Ravi defends decision to give MPs vehicles

Saturday, 19 November 2016 00:16 - - {{hitsCtrl.values.hits}}

Minister of Finance Ravi Karunanayake yesterday denied allegations raised by opposition lawmaker and JVP Leader Anura Kumara Dissanayake in relation to obtaining 58 vehicles on operational leases, which is supposed to save the state money.

Highlighting the rationale behind obtaining vehicles on operational lease against outright purchase, Minister Karunanayake said: “When you purchase a jeep for Rs. 33 million, the Government receives Rs. 25 million as tax. But by obtaining a jeep on operational lease of a period of 60 months, the Government incurs a cost of Rs. 35.4 million. So, by the end of 60 months, the additional payment borne by the Government doesn’t exceed Rs. 2.4 million. But by getting a vehicle on operational lease, the supplier takes care of the insurance, revenue licensing, and repairs and maintenance during the five-year period. In case we spend Rs. 33 million by the end of five years, the opportunity cost comes to Rs. 18.15 million.

On the other hand, the opportunity cost will reach Rs. 4.9 million after 60 months if the vehicle was bought for Rs. 9 million, having exempted all taxes. By the end of five years, we should pay Rs. 35.4 million if a vehicle was bought on lease. So, getting vehicles on operating lease is viable for the Government.”

According to the Minister, Cabinet approval was obtained to go for an operational lease and the correct procurement steps were followed. “We have not taken any decision to provide leased vehicles to MPs who are receiving a monthly allowance. We have followed the procurement procedures to obtain vehicles on lease for the Government. Accordingly, in obtaining vehicles on operational lease, the Minister of Parliamentary Affairs and Media has presented a Cabinet paper on 14 June 2016. Subsequently, advertisements were placed in Dinamina and Thinakaran of 18 June and Daily News of 17 June 2016. Even though terms of MPs expire, Cabinet approval was received to go for an operational lease of 60 months – getting vehicles on operation leases. Until such time, MPs are provided an allowance of Rs. 200,000/- by the Ministry of Parliamentary Affairs and Media,” he said.

Listing further benefits enjoyed by obtaining vehicles on operational lease, which is not a burden on the taxpayer, the Minister said:

“The additional benefits from an operational lease includes the [removal of] stress on the state cash flow if all these vehicles were outright purchased. Operational lease will also take care of the issue where MPs are not returning the vehicles with their term coming to an end. When these vehicles are under repairs, the supplier provides similar replacements saving the Government money by purchasing standby vehicles. When it comes to repairs, the Government need not bother paying bogus repair bills.

With Cabinet approval obtained and a subcommittee appointed for this procurement process, followed by several other approvals, the officials executing this agreement will not get penalised. We have used the same operational lease system last year and have saved approximately Rs. 9,800 million.

So, other than the President and the Prime Minister, all Ministries are to go for operational leases instead of purchasing vehicles.” (AH)