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Govt to review Prima, Shell and SL Airlines Agreements

by Ravi Ladduwahetty

The Government will review the agreements entered into by the previous regime with Prima Ceylon Ltd, Shell Gas Lanka Ltd and SriLankan Airlines, especially with regard to the privatisation process which led to the divestiture of 40 % of the equity stake of the national carrier.

The Government will also review the prevailing Goods and Services Tax (GST), although no decision has been taken yet to reduce/increase it.

This was disclosed at a news conference chaired by Cabinet spokesman and Minister of Enterprise Development, Investment Promotion, Industrial Policy and Constitutional Affairs Prof. G.L. Peiris at the Government Information Department at Narahenpita.Minister of Rural Economy and Deputy Minister of Finance Bandula Gunewardena, Mass Communications Ministry Secretary Kumar Abeysinghe and Director of Government Information Ariya Rubesinghe were also present.

The decision to review the Agreement with Prima has been mandatory as the monopoly of that company was an impediment to reducing flour prices. The Government is exploring the possibility of looking for other worldwide suppliers to make flour imports more competitive, Prof. Peiris told journalists.

Prof. Peiris also explained that the Government was paying Rs. 300 million to Prima (Ceylon) Ltd to subsidise flour prices. These funds that could have been used to build schools, hospitals and other social infrastructure. He said that the more flour prices were reduced, the higher the consumption would be.

The subsidy would keep increasing. Thus the Government would be indirectly subsidising the American wheat farmer, he said.

The increase in flour prices would be a boon to the local paddy farmer who will have better sales, he said.

The official visit of Prime Minister Ranil Wickremesinghe to India resulted in the Indian Government deciding to supply 25,000 tonnes of wheat flour to Sri Lanka, which is around one third of the country's monthly requirement. We will consider increasing the quantity of flour imports from India, Prof. Peiris said.

Minister Bandula Gunawardena also explained that the Agreement signed by the government in the 1980s with Prima was on a Build Own and Transfer (BOT) basis. Thus the Prima factory and the company was to be the property of the Government at the end of 2005. However, the PA Government had come into another agreement with Prima so that they could retain the ownership of the company by paying a pre-determined amount and operate on a Build/Own and Operate method, Minister Gunawardena explained.

Prof. Peiris also explained the decision of the Government to permit the Ceylon Petroleum Corporation to regulate the market was to give the benefit of the reduction of global prices to the consumer. He said that if not for the Rs. 21 billion loss of the CPC for which the interest component was Rs. 3 billion, the prices of petrol could have been reduced by Rs. 6 per litre and diesel by Rs. 3.50 per litre.

When asked by the Daily News whether the petroleum sector would be liberalised in the near future, he said Power and Energy Minister Karu Jayasuriya will announce a policy decision in this regard in due course.

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