Ravi defends decision to give MPs vehicles
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.”
(Source: FT.LK)
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cost of jeep 10,000,000 tax 25,000,000 35,000,000,000
cost ravi
5 year lease of jeep 35,400,000
what is the opportunity cost ravi is talking of 18,500,000
Vehicles bought brand new comes with guarantee by the manufacturer and the buyer enters into a service agreement with manufacturers agents. However if the agents happen to be third party dealers then manufacturer guarantees do not hold good. However if the government were to import then it is for the government to enter into an all inclusive agreement with the manufacturers to avoid any conflict with the agents. So ravis claim on service charges are unfounded. Most of the statutory charges are concessions granted to the MPS.
Toyotas gives a good deal at least I suspect it to be so for we see battalions of ISIS and jihadists trooping in toyotas therefore they appear to be battle tested to coe with the sorst situations in Sri Lanka maybe they can get them to have mounts for small armaments and water canons to meet any hostilities in their electorates
I agree with Ravi in this instance.
Fleet Management is a specialised field which is not part of Government (which has a mainly policy making role in the running of country).
Fleet Management is best left in the hands of private sector operators who specialise in that field.
Of course, the private sector Fleet Manager will charge fees for their services; at the same time they will be creating much-needed employment opportunities.
If the Govt undertakes Fleet Management, it will be in the hands of political appointees who turn up for work at 11AM and depart after consuming the home-made ‘Buth Parcela’ at 1PM.
The costs of private sector Fleet Management could be subject to a proper tender process which will give rise to proper competition and optimised prices.