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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. 

Saturday, September 23, 2006

Failure of tsunami reconstruction leaves humanitarian agencies under fire

Lanka Academic: 22/09/2006"

Associated Press, Fri September 22, 2006 06:50 EDT . MICHAEL CASEY - AP Environmental Writer - anka sit idle because they are unseaworthy or too small. Only 23 percent of the US$10.4 billion (euro8.1 billion) in disaster aid to the worst hit countries, Indonesia and Sri Lanka - , has been spent, according to the United Nations, because so much of it is earmarked for long-term construction projects.
``I think mistakes occur in every disaster, but for the first time we are seeing it on a large scale,'' Anisya Thomas, managing director of the California-based Fritz Institute, an NGO, or non-governmental organization, that specializes in delivering aid and has surveyed survivors in India and Sri Lanka - .

``Many large NGOs are involved in rehabilitation and reconstruction activities beyond their capacity,'' Thomas said. ``The large NGOs had trouble finding local resources and, when they did, they often had trouble holding them accountable.''

Days after the Dec. 26, 2004, tsunami, NGOs rushed in alongside the U.S. military and other government agencies, and their quick response was credited with preventing the disaster from getting worse.

But as the NGOs shifted to reconstruction, excessive amounts of money meant that spending decisions were often driven by ``politics and funds, not assessment and needs,'' according to the Tsunami Evaluation Coalition or TEC, an independent body that includes over 40 humanitarian agencies and donors.

In a July report, TEC called the aid effort ``a missed opportunity.'' It said there were too many inexperienced NGOs working in disaster zones, while seasoned agencies jumped into areas they knew nothing about Medecins Sans Frontieres Belgium built boats while Save the Children constructed houses.

The report also accused NGOs of leaving many survivors ignorant about their plans or failing to deliver promised aid. ``A combination of arrogance and ignorance characterized how much of the aid community misled people,'' it said.

The agencies are studying the report and many are overhauling their training and staffing.

``The tsunami was unique in so many ways,'' Scott Campbell, program director for Catholic Relief Services in Aceh, the Indonesian province that was hit hardest by the earthquake and tsunami. ``It has made every organization rethink how to approach this.''

With large swaths of Aceh's coast reduced to damaged homes and flooded farmfields, the challenge was enormous. More than 150,000 Acehnese survivors spent more than a year in rotting tents and hundreds of families are still in them.

There are communities with brick homes to rival some American suburbs, while others look like slums of clapboard shacks. A few hundred yellow homes looking like outsized mailboxes are held together with duct tape.

Clusters of homes were abandoned by their new owners because of leaky roofs or termites in the untreated wood. Hundreds more were built without water, electricity or sewer hookups. The NGOs later acknowledged that they assumed the government would provide utilities, not realizing that the disaster had decimated many government agencies.

``The quality is bad. I won't even use this wood for a chicken coop,'' said 57-year-old Hamdan Yunus, an Indonesian fisherman from the village of Kampung Jawa who tore down the home donated by British-based Muslim Aid after the wood began crumbling.

Tsunami survivors on Wednesday threw rocks at police in Aceh during a protest outside government agency over the slow pace of rebuilding. The fighting broke out after police used water cannons on hundreds of protesters, who had blockaded the reconstruction agency's headquarters demanding jobs and housing since Tuesday.

In the Indian state of Tamil Nadu, temporary homes built by Western-based charities were of ``poor quality'' and ``uninhabitable'' during the daytime because of the heat, according to a July 2005 evaluation of relief efforts.

Not all the shortcomings are the NGOs' fault. Corruption played a big part.

British-based Oxfam shut operations in the city of Aceh Besar for a month and an investigation led to charges of misconduct against 10 Indonesian staffers over the loss of US$22,000 (euro17,100).

Save the Children says it has to rebuild dozens of termite-stricken houses in Aceh after discovering contractors pocketed funds earmarked for construction. It has fired three housing inspectors, bolstered oversight at its US$156.6 million (euro121.7 million) Aceh program and is buying timber from Canada.

An Indonesian government audit found as much as US$5 million (euro3.9 million) went missing in the first weeks.

``The corruption has spread everywhere. It goes all the way down to the village level,'' said Akhiruddin Mahjuddin, who leads Gerakan Anti-Korupsi, an Aceh group. ``I'm really disappointed. I would say from 30 percent to 40 percent of tsunami aid money is missing.''

The Asian Development Bank is spending US$4 million (euro3 million) on anti-corruption measures in Aceh, and the Aceh provincial government is working to improve its accounting systems while putting up billboards warning the public about bribery.

Transparency International, a global anti-corruption watchdog, also has accused Sri Lankan officials of demanding bribes from survivors to get on lists for new homes and directing a disproportionate amount of funds into areas that support the government in the island's civil war.

In Thailand, the most developed of the hard-hit countries, unscrupulous businessmen were accused of stealing land in damaged villages to build tourist resorts.

Under pressure to spend the donations, agencies increased their pace toward the end of last year. In what the U.N. called ``unmistakable progress,'' agencies have been credited with building 57,000 houses across the 11 countries that felt the impact of the tsunami waters. Another 81,000 are under construction. Hundreds of schools and clinics have also been built.

But there were also plenty of missteps.

Some agencies handed out cash grants and loans for survivors in ill-conceived plans a factory in India to make tiles where there was no market for them, or the planting of thousands of mangrove seedlings that died.

The World Bank found that 40 percent of the 7,000 boats donated in Indonesia would be ``unusable in 12 to 18 months'' and that many of the boat-building plans failed to consider how fishermen would store or sell their catches.

``The donors at first seemed to pursue quantity over quality and the actual needs of the fishermen,'' said Adli Abdullah, secretary general of an Aceh fishing organization.

The problems have beset many of the top names in the humanitarian business.

Habitat for Humanity International, based in Americus, Georgia, is struggling to get utilities to the several thousand homes built in Indonesia and Sri Lanka - . Oxfam, which received the most funding of any NGO, is assessing whether to rebuild 750 of the 800 homes it built in Aceh.

Save the Children says all of the 708 homes it built at two sites in Aceh will need work 64 are being rebuilt and the remainder are being extensively repaired.

The Indonesian government, frustrated by the amount of bad housing, has set aside up to US$1 million (euro777,300) to repair or rebuild ``several thousand'' homes.

``We made the assumption that these NGOs didn't need our guidance when it comes to building houses. What happened is that they were not prepared,'' said Kuntoro Mangkusubroto, who heads the government's reconstruction effort.

``Building is not just houses. It's building communities,'' he said. ``You have to construct the drainage, the septic tanks... They (the NGOs) just thought about the money and building materials.''

NGOs blame some of their problems on the scope of the disaster and the difficult environment.

Timber as well as expertise were in short supply. Prices of many materials have doubled in the past year. Land ownership has often been impossible to determine with so many owners dead. Some areas are isolated by bad roads and rough seas.

Government agencies have also come under fire for dragging their feet on issuing regulations over what housing can be built in Indonesia, and by limits on coastal redevelopment in Sri Lanka - . Fighting in Sri Lanka - has forced agencies to halt reconstruction and pull staff out.

Still, NGOs acknowledge they share some of the blame.

They are looking for ways to respond more quickly to disasters by creating emergency response teams, opening regional supply warehouses or partnering with the private sector to ensure a steady supply of professionals.

A more far-reaching reform would be to set international standards for NGOs and follow the U.S. example of making tax-exempt status dependent on agencies meeting accountability requirements.

Former U.S. President Bill Clinton, the U.N. Special Envoy for Tsunami Recovery, liked to say the goal should be to ``build back better.'' His deputy, Eric Schwartz, says he's confident NGOs are open to oversight provided their independence is respected.

The pressure for a process to accredit NGOs ``is substantial,'' he said. ``I think they understand this.''

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Thursday, September 21, 2006

N’cholai, Upper Kotmale and new electricity bill

The Island: 21/09/2006" by Dr. Tilak Siyambalapitiya

Now is the time to pay for the drama you Sri Lankans watched and enjoyed for the past 10 years. Should we build Norochcolai and Upper Kotmale ? From 1996 to date, the Bishop of Chilaw and NGOs blocked the Norochcholai coal-fired power plant, which was to produce by now, 900 Megawatt (i. e. 50% of your electricity) at half the price of oil. For ten long years, the Bishop and NGOs did not allow Ceylon Electricity Board (CEB) to build the power plant.

You electricity customers, never ever supported the electricity planners. Your chambers of commerce and industry were largely silent when power plants to produce cheaper electricity were being repeatedly sabotaged by religious leaders, environment NGOs and politicians. Perhaps you thought that somebody should teach CEB a lesson, or you thought electricity officials are all corrupt to recommend coal power and hydropower to earn commissions. Some journalist even wrote that all these power plants are unnecessary projects proposed by officials.

So, now is the time to payback.

Of course, with each election, politicians both blue and green, promised they would not build the Norochcholai power plant. Leaving the specialists aside, Presidents, Prime Ministers, Leaders of Opposition and the Bishop made statements on environment, economics, logistics and engineering. The first national politician to publicly announce in 1997 that the project would not be built if he was elected to office, and repeated it at each election prompting other politicians to promise they too would not build the power plant, is still in the opposition.

The case of Upper Kotmale is not different. First it was the Environmental Foundation Limited (EFL) that put the project through a series of legal cases, which caused the project to be delayed by four years. Then the Consultant to the project, the Government’s very own Central Engineering Consultancy Bureau (CECB) worked against the project for years. Then emerged the political opposition, which took a further four years to resolve. Today, Upper Kotmale would have produced 1.5 million units of clean energy per day at Rs 3.50 per unit, and that was not to be. Today CEB produces the lost energy from Upper Kotmale by burning fuel oil at three times the cost, emitting not less than 6 tons of sulphur to the atmosphere each day. And the environment NGOs want you electricity customers to believe that they have done a great favour to the country and its environment.

The country went through two serious periods of blackouts (1996 and 2001/2), caused the economy to dive to negative growth, which too were not adequate to convince the Presidents, leaders of opposition, the Bishop, the political parties and NGOs to let the two projects proceed.

Finally it was the Government of 2004 that decided to implement the two projects, come what may, which resulted in the agreements being signed in 2005, and inauguration of the site work in March and May this year.

The New Electricity Prices

The individuals and NGOs listed above are now silent when your electricity bills increase. The projects they opposed for a decade are now being built precisely in the same manner they were originally planned, but at a significantly higher cost. World prices of steel and cement, the two main ingredients required to build any power plant, doubled in price while Sri Lankans were happily debating about the two power plants for ten long years. When the Bishop began his opposition to Norochcholai in 1996, the difference in production cost between Norochcholai and a diesel power plant, was a mere one rupee for a unit of electricity. Today the gap is more than four rupees, and you electricity customers are now paying for it. The gap between Upper Kotmale and a diesel power plant is more than five rupees for a unit of electricity.

Electricity prices have been increased from 1st September for all customers, except those consuming less than 30 units per month. About 30% of the households are in this low consumption bracket, but everybody else has to pay. If your consumption is in the range of 100 units per month, your bill will increase by about 17%. If you consume 200 units, the bills will be up by 25%, and the increase will be 30% for customers using around 300 units.

The biggest blow will be to commercial and industrial customers. A medium-scale commercial customer (these include offices, schools and hospitals, both state and private), would see the bills rising by 31%, while demand charges have been slightly increased, and fixed charges will remain steady. The biggest blow is to medium and large industries, who will see their electricity bills rising by levels up to 37%.

Of course, a part of these bills will be termed as "fuel adjustment charges", on which there is no hope of reduction until year 2015, when the full benefit of coal-fired power plants and other hydroelectric power plants would be available. Although Norochcholai is scheduled to produce electricity from 2011, CEB would need at least 50% of its electricity to be produced by coal, before electricity prices are stabilised at regionally competitive levels. And that will be in 2015 ! So, ten years of mistakes since 1995, corrections applied in 2005, and if the on-going corrections are applied vigorously, the results can be seen by 2015.

Electricity has been sold below cost from about 1995, but there was some recovery after oil prices dropped in 1998. Ever since 1999, CEB has been reporting losses. The accumulated debts are said to be approaching the 100 billion rupee mark.

Generation, Highest Share of Cost

At the fuel prices prevailing in the last week of August, the typical cost structure of electricity supply in Rs per unit, would be as follows:

Average generation cost: 8.28, provision for network losses: 1.62, network maintenance, routine upgrades and overheads: 2.50, TOTAL=12.40. Any person looking at the above costs, would agree that it is the generation costs that have to be reduced, to manage the electricity prices. That is precisely what electricity planners have been recommending, asking and pleading for over the past two decades. Build coal-fired power plants, build the remaining hydroelectric power plants. However, professionals were pushed aside while politicians and Bishops were making decisions. Or were rather not making decisions.

If Norochcholai and Upper Kotmale were allowed to proceed on schedule, the average electricity supply cost would have been as follows: generation cost: 5.00, provision for network losses: 95 cts, overheads: 2.50, TOTAL= 8.45 Rs per unit. This is exactly the price of electricity that prevailed in August 2006.

CEB would have been making profits, not asking for favours from the Government, customers would be happy. Politicians would not have had to call the electricity sector, a monster. But this was not to be.

There certainly is hope, hope of relief in electricity prices. Norochcholai and Upper Kotmale projects are proceeding. Housing for relocated families are being built at both projects. Major civil works would begin in both projects towards the end of this year. In addition, the Trincomalee coal-fired power plant project is nearing agreement stage, but there is a long way to go. If all go well, the price increase in electricity that you will pay from this month can be withdrawn gradually from year 2011, and fully withdrawn from year 2015. Yes, Sri Lanka has been making mistakes with the electricity sector for 10 years, and it takes nearly 10 years more to see the benefits of the corrections now being implemented.

Forces against projects

Over 300 families are about to receive new housing in Upper Kotmale, and 70 families are about to receive new houses plus one-and-a half acres of land at Norochcholai. Forces against the projects are still active. Processions are being organised by NGOs and interested parties, generally from outside the project areas. Various legal moves are being contemplated and pursued against the two projects, which are moving ahead in full compliance with all environmental laws of the country.

The cheapest oil-burning power plant with CEB costs 8 rupees a unit of electricity for fuel alone. If Norochcholai was operational, it would have a fuel cost of 3.82 rupees per unit. Thus the saving is at least Rs 4.18 per unit of electricity. Norochcholai was to produce 20 million units today, if it was allowed to be built on time. Therefore, to compensate for each day of delay, you electricity customers are paying at least Rs 84 million per day.

Norochcholai delay costs 84 million rupees per day

If Nororchcholai is delayed by one extra day, the electricity customers will be called upon to pay an extra 84 million rupees per day. The treasury will convert that money into hard currency, and pay to buy more and more oil. Protesters and NGOs, and perhaps some prospective power plant suppliers too, are doing their best to force further delays on these vital power plants.

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Monday, September 18, 2006

Industry sector major boost for 7.2% GDP

Daily Mirror: 18/09/2006" By Ayesha Zuhair

The Census and Statistics Department has recorded a 7.2% Gross Domestic Product (GDP) growth rate for the second quarter of 2006. The Department reports that the agricultural sector has recorded a growth rate of 5.5%; the industry sector has recorded a gowth rate of 9.6% while the services sector has grown by 6.5%.

Suranjana Vidyaratne, Director General of the Department announced that all subdivisions of the agricultural sector, except tea and rubber, have experienced positive growth rates. This includes coconuts, minor export crops, paddy, livestock and fisheries. She said that the significant growth in the services sector was chiefly due to the boom in mobile and telecommunications, noting that productivity in these areas has also improved.

Vidyaratne also stated that there has been a decline in the unemployment rate, even though an exact figure could not be given. “There have been shifts within the three sectors – the employed, the unemployed and the inactive because of the Maha and Yala season as well as movements in the fishing industry,” she said.

The CCPI – the country’s official Price Index which is used to monitor the cost of living of the people – for all items in August was 4650. A decrease of 22.5 index point change of 0.5 % was noted from the July 2006 index which was 4672.50. This represents a Rs. 45.40 decrease in expenditure value of the market basket. However the year-on-year CCPI of August 2006 and August 2005 has a different story to tell: there has been an increase of 617.9 index points or 15.3% over August 2005.

The inflation rate for the month of August was 10.8%, lower by 2.0 percentage points compared to last year’s August rate of 12.8%. The month-on-month inflation rate of the Colombo city was 0.4 percentage points higher than that of last month.

The decrease in the CCPI for August is attributed to the decrease in prices of garlic, red onions, some varieties of fresh and dried fish, coconuts, eggs and most varieties of vegetables accounting for Rs. 241.07 or 119.34 index points. Fuel and light and miscellaneous groups have recorded price increases amounting to Rs. 11.40 and Rs. 30.70 respectively.

However, the prices of wheat flour, rice and curry, sugar, milk, tea, dried chilies, limes, cowpea whole, manioc, jam, biscuit, cream crackers, fresh fish (Balaya and Small Mullet), dried fish (Katta and Koduwa) have increased.

Of the total decrease of 0.5%, food items account for a decrease of 1.4% mainly due to the decrease in the prices of vegetables (1.98%) and fresh fish (0.16%). There has been an increase of 0.24% on account of fuel and light, mainly kerosene oil (0.21%). Clothing and miscellaneous items have recorded an increase of 0.02% and 0.66% respectively.

Asked if the escalating cost of oil was reflected in the CCPI, D. C. A. Gunawardena, Director – Prices at the Department of Census and Statistics, said that the cost of petrol and diesel was not included in the basket; only Kerosine was included. “However, the transportation costs of the working class have been taken into account, such train and bus transportation. Nevertheless, there is still an inflation of 10.8%. So even though the direct cost is not included, the indirect costs are reflected in the index,” he said.

Caption: (L-R) D. Amarasinghe, Director – National Accounts, Suranjana Vidyaratne, Director General and Gamini de Silva, Director.

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