Sunday, May 13, 2012

GoSL buys 14 MI17 helicopters, spends Rs.328m on vehicles, Rs.350m on the sugar companies, what on earth is going on?

Buried within the inner pages of today's Sunday Times were two stories that almost made me drop my cup of tea.

Glancing through the political column the writer mentions,almost  en passant, that the cabinet approved the purchase of  fourteen MI-17 helicopters  from Russia. The purchase is to come from a US$300m credit line extended by Russia but does not mention the price. According to this site,  the cost of an MI-17I is around US$11-12m each. Even if the GoSL is buying the older models, they cost around US$7.5m each. The cost, at a minimum, will be between the range of US$105m- US$168m, but it is important to know the true cost because I fear that the whole of the credit line may have been spent on this. We don't have a war, there can be no possible urgency for the purchase, even if the airforce needed to upgrade its fleet this could at least have been delayed a couple of years.

The next story is almost as bad, a supplementary estimate of Rs.350m has been passed to pay recurrent expenses at Pelwatte and Sevanagala Sugar companies that were taken over by the Government. Obviously the companies have not generated sufficient income to meet expenses and the Government has stepped in to fill the gap, as it is obliged to do since it owns the business. Had these losses been incurred when the businesses were in private hands the owners would have to meet the shortfall, this is exactly why Government should have no involvement in running industries. They have always proved to be drain on taxpayers, but recent losses by state owned business have reached frightening levels, the Srilankan loss of Rs.19bn is a new record, as is CEB Rs.25bn loss.

The Government is also spending another Rs.328.2m on vehicles for various ministries. Just to put things in perspective, a retired Civil Servant of the old Ceylon Civil Service was criticising the Archbishop of Colombo who had come to see him many years ago in a chauffeur driven Mercedes Benz. He had asked the Archbishop how he could possibly justify this, the Archbishop had claimed that the car was a donation. Hardly a fitting way for a man of god to travel was the Civil Servant's comment. He said that when he was offered a Mercedes he refused, arguing that he could not possibly visit poor villages in such a luxurious car. He preferred his battered Volkswagen Beetle, with holes in the floorboards covered with wooden planks.

A further Rs.2.2bn has been approved to meet the shortfall of provisions on capitalisation of SriLankan Airlines and Mihin Lanka airline.

It seems that the Government has lost all sense of proportion, spending freely while the population have been hit by mammoth taxes, some of which will go towards financing these 'essential' expenses.

This should have been headline news, not buried inside the inner pages of the press.

The customs website gives a useful summary of some of the new taxes imposed, especially on food.

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