Rajapaksa-linked company building gunpowder import monopoly, claims Opposition

The Samagi Jana Balawegaya (SJB) and Frontline Socialist Party (FSP) have alleged that the Ministry of Defence is paving the way for a private company – which they allege to be linked to the Rajapaksa family – to build a monopoly on the import of gunpowder (ammonium nitrate) and earn huge profits, by allowing the said company to import 1,000 metric tonnes (MT) of the same and sell it at a price of Rs. 1,926.16 per kg.

Speaking at a media briefing, FSP Education Secretary Pubudu Jayagoda alleged that the Defence Ministry has given permission to the private company in question to import 1,000 MT of Ammonium nitrate. Claiming that the concerned company has been given permission on the basis that it is ready to import ammonium nitrate by spending its own US dollars, he said that neither the Defence Ministry nor the State Trading Corporation (STC) has made any inquiry as to whether there are other companies ready to spend their own USD and import the substance.

“How was this private company given the opportunity to import 1,000 MT of Ammonium nitrate? It is mentioned in a related document that they said they were ready to spend their own US dollars. Accordingly, have the Defence Ministry and STC made an inquiry in any way to find out whether there are any other companies that are ready to spend their US dollars and import this material? Has a tender been called for this? How could a monopoly be allowed to be established for one company by ignoring the companies that have been importing ammonium nitrate for so long?” he queried.

He said that it is also problematic that a circular dated 29 September 2022, signed by the Defence Ministry Secretary General (Retd.) Kamal Gunaratne, has set a maximum retail price (MRP) for a kilogram of ammonium nitrate, with effect from 28 September. Through the relevant circular, Jayagoda said that the price of 1 kg of Ammonium nitrate, which was previously Rs. 232, has been increased to Rs. 1,926.16, an amount around 10 times higher than its previous price.

“It is problematic that the Defence Ministry has determined the MRP of Ammonium nitrate. This price increase has been done outside the role of the Defense Ministry. Why is the Defence Ministry giving this company the opportunity to establish a monopoly on ammonium nitrate import and earn huge profits by allowing it to import 1,000 MT and selling it at a higher price of Rs. 1,926.16?” he queried.

Jayagoda also commented on the fact that the names of several persons with the surname Rajapaksa have been mentioned in the section where the board of directors and management team are depicted on the official website of the company concerned. He charged that the names of the two persons mentioned as the two directors and three of the persons mentioned as the management team bear the Rajapaksa surname. Owing to this, he claimed, there are doubts over the ownership of this company.

Meanwhile, Samagi Jana Balawegaya Gampaha District MP Dr. Kavinda Heshan Jayawardhana also commented on the matter.

Speaking at a media briefing at the Opposition Leader’s Office in Colombo yesterday (2), he said: “Right now, a private company has been allowed to import 1,000 MT of Ammonium nitrate. Ammonium nitrate is a very dangerous substance. We have learned that the ammonium nitrate purchased for use in granite quarries was used in the Easter Sunday terror attacks. How was the private sector allowed to import ammunition in such a situation? Was this permission given without a tender procedure?”

Commenting further, he said: “When we look into details of the private company which has been allowed to import ammonium nitrate, all of them bear the surname Rajapaksa. We do not know if they are related to the ‘royal family’ (a reference to former presidents Mahinda and Gotabaya Rajapaksa and their families), but it is clear that there is a clear fraud going on. Also, the Defence Ministry is ordering the sale of ammonium nitrate at a particular price. How does the Defence Ministry set prices like that?”

Meanwhile, when contacted by The Morning, Defence Ministry Additional Secretary Saman Dissanayake said that the STC had the sole authority to import ammonium nitrate until early this year through a Cabinet proposal made in 2006 with the approval of the Defence Ministry. Although the country’s annual requirement of ammonium nitrate is 750 MT a month, he said that the STC had however been importing only about 35% of the total requirement.

“From March 2022, the STC had not imported a single kilogram of ammonium nitrate due to two reasons – the shortage of US dollar reserves and the fact that an Indian supplier from whom the STC had been purchasing ammonium nitrate stopped exporting. However, the STC did not inform us of this issue until March. We are responsible for supplying ammonium nitrate for many purposes, including quarries and large-scale development projects. 

“We were waiting for the STC to import ammonium nitrate from March to June 2022. As it did not bring it in, several discussions were held between the President, the Prime Minister, the Defence Ministry Secretary, and the STC Chairman. During those discussions, the STC said that it would import stocks, but nothing had been imported,” he explained.

As the STC did not import ammonium nitrate, Dissanayake said, the Defence Ministry had submitted a Cabinet proposal seeking permission to allow the private sector to import ammonium nitrate for a period of one year, in addition to the STC. He said that the said proposal was submitted as the STC did not import ammonium nitrate, and the amount it imported was not adequate even when it did. Following the submission of the relevant proposal, he said that in June or July 2022, the Cabinet of Ministers had granted approval to allow the private sector to import ammonium nitrate, under the supervision of the Defence Ministry, to store them at Sri Lanka Navy warehouses, and distribute them.

“When we received Cabinet approval, we asked the registered explosive suppliers of the Defence Ministry if they could import ammonium nitrate. In response, a few of them said that they have US dollars and could import, and this particular company had submitted a proposal. The company said that it would import ammonium nitrate using its own US dollars, but would only go ahead with the import if the Defence Ministry pays 85% of the total cost in rupees before they process the import. 

“Accordingly, we told 86 ammonium nitrate dealers in the country that we had received this proposal, and asked if they approved. We also told them that they needed to pay 85% of the price of the ammonium nitrate amount which they intend to purchase before the import is made, as we had to pay the company in advance,” added Dissanayake.

He also said that the relevant company had agreed to supply a kilogram of Ammonium nitrate at Rs. 981, and said that a tender was not called for as Cabinet approval had been given to allow the private sector to import the substance. However, when the dealers were informed of the arrangement, he said that about 50% of them did not like it, and only five dealers had informed the Defence Ministry in writing that they were willing to purchase ammonium nitrate, and pay the 85% of total price in advance.

“During this time, the STC had worked to import 44 MT of Ammonium nitrate last week. Then it asked the Defence Ministry’s permission to sell ammonium nitrate at Rs. 1,750 per kg. There is a price committee for every consignment, and the committee decides the price after considering all the factors. Accordingly, that committee allowed the STC to sell ammonium nitrate at Rs. 1,450 per kg,” he added.

Claiming that the relevant private company has not been given any permission to import ammonium nitrate as the dealers had not favourably responded to its requirement, Dissanayake charged that it is the STC and the dealers who disliked the said proposal that are propagating that the relevant company has been given permission to import ammonium nitrate. According to the Explosives Act No. 21 of 1956, he said that the Defence Secretary has full authority to import, control, determine the price, sell, and store all explosives in the country.

When queried regarding the allegation that the said company is linked to the Rajapaksa family, Dissanayake said: “This company has nothing to do with the Rajapaksa family. This is the local agent of a Chinese-based company. This agent is the one who brings the explosives, the weapons to the police and the tri-forces. It is also the company that supplies Česká zbrojovka (CZ) type firearms.”