 billion, and the total debt service payments, which is around Rs. 350 billion per year, more than the total government revenue.

Increasing costs on petroleum will have many undesirable effects on the country’s economy. In fact, increasing diesel prices has resulted in a rise in almost everything including transport costs, bus and train fares, factory costs etc. leading to high rate of inflation. Diesel prices are also closely linked to cost of electricity as about 65% of electricity generated comes from thermal power stations, which run on diesel. On the top of it, according to newspaper reports, thermal power plants are under construction which will increase further the consumption of diesel causing an increase in costs and also pollution of the environment. Already, the sulphur dioxide level. in the atmosphere is high resulting in respiratory diseases.

Increasing diesel prices will have a corresponding effect on the cost of production of all our exports including tea, rubber, coconut and garments etc, resulting in a reduction in our competitiveness of our exports in the world market. This may even cause some industries to close down making employment of some people redundant. Most of the farmers, who constitute nearly 60% of the population, do not get any regular income. If their buying power is reduced, due to high prices of food and other consumer items, the demand for industrial products including those from the SME sector will decrease causing further retardation of the ailing economy of the country.


In view of the high costs involved in importing crude oil, it is extremely important that we start producing and using alternatives to petroleum. .Ethanol is an alternative which can be used as an alternative. It is already produced in Sri lanka, though not in sufficient amounts. However, if there is a concerted effort by the government and other related organisations availability of ethanol could be increased within a relatively short period.

Cultivation of sugarcane will not only increase local sugar production but also ethanol. availability. In fact, cultivation of 100 ha of sugarcane would increase local sugar production by around 800 t , ethanol availability by 100,000 litres , in addition to an increase in the production of other by-products and employment opportunities. One of the by-products is bagasse which could be used to generate electricity. Thus, promoting sugarcane cultivation in the country will result in many socio-economic benefits.

In addition to alcohol, bio gas is an alternative available within the country. Urban wastes can be used to produce bio-gas which can replace LP gas used for cooking. Dendro-power using fast growing nitrogen fixing tress such as glyricidia and leuceana, and solar-power are also potential alternatives. Various vegetable oils can be used to make bio-diesel. Thus, there are many alternatives to petroleum. All these alternatives need to be included in medium-long term plans in the energy sector.

Reducing fuel consumption

While developing petroleum alternatives, it is essential that action be also taken to reduce fuel/power consumption in the country. Otherwise, as indicated elsewhere, the trade deficit will continue to rise. In many other countries such as China, Thailand, Philippines etc. action has already been taken to reduce fuel/ power consumption and cut down wastes. If we reduce our energy consumption by 10%, it will result in a saving of at least Rs. 20 billion.

It is high time that early action is taken to examine the different ways of solving the problem of energy crisis, and implementing appropriate actions, rather than simply increasing local fuel prices, as suggested by some theoretical economists, which would result in many problems to the people and to the government.

Traffic Congestion: A concerted effort need to be taken to reduce wastage of fuel by reducing traffic congestion. It has been reported that traffic jams cause an appreciable waste of fuel amounting to around Rs. 2 billion per year.

Rainwater Harvesting: Rainwater harvesting need to be promoted in large public buildings such as hospitals to reduce the use of treated water. A considerable amount of power is used to pump water for distribution. The amount of power used to pump water, an appreciable portion of which is used to wash vehicles, flush toilets etc. is substantial. Roof rainwater harvesting to obtain water for such purposes would reduce power used by National Water Supplies and Drainage Board in pumping water

Electricity Consumption: About 65% of electric power is thermal, and diesel is used as the source. Consumption of electricity in offices can be reduced to a considerable extent if the Heads of such Institutions take immediate action to cut down excessive/unnecessary use of electricity. Reducing consumption of electric power in offices and other public places would considerably reduce our expenditure on oil.

Stabilization of diesel prices

In view of all the undesirable repercussions a high diesel price would cause, it is important at the present juncture to stabilise the local prices of diesel. A portion of the finances necessary for this may be obtained by taxing heavily (such as a diesel tax) those who use diesel vehicles except buses and lorries. At present, even the luxury diesel vehicles get subsidised fuel.

Thus, there are many alternatives to petroleum. It is extremely important that early action is taken to examine the different ways of solving the problem of fuel crisis and implementing appropriate actions.

While developing petroleum alternatives, it is essential that action be also taken to reduce fuel/power consumption in the country...

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Wednesday, July 26, 2006

Industries Chamber urges Mahinda to curb strikes

Daily Mirror: 26/07/2006"

The premier industrial lobby group, the Ceylon National Chamber of Industries (CNCI) yesterday fired a letter to President Mahinda Rajapaksa urging him to take strong and quick action against trade union strikes that destabilizes the country.

“It is with serious concern and utter bewilderment that we watch the daily disruption of economic activity and civic rights of the people of our country by irresponsible and selfish Trade Union Action by Trade unions of important sectors of Government enterprises,” CNCI Chairman Nimal Perera has lamented in his letter to President Rajapaksa.

He recalled that the Colombo Port strike which lasted for 10 days not only cost the country millions of rupees but it had long lasting repercussions to the economy due to serious impediments the exporters and importers including the manufactures have to face would have severe negative effects on the economy.

“The strike action by the workers of Ceylon Petroleum Corporation who are holding the whole country to ransom would compound the adverse effects and the damage sustained to the economy by the Port strike,” the CNCI chief emphasised.

He pointed out that if the published reason for the CPC strike is the appointment of a Chairman made by the President needless to say that the trade unions today could even dictate terms to the Executive President democratically elected by the people. “We believe that godfathers of this mischief making Trade Union leaders are in the Government ranks as well which makes the situation even worse. A strike action after action by Government and Government Corporation employees of key installations in the country could even be a deliberate attempt to destabilize the Government,” the CNCI chief said.

He opined that if the Government submit to CPC workers’ demands there will be more sectors resorting to Trade Union action thereafter crippling the entire economy and totally destabilizing the country.

“We as responsible members of the private sector urge you to deal with these CPC strikers firmly and in the event that they continue their strike action to evict them and deploy the armed forces to bring normalcy to Ceylon Petroleum Corporation,” the CNCI Chairman Perera had said in his letter to President Rajapaksa.

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Tuesday, July 25, 2006

Millennium Development Goals in Sri Lanka: A statistical review

Daily News: 25/07/2006" Amara Satharasinghe, Deputy Director, Department of Census and Statistics


In the year 2000, the leaders of the world decided to launch a concerted attack on poverty and the problems of illiteracy, hunger, and discrimination against women, unsafe drinking water and a degraded environment.

The United Nations at the dawn of the new Millennium, leaders from virtually all countries agreed to a set of eight ambitious Goals called Millennium Development Goals (MDG). Developing countries, have been taking the lead in this campaign, particularly regarding the first seven Goals concerning direct improvements in human well-being.

The eighth Goal includes steps that developed countries need to take for supporting the campaigns of developing countries to win the struggle of eradicating poverty.

Sri Lanka is one of the 189 member states that adopted the Millennium Declaration and in doing so committed itself to the achievement of the Millennium Development Goals (MDGs).

This necessitates regular review reports and a user-friendly database to store, retrieve and present trends and patterns of MDG indicators for tracking progress in achieving the goals. It is to serve this purpose the department of Census and Statistics recently released a publication and a database system on the MDGs.

The "Millennium Development Goals in Sri Lanka - 2006" is a statistical review of a set of selected indicators for monitoring progress towards Millennium Development Goals (MDG).

There are 8 MDGs with 18 targets. For monitoring progress towards these targets, 48 indicators, with some additions, have been recommended. The Department of Census and Statistics has compiled 24 of the MDG indicators on its own.

The trends and patterns of these 24 indicators over the past two decades are reviewed in this publication.

A user-friendly database to monitor the progress in achieving MDGs was also released with this publication. This database has been prepared by using the software DevInfo which is offered by the United Nations for monitoring MDGs.

Data on MDG indicators together with a set of tables, charts and maps presenting the trends and patterns of the indicators is included in this database.

Data available in this database can be retrieved and presented satisfying user needs easily.

The global MDGs are to be achieved over a 25-year period with 1990 as the base year and 2015 as the final year for most of the targets.

Taking the data from surveys and censuses conducted by the Department of Census and Statistics, this report and the database provide data mainly for two years, one year each from the 1990s and 2000s, depending on the availability of data.

The report provides a comparison of the expected achievements based on a linear extrapolation against the targets set for 2015. An initiative is now under way to identify the data gaps and to compile more MDG indicators to improve the monitoring of the Sri Lanka's progress towards MDGs.

The first Goal is poverty eradication. While all MDG goals are inter related, a main determinant of other MDGs is poverty. Poverty permeates all sectors and holds back progress.

There are two targets set for this Goal. Target 1 is to halve, between 1990 and 2015, the proportion of people below the poverty line.

For international comparison, the poverty line is set at 1 US $ a day. However, the national governments also set official poverty lines. The proportion of population whose income is less than the national poverty threshold is known as the poverty headcount ratio and this is the indicator presented here.

As measured by this indicator, as at 2002, about one fifth of the household population in Sri Lanka was living in poverty and given the recent trends the 2015 target of 13% is unlikely to be achieved. Accelerated efforts being made to eradicate poverty, might change this trend.

Halving, between 1990 and 2015, the proportion of people who suffer from hunger is the second target of Goal 1. Prevalence of underweight in children under five years of age is the indicator for monitoring progress.

Underweight has declined from 37.7% in 1993 to 29.4% in 2000. Continuation of this will result in a prevalence of just under 12% by 2015 which is considerably lower than the target 19% and is therefore, well on track to reach this target.

Goal 2 of the Millennium Declaration is to achieve universal primary education. The target set for this goal is to ensure that, by 2015, children everywhere, boys and girls alike will be able to complete a full course of primary schooling. Achieving universal education is also a strategy to reduce poverty and expand the options available to both girls and boys.

Four indicators are used to track progress: net enrolment ratio in primary education, proportion of pupils starting grade 1 who reach grade 5, primary completion rate and literacy rate of 15-24 year olds. Sri Lanka has already made much progress in terms of all these indicators.

Net primary school enrolment ratio for both boys and girls is over 95%, proportion reaching grade 5 has exceeded 95%, and the literacy rate for 15 to 24 year olds is over 95% for both males and females. Sri Lanka is on track to reaching universal primary education well in advance of 2015.

Promoting gender equality and empowering women is the third Millennium Development Goal. The target for this goal is to eliminate gender disparity in primary and secondary education preferably by 2005 and in all levels of education no later than 2015.

Two indicators related to education for monitoring progress of Goal 3 are ratio of girls to boys in primary school, secondary and tertiary education and ratio of literate women to men 15-24 years old.

Access to education and the ability to read and write are the essence of empowerment.

Sri Lanka has already eliminated gender disparity in both primary and junior secondary education, the parity index being nearly 100% in 2002. In senior secondary and tertiary levels share of women is even higher than that of boys. There is no disparity in literacy between men and women the parity being 100.9% in 2001.

Goals 4 and 5 are to reduce child mortality and maternal mortality respectively. The targets are to reduce by two-thirds the under-five mortality rate and by three quarters the maternal mortality ratio. The indicators for child mortality are infant mortality rate, under five mortality rate and measles immunization coverage.

For maternal mortality they are maternal mortality ratio and births attended by skilled health personnel.

Child mortality and maternal mortality in Sri Lanka have recorded reductions to levels that are considerably low and comparable with those obtained in some developed countries. They are the lowest among South Asian countries.

Immunisation coverage has been sustained over 80%. About 96% of births occur in health institutions and are attended by skilled personnel.

The country continues to make progress in reducing child mortality and improving maternal health.

The current trends indicate that Sri Lanka is on track to achieving child and maternal mortality goals.

The sixth goal of the Millennium declaration is combating HIV/AIDS, malaria and other diseases. Two targets are set. One is to have halted by 2015 and begun to reverse the spread of HIV/AIDS. One of the proxy indicators used for this goal and for which data are available is the contraceptive prevalence rate for women 15 - 49 years of age.

By the year 2000, the contraceptive prevalence rate in Sri Lanka had risen to 70% from a level of 66% in 1993.

Ensuring environmental sustainability is the seventh Goal. One target of this goal is to integrate the principles of sustainable development into country policies and programmes and reverse the loss of environmental resources.

While there are several indicators for this target, one for which data are available in Sri Lanka is the proportion of population using solid fuels.

Still a very high percentage (80%) of the population in Sri Lanka use solid fuels. According to the data available for 2001, use of solid fuels is significantly higher in rural (86%) and estate areas (96%) compared to urban areas (35%).

The second Target of this goal is to halve, by 2015, the proportion of people without access to safe drinking water and basic sanitation.

The two indicators for monitoring progress are the population with sustainable access to an improved water source, urban and rural and the proportion of urban and rural population with improved sanitation. The percentage of households in Sri Lanka having access to a source of safe drinking water is considerably high.

According to the Census of Population and Housing, 2001, 82% of the households in Sri Lanka have access to a safe source of drinking water. According to the same source of data, about 66% of the households have access to improved sanitation and further actions need to be taken to improve the situation. There are significant differences between urban and rural areas.

The final goal of the Millennium declaration is developing a global partnership for development. Seven targets are set under this goal with 17 indicators. Data are available for this report for three of them: unemployment rate, personal computers in use per 100 population and Internet users per 100 population.

The unemployment rate has been brought down from 32% in 1996 to 28% in 2002 and has been declining further. According to a study conducted in 2004, there are only 3.8 computers in use for 100 household population. Internet use is also very low and according to the same study only 2.8 % people use Internet per 100 population.

The Millennium Development goals now constitute a central focus of national development. The country is potentially on tract on most of the indicators described here.

Among the key achievements are access to safe drinking water, equitable primary education, literacy, child and maternal health. A significant achievement is that there is no gender disparity in these achievements. However, there remain considerable challenges.

The critical challenge is that 23% of Sri Lanka's population is still living below the national poverty line.

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Monday, July 24, 2006

Picking up the pieces

Local London: By Leigh Adams

WHEN the tsunami struck Asia in December 2004, the Sri Lankan community was among many devastated by the floods.

The plight of the many thousands affected by the disaster moved a Woodford Green student to such an extent that she has now volunteered to spend eight weeks helping to rebuild the community.

Eleanor Lear is part of a group of 15 Durham University student volunteers who are helping with the rehabilitation and reconstruction of the area, as part of the large British Council and Higher Education Funding Council for England-supported Project Sri Lanka.

The 21-year-old, who has just arrived in the south of Sri Lanka, will now take part in a wide range of educational, sporting and cultural activities to give much-needed help to the Sri Lankan people.

Eleanor, who reads history at Durham, said: "I am really happy to have the opportunity to help rebuild the country after the tsunami.

"I have worked with children previously and it was such a rewarding experience that I'm looking forward to have the chance to do so again."

Along with the other students, she will be working in a pre-school at Palana West which has been built and equipped from funds raised by these students and the Durham University Charities Kommittee (DUCK) over the last six months.

They will also help to teach fellow students at the University of Ruhuna at the heart of the tsunami-devastated southern province, and in a school at Moraketiara, which is being funded by Alnwick Council, Rotarians and other North East regional sponsors.

The project aims to provide financial aid for education, physical structures and equipment, emotional and spiritual support, and intellectual and academic support.

Project leader Professor Joy Palmer-Cooper praised the students for the hard work in fundraising and other preparations for their visit.

She said: "It was essential that the students were personally involved and they have been there from the start, at the heart of the project.

"We are making real links and thanks to their efforts, ideas and enthusiasm, we are building something to last."

To find out more about Project Sri Lanka, go to www.dur.ac.uk/project.sriklanka/

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Begin work on South Port or face Colombo becoming a feeder facility

The Island: 24/07/2006"

It is imperative that we should commence developing the Colombo South Port immediately or face the dim prospect of seeing the Colombo reduced to a mere feeder port, said Jayanath Perera, Chairman of the Shippers’ Council on Friday.

Addressing the Annual General Meeting of the Council held at the Trans Asia Hotel, Jayanath who was elected chairman for the second consecutive year said that within the next two years the new generation vessels of 12,000 to 16,000 teu capacity would be in operation and they would not be able to call Colombo due to draft restrictions. "There will be delays and additional costs. Exports will be uncompetitive in the international markets and our imports and exports will have to be transhipped via other hub ports in the region," he said.

The following is the full text of Shippers’ chief’s speech:

"Within the next two years we witness some of the biggest vessels in operation. The new generation of vessels with capacities of 12,000 to 16,000 TEUs are unable to call at Colombo due to draft restrictions. This would be a major problem when these ships are fully operational. If we do not commence development of the South Port Terminal at least now, Colombo becoming a mere feeder port is inevitable.

The repercussions are, there will be no direct services to many main destinations from and to Colombo. All our imports and exports will have to be transshipped via other hub ports in the region. This would result in delays together with additional freight costs. Our exports will be uncompetitive in the international markets and consumables will go up in price. All these factors of course will severely affect the economy.

We have seen many changes in the Shipping Industry in the past twenty to thirty years. Whilst some of these changes have brought benefits to Shippers some regrettably could be considered detrimental. The development of mega carriers has given shippers better opportunities to ship their cargo at reasonable rates. At the same time we have also seen mega mergers and takeovers, which have created a monopolistic environment within the shipping industry. Shifting industries from one geographical location to another also had an impact on shipping patterns. We also observe major investments in the development of Port Terminals creating competition to attract more ships. The immersing economies of China and India have also contributed a significant influence due to the large import, export volumes. We are aware that India with her rapid industrial and economic growth has already commenced development work on their main port terminals. In fact terminals are nearing completion and would certainly attract main lines if we fall behind in the development of our port.

The Port of Colombo, as we all know is in a strategic preferred location. We have merely enjoyed the benefits of this aspect for decades without doing much. The question is can we remain where we are only highlighting the location of our Port.

It is an accepted fact that more than 70% of our shipping volumes represent transshipment cargo from the Indian sub continent. Our low Import and export volumes do not attract shipping lines to call at Colombo. How can we, located as we are, safeguard our hub status?

Within the next two years we witness some of the biggest vessels in operation. The new generation of vessels with capacities of 12000 to 16000 TEUs are unable to call at Colombo due to draft restrictions. This would be a major problem when these ships are fully operational. If we do not commence development of the South Port Terminal at least now, Colombo becoming a mere feeder port is inevitable.

The repercussions are, there will be no direct services to many main destinations from and to Colombo. All our imports & exports will have to be transshipped via other hub ports in the region. This would result in delays together with additional freight costs. Our exports will be uncompetitive in the international markets and consumables will go up in price. All these factors of course will severely affect the economy.

I strongly believe the time has come for all of us to get-together CASA, SLAVO and all directly and indirectly involved in the industry to jointly make representations to the Government to embark on this development project immediately, although we are already late. I consider this to be of the highest priority and need of the hour. Other industry problems may have to wait, as this is urgent.

During the last year our main focus was diverted towards the organizing the Federation of Asean Shippers’ Council & Asian Shippers Council AGMs in Colombo. This event was scheduled to be held in August this year. Unfortunately we lost this prestigious opportunity due to the security situation in the country.

As you are aware there are many other unresolved matters that we have to tackle in the coming year.

Terminal Handling Charges, Pushing for a Regulator for Shipping Industry, Demanding a proper EDI system for Customs clearance, Lobbying for reduction in Port Charges are some of these key issues.

I would like to appeal to all our members to come forward and assist us in whatever manner possible so that we all can enjoy the benefits deriving from our achievements."

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Sunday, July 23, 2006

Alternative technologies that work: The Star of Small Things

Sunday Observer: 23/07/2006" by Professor Kumar David

Alternative technology, all the fashion some decades ago, has gotten a bad name mostly because of unsustainable fancies. Sometimes the proposals were theoretically valid but problems in large scale application, unsound project economics or unrealistic input requirements, vitiated adoption. Occasionally they were plain crackpot proposals with no basis in physics, chemistry or mechanics, peddled by the naive or the knavish. Unfortunately, in the wake of all this, some pretty sound and proven options were discarded like the proverbial baby who exited with the bathwater.

Two useful technologies which merit close attention and adoption are this week's topics, but let me first hasten to give credit where it is due; it was Tharu not yours faithfully who has brought them to fruition. OK, I admit it, in the title I punned on Star to get your attention; 'Tharu' does not twinkle-twinkle in the night sky, it's the diminutive of V. Tharunaratnam, innovator, entrepreneur, engineer and generally jack of many trades and master of quite a few.

Before getting down to water and gas a few words about Tharu who as a young engineer built that footbridge across the Mahaveli in the campus that many of us have fond memories of - I stopped a now distinguished researcher and Peradeniya Professor of Chemistry, then a lovesick youth, jumping off some forty years ago! Tharu left for the UK in 1964 and then spent 30 years in Nigeria working with water, mines, gems and what have you, getting back home in 1997 to have a go at intelligent technology transfer.

Ground-water and Mini-wells
Experts will tell you that globally there is more fresh water in the soil than in all the world's lakes, glaziers and rivers put together (0.4% versus 0.2% of the world's entire water). Even in the most arid climes once rain water seeps a few feet below the surface it is safely trapped for long periods - people in North Africa and the Middle East have known and exploited the resource for centuries. As for rain drenched Sri Lanka, there is enough ground water between Fort and Dehiwala to meet Colombo's needs. One meter of annual rainfall over a 1000 sq km area amounts to one billion cubic meters per annum, renewable, and if just 10% is captured that's enough for a population of one million people (at a very generous 100 litres per person per day) with nearly twice that amount left for industrial and general use.

The trick is in the collection method known as a collector-well or mini-well system. It's just a network of wells, or a single well in the case of a small installation, no deeper than an ordinary well, but with a few radial horizontal holes (little tunnels) at the bottom leading away in different directions from the well. The ground water seeps into these holes and flows into and collects in the well. So it's like an ordinary well except that it collects water from a larger surrounding area. Naturally, a prior geological investigation seeking the best soil conditions and identifying aquifer paths will enhance collection efficiency.

Tharu is well beyond the experimental stage with 30 to 40 successful schemes already in operation, including one at the University of Moratuwa. An ambitious scheme now nearing completion in Amparai links several collector-wells together and the pooled water will be pumped to neighbouring localities.

This method of water supply can be implemented at a fraction of the cost of conventional reservoir based schemes and with much shorter lead time, so why is there only limited interest? The answer seems to be a lack of interest; the national water board would rather go ahead with its mega projects, local governments are not knowledgeable enough and see it as a leap in the dark, and institutions like the University of Moratuwa had to battle a mountain of red-tape for obtaining government approval to go ahead.

Have you heard the quip that the next world war will be fought over water, not oil? Secret strategic studies have been conducted in centres of world power to assess how to gain access and control global fresh water resources if it comes to a crunch in the long future. Water is of strategic importance and also the commodity with the highest added value in the whole world - tap water sells at about one rupee per cubic meter, bottled water in the shop costs Rs 50 a litre, a mark up of 50,000 times for simple distillation and a plastic container. Ground water extraction deserves a lot more attention than it is getting. And the technology is already here!

Gasification of wood, peat, coal, charcoal and other carboniferous materials is an old hat and as Tharu says he has not reinvented the wheel but only produced a reliable contraption using readily available construction materials which works fine with local fuel inputs such as coconut shells and firewood. A kilo of LPG costs about Rs 80 but an equivalent amount of energy can be obtained by the gasification of three kilos of coconut shell, says Tharu.

The science behind it is quite simple. The energy released in the burning of wood and similar materials is about one third captured as ambient heat and about two- thirds lost in smoke and gas. The idea is to control the burning in such a way that as much as possible of the energy is transferred to the gases and then to impound the gas for later use. The gaseous products are 20% combustible hydrogen (from the breakdown of water vapour in the wood), 20% carbon monoxide and 60% nitrogen from the air. The nitrogen forms a safe conveyance medium while the carbon monoxide is toxic and must be handled sensibly. (If you lock yourself in an unventilated space with a car engine running, well that's one way of shuffling off this mortal coil).

The crux of the technology is to burn the wood with only 30% of the air it needs for normal combustion. In this condition an exothermic reaction raises the temperature very high and this maximises the decomposition of water vapour and the production of hydrogen. A simple gasifier design has been developed and tested and a few units are already in operation around the island.

"Wood-gas" or "producer gas" was widely used in Europe in the nineteenth century before cheap and all-conquering oil, and during World War II 95% of all farm machinery in Denmark and 40% of all motor traffic in Sweden ran on wood-gas. The US Federal Energy Management Unit has commissioned and tested design prototypes in the 1980s and 1990s for introduction in the event of an oil emergency.

Small units using the local design are suitable alternatives to imported kerosene and LPG and in the longer term wood-gas has potential as a vehicle fuel for tractors and heavy machinery. Obviously firewood and coconut shells are not options for the big works like the large scale generation of electricity for the power system.

Now that the basic R&D is done and venture capital for the innovation stage is not need it would be profitable and serve national goals if a private company with financial resources were to step in and bring the product to market. Unfortunately Sri Lanka's trade, commission and tourism oriented private sector has little industrial drive.

The moral of this article is that there are numerous innovative, productive and profitable small scale industrial initiatives which are languishing in the woodwork. They must be understood, evaluated and brought to market sensibly. Those with real commercial potential must be separated from the silly ones that violate the elementary laws of science and economic rationality. Feet firmly planted on the ground technologists and able entrepreneurs, not overzealous nationalists and still wet behind the ear greens, are the best people to involve in these decisions.

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Bribery and corruption hindrance to economic development

Sunday Times: 23/07/2006"

There are many factors impeding Sri Lanka's economic growth which prevent the country from achieving a much higher level of economic performance. Among these is the rampant corruption by both politicians and government officers.

From time to time there have been reports in the press of suspected corruption or of a case being brought against an official that he or she has been corrupt.

What is currently evident to those who have to apply for some sort of permission from a state authority is that it is often impossible to get such permission without offering a bribe. It is not a situation of isolated instances of bribery but one where bribery is widespread.

Transparency International, a watchdog of international corruption, has assessed Sri Lanka as one of the most corrupt countries in the world.

One of the underlying reasons for many of the proposed highway constructions to have made little progress is that, with each change of government a fresh installment of bribes was needed. The powers that be were fattened by these bribes while the development of infrastructure remained in limbo.

There are similar cases in the power and energy sector. It has been admitted that alternate energy projects by private enterprises has been stalled owing to corrupt practices of CEB officers.

Another instance that illustrates how foreign investment could spoil economic development has come to our attention. A foreign entrepreneur invested in a tourist resort with BOI approval. However, its construction was halted as the Central Environmental Authority (CEA), refused permission unless a bribe was paid. Although the bribe was not much in comparison to the foreigner's large investment in the project- one hundred thousand rupees, a mere US$ 1000 to the foreigner, he was so disgusted with the practice that he refused the bribe and left the country. Not only has such action denied the country the investment and earnings from the project, but also the investor could relate this experience to other prospective foreign investors deterring those from investing in Sri Lanka.

Many foreigners have realised that you can't do business without bribes.

Some are willing to pay the bribe and invest in the country. Others may shun the country for better places to do business. Singapore is once again cited as a country with almost no bribery and corruption. No wonder foreign investors prefer a high wage economy like Singapore to a relatively low wage country like Sri Lanka. Transparency International rating and assessment is no doubt a deterrent to some large investors. Efforts at increasing foreign investment will have limited success unless bribery and corruption are contained.

There was a time when social scientists took the view that corruption makes the wheels of the economy run faster and were reconciled to it as inevitable in a developing economy. This theory has been thrown out. Economists now recognise that there is an inverse relationship between corruption and economic growth. It is partly so because of globalisation and competition between countries for foreign investment. Corrupt countries fail to attract big foreign investments both due to the difficulty that foreign investors have in dealing with the nuances of corruption and no doubt also owing to the higher costs that bribery entails.

Where public investments are concerned, bribery results in not merely direct higher costs but also poor quality of output. Corruption on a large scale is often associated with infrastructure projects as the sums involved are very large. We have witnessed this in some of the construction projects of the Mahaweli.

Another clear instance of incalculable harm has occurred due to corruption in the procurement of military consumables as well as military hardware. Much expenditure on military purchases has been not only a waste of public money but also a reason for the deaths of military personnel and inability to fight the LTTE.

There can be little doubt that the country cannot go forward unless extensive corruption is wiped out. The Central Bank Annual Report of 2005 makes this point in terms of what economists call rent seeking. It captures the multifaceted impacts of rent seeking well when it says, "Rent seeking imposes a significant cost on the economy and retards economic growth through altering the incentive system, misallocation of resources, and breeding inefficiency.

Firms may begin to spend resources on rent seeking rather than improving competitiveness through productivity enhancement and innovation. Further, the receipt of undue benefits by special interest groups may cause disappointment and frustration among others leading to lacklustre performance in the economy. Rent seeking results in a sub-optimal allocation of resources and may reduce efforts to enhance productivity.

Those with authority could favour their special interest groups who may campaign to elect them again. Under such circumstances, bureaucrats and politicians may not act in the best interest of society.

These actions distort the structure of economic and social incentives and lead to a misallocation of resources, resulting in welfare losses and hindering economic growth." Undoubtedly wiping out corruption is a Herculean task as those in authority are involved. At present nothing less than deep surgery is needed to make a dent in this problem.

It has to be recognised as one of the most serious issues in economic development. Developing an institutional framework that reduces the capacity to be corrupt as well as punitive actions are needed to wipe out this social menace that is a serious bottleneck to rapid growth of the economy.

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