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Thursday May 23rd, 2024

Adani deal symptomatic of Sri Lanka’s high costs from lack of competition: Analyst

ECONOMYNEXT – Sri Lanka has to open both traded and non-traded sectors to competition, in order to boost productivity and drive prices down, Murtaza Jafferjee, Chairman of Advocata Institute, a Colombo-based think tank said.

An unsolicited deal given to India’s Adani group without competition despite a requirement under an International Monetary Fund to reduce corruption though tendering was symptomatic of the crisis facing Sri Lanka.

Sri Lanka has agreed to buy power for 8.26 US cents a unit from its 484 MegaWatt wind power project in Mannar and Pooneryn.

A competitive tender for a smaller wind plant also in Mannar where there is high wind potential closed this month.

“Probably the tariff is less than 6 cents,” Jafferjee said at forum at Sri Lanka’s central bank on sustaining stability.

“So why are we paying 8.3 cents for an untendered project?”

“The IMF Governance Diagnostic Report says tender, tender, tender. We don’t have a procurement law, we have procurement guidelines.”

Recently there was a tender for solar power plant which were also smaller. But the price was lower than a 100MW plant given earlier in the year at 8.50 cents.

“It was small, 160MW: 5MW, 10MW. The average price came at 6 cents,” he said. “How are we going to drive electricity prices down, if we don’t have competition?”

“Larger size, scale, drier areas, more preferential areas in Mannar where the wind regime is higher the price should be going down,” he said. “Do competitive tenders, price will go down.”

Related Sri Lanka parliament nod to remove tender process in power projects amid protests

Jafferjee said there would be no pressure to increase productivity and bring costs down unless there was competition.

Just like renewable energy it also applied to traded goods.

“And the fundamental problem with Sri Lanka is we have to expose this economy to market,” he said.

“And the fundamental precept of a market is competition. That is why we need FTAs. Because we have to open up the tradable sectors to competition and drive prices down.

“The non-tradable sectors – electricity reform, telecom, water – all of that is again to introduce competition. We don’t even have a competition commission.

“Competition is the answer for productivity improvement. Then you need the intelligent people to come and show how to reduce the costs.”

Jafferjee said a long time ago he studied engineering and a concept called constrained competition, before he became interested in economic matters.

“Unless you constrain people you are never going to become efficient because your brain is then working,” he said.

“That’s where then intelligence comes in; you have to first constrain, then you need the intelligent people who have to know how to basically optimize.”

An existing wind plant in Mannar has been found to have high plant factor, where more energy can be generated from the same windmill in a given period giving higher returns of the same capital costs, though there are changes depending on the exact coastal stretch it is located on.

One large solar plant which was awarded recently was tendered at a bad time when the Fed was printing money and energy prices were high, driving solar panel costs, and Sri Lanka was in a worse financial situation than now.

Renewable plant cost can also change due to other reasons such a requirement for battery storage for ramping or for actual delivery during the nigh peak. (Colombo/May15/2024)

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Sri Lanka plans to expand Bingiriya export zone to 1,100 acres

ECONOMYNEXT – Sri Lanka is expanding an export processing zone in Bingiriya in Kurunegala and plans to link the area with Puttalam with roads and other infrastructure, Minister Bandula Gunawardana said.

A task force of ministerial secretaries will be appointed to carry out the tasks speedily, following a cabinet paper submitted by President Ranil Wickremesinghe said.

The Bingiriya zone already has 157 acres and another 282 acres is being developed by the Board of Investment, he said.

Steps would also be taken to acquire 666 acres.

There was no information whose lands would be acquired. (Colombo/May23/2024)

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Sri Lanka has power breakdowns amidst extreme weather

ECONOMYNEXT – The state-owned power utility, the Ceylon Electricity Board has reported over 36,900 breakdowns resulting in power interruptions to more than 300,000 consumers in the last three days due to inclement weather in the island, the power minister said.

“Additional service staff has been assigned to attend the breakdowns and the CEB management & service staff are working 24 hours to restore power to the affected consumers,” Minister of Power and Energy, Kanchana Wijesekera said on social media platform X (twitter).

Wijesekera said consumers could report power interruptions through the CEB hotline 1987, via SMS to 1987 with BD and the electricity consumer number to follow, or use the CEB Care app, or through http://cebcare.ceb.lk.

The South-East monsoon has seen floods, landslides and strong winds do damage to the utility provider’s infrastructure in the last week. (Colombo/May23?2024)

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Sri Lanka President calls for unity, sacrificing for a better tomorrow on Vesak day

ECONOMYNEXT – Sri Lanka President Ranil Wickremesinghe has recalled a sermon from the Buddha about sacrificing for a better tomorrow, and called for unity to heal and rebuild the country, as Buddhists celebrate Vesak.

Buddhists celebrate Vesak as commemorating the birth, enlightenment and passing away of the Buddha.

“At this challenging moment, we as a nation should cultivate the same great zeal for enlightenment that Buddha exemplified, inspired by his sermon, “Maththasukha parichchaga- passé che vipulan sukhan” – to sacrifice today for a better tomorrow,” President Wickremesinghe said in his Vesak day message.

“We must remember the advice of Lord Buddha, “Sabbattha Sammanaso,” to treat everyone equally and ensure we put it into practice as a country. This is the greatest offering we can present to the Buddha on this Vesak day.

“Regardless of race, religion, caste, or political affiliation, we must all unite to heal and rebuild our country. ”

The full statement is reproduced below:

The Vesak festival is a profoundly sacred day for Buddhists worldwide, commemorating the Buddha’s birth, enlightenment, and passing. Buddhists in Sri Lanka, along with their brethren around the globe, celebrate Vesak with deep devotion. They spend this period engaging in religious observances and venerating the Buddha with fervent devotion.

At this challenging moment, we as a nation should cultivate the same great zeal for enlightenment that Buddha exemplified, inspired by his sermon, “Maththasukha parichchaga- passé che vipulan sukhan” – to sacrifice today for a better tomorrow.

We must remember the advice of Lord Buddha, “Sabbattha Sammanaso,” to treat everyone equally and ensure we put it into practice as a country. This is the greatest offering we can present to the Buddha on this Vesak day. Regardless of race, religion, caste, or political affiliation, we must all unite to heal and rebuild our country. The principles of Lichchavi Raja Dharmaya will guide us in this endeavour.

Let us keep in mind that the primary aim of the Vesak festival is to foster spiritual growth and character development in a world rapidly advancing physically. I wish everyone a blessed Vesak festival.

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