it's sorted now!
The way to do this as Feed suggested is to blaze the pads over fire, I just used pliers to hold it and it takes only a minute or so per pad. You can see the fumes showing up once they are gone you know pads are clean. Probably best to blaze the pads and not do the sanding. I did sanding before and it didn't remediate the issue. Then I took off the discs and cleaned them with washing liquid and a sponge just rubbing them, Upon installation brakes are good as new.
The whole procedure takes like 10 minutes per wheel so not a big deal but if I had to do it before every ride I would probably give it up! I suppose twice a year after longer break using the bike it's ok to do this! In ideal world there would be no need to do it at all and I heard that sram brakes don't leak but they are so tricky to bleed so you can't win! Shimano are very easy to maintain and bleed the system
Also for new people not familiar with the issue don't let any bike shop tell you that you need new rotors or pads. I heard it before and it's just not true, unless your pads are worn out completely and disc thickness for shimano below 1.5 mm. It's a pity that shimano do not recognise the issue officially and remediate it completely. Even bike shops are reluctant to do this as it is relatively long procedure for very little money and no new parts
Hope this is helpful to somebody
Pawel