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Saturday May 25th, 2024

Fire accidents in Sri Lanka LP gas leak raise safety questions

ECONOMYNEXT – A spate of fire accidents reported in Sri Lanka in recent days involving liquid petroleum (LP) cooking gas cylinders appear to be linked to gas leaks, a government official said on Thursday as worried customers awaited clear safety precautions from the authorities.

At least four gas leak explosions occurred across the country, namely in Pannipitiya, Palamadulla, Rathnapura and Kurunduwatta, Colombo, in November alone, according to police reports.

“The explosions happened due to the LP gas that leaked mixing with oxygen and other gases in the atmosphere,” Roshan Fernando, Senior Assistant Government Analyst of the Government Analyst’s Department said.

“I must inform you that the cylinders have not exploded in any of the incidents that have been reported.

“Today, we investigated an explosion that happened in Kottawa,” he said, referring to a Colombo suburb town.

“The gas in the atmosphere had ignited due to a light bulb. In that house, a metal clip that we use to secure the gas pipe to the cylinder was also not there. The gas has leaked due to that.”

A key government official at the state-run Consumers’ Affairs Authority (CAA) after his resignation recently claimed that gas companies have changed the proportions of the two gases used inside the cylinder. A widely circulated interview with the official added to consumers’ concerns.

Thushan Gunawardena, the former executive director of the CAA, said gas companies have changed the butane proportion from 70 percent to 50 percent and that could also have contributed to the explosion.

“We are investigating these incidents because these leakages are less than 1 percent of the cylinders we supply to the market per month,” W K H Wegapitiya, chairman of Laugfs Gas Plc, told EconomyNext.

However, Wegapitiya said the fires reported were not related to the cylinders but was rather an issue with the appliances use cylinders don’t explode.

“All these are due to human negligence,” he said.

Laugfs gas accounts for 20 percent of the LP gas market share in Sri Lanka.

Consumer Affairs Minister Lasantha Alagiyawanna said they have discussed the measures that are already in place and further measures to be taken in the future with experts.

“In the next two-three weeks we will work on issuing gazettes and regulations that need to protect consumers our country,” Minister Alagiyawana said.

“Quality assurance is mandatory in Sri Lanka. The Sri Lanka Accreditation Board is the body that regulated the laboratories that do quality assurance in Sri Lanka.

“We have asked the Accreditation Board to register two laboratories that do quality testing when gas is imported to Sri Lanka. It is to strengthen the system and to assure the quality of the gas we import.

Previously, five gazettes had been issued in 2012 regarding the quality of the gas cylinder, regulators and other equipment,” the minister said.

LP gas leaks occur for a couple of reasons caused by a lack of knowledge by LPG consumers and improper usage, Wegapitiya said.

A composition change in the LP gas cocktail – Butane and Propane – caused the explosions after the traditionally used proportion of 70:30 was changed to 50:50, officials have said.

However, Wegapitiya said there was no logic behind the allegation of increasing propane in the cocktail because it is the more expensive of the two gases.

Domestic gas leaks often happen due to poorly fixed or fitted regulators leading to leaks and gas tubes that are not replaced in time or damaged by pests, and if the user keeps the stove on without igniting, or due to substandard appliances.

Sri Lanka does not have a gas regulatory body. Gas company officials said they have their own investigation units to conduct studies. (Colombo/Nov25/2021)

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Melco’s Nuwa hotel to open in Sri Lanka in mid-2025

ECONOMYNEXT – A Nuwa branded hotel run by Melco Resorts and Entertainment linked to their gaming operation in Colombo will open in mid 2025, its Sri Lanka partner John Keells Holdings said.

The group’s integrated resort is being re-branded as a ‘City of Dreams’, a brand of Melco.

The resort will have a 687-room Cinnamon Life hotel and the Nuwa hotel described as “ultra-high end”.

“The 113-key exclusive hotel, situated on the top five floors of the integrated resort, will be managed by Melco under its ultra high-end luxury-standard hotel brand ‘Nuwa’, which has presence in Macau and the Philippines,” JKH told shareholders in the annual report.

“Melco’s ultra high-end luxury-standard hotel and casino, together with its global brand and footprint, will strongly complement the MICE, entertainment, shopping, dining and leisure offerings in the ‘City of Dreams Sri Lanka’ integrated resort, establishing it as a one-of-a-kind destination in South Asia and the region.”

Melco is investing 125 million dollars in fitting out its casino.

“The collaboration with Melco, including access to the technical, marketing, branding and loyalty programmes, expertise and governance structures, will be a boost for not only the integrated resort of the Group but a strong show of confidence in the tourism potential of the country,” JKH said.

The Cinnamon Life hotel has already started marketing.

Related Sri Lanka’s Cinnamon Life begins marketing, accepts bookings


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Sri Lanka to find investors by ‘competitive system’ after revoking plantations privatizations

ECONOMYNEXT – Sri Lanka will revoke the privatization of plantation companies that do not pay government dictated wages, by cancelling land leases and find new investors under a ‘competitive system’, State Minister for Finance Ranjith Siyambalapitiya has said.

Sri Lanka privatized the ownership of 22 plantations companies in the 1990s through long term leases after initially giving only management to private firms.

Management companies that made profits (mostly those with more rubber) were given the firms under a valuation and those that made losses (mostly ones with more tea) were sold on the stock market.

The privatized firms then made annual lease payments and paid taxes when profits were made.

In 2024 the government decreed a wage hike announced a mandated wage after President Ranil Wickremesinghe made the announcement in the presence of several politicians representing plantations workers.

The land leases of privatized plantations, which do not pay the mandated wages would be cancelled, Minister Siyambalapitiya was quoted as saying at a ceremony in Deraniyagala.

The re-expropriated plantations would be given to new investors through “special transparency”

The new ‘privatization’ will be done in a ‘competitive process’ taking into account export orientation, worker welfare, infrastructure, new technology, Minister Siyambalapitiya said.

It is not clear whether paying government-dictated wages was a clause in the privatization agreement.

Then President J R Jayewardene put constitutional guarantee against expropriation as the original nationalization of foreign and domestic owned companies were blamed for Sri Lanka becoming a backward nation after getting independence with indicators ‘only behind Japan’ according to many commentators.

However, in 2011 a series of companies were expropriation without recourse to judicial review, again delivering a blow to the country’s investment framework.

Ironically plantations that were privatized in the 1990s were in the original wave of nationalizations.

Minister Bandula Gunawardana said the cabinet approval had been given to set up a committee to examine wage and cancel the leases of plantations that were unable to pay the dictated wages.


Sri Lanka state interference in plantation wages escalates into land grab threat

From the time the firms were privatized unions and the companies had bargained through collective agreements, striking in some cases as macro-economists printed money and triggered high inflation.

Under President Gotabaya, mandating wages through gazettes began in January 2020, and the wage bargaining process was put aside.

Sri Lanka’s macro-economists advising President Rajapaksa the printed money and triggered a collapse of the rupee from 184 to 370 to the US dollar from 2020 to 2020 in the course of targeting ‘potential output’ which was taught by the International Monetary Fund.

In 2024, the current central bank governor had allowed the exchange rate to appreciate to 300 to the US dollar, amid deflationary policy, recouping some of the lost wages of plantations workers.

The plantations have not given an official increase to account for what macro-economists did to the unit of account of their wages. With salaries under ‘wages boards’ from the 2020 through gazettes, neither employees not workers have engaged in the traditional wage negotiations.

The threat to re-exproriate plantations is coming as the government is trying to privatize several state enterprises, including SriLankan Airlines.

It is not clear now the impending reversal of plantations privatization will affect the prices of bids by investors for upcoming privatizations.

The firms were privatized to stop monthly transfers from the Treasury to pay salaries under state ownership. (Colombo/May25/2024)

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300 out of 1,200 Sri Lanka central bank staff works on EPF: CB Governor

ECONOMYNEXT – About 300 central bank staff out of 1,200 are employed in the Employees Provident Fund and related work, Governor Nandalal Weerasinghe said, with the function due to be transferred to a separate agency after a revamp of its governing law.

“When it comes to the EPF there is an obvious conflict of interest. We are very happy to take that function out,” Governor Weerasinghe told a forum organized by Colombo-based Advocata Institute.

“We have about 300 staff out of 1,200 including contract staff, almost 150 of permanent staff is employed to run this huge operation. I don’t think the central bank should be doing this business,”

The EPF had come under fire in the past over questionable investments in stocks and also bonds.

In addition, the central bank also faced a conflict of interest because it had another agency function to sell bonds for the Treasury at the lowest possible price, not to mention its monetary policy functions.

“There has been a lot of allegations on the management of this fund. This is the biggest fund of the private sector; about 2.6 million active, I think about 10 million accounts.

“When it comes to EPF, obviously there’s another thing. We obviously have, in terms of resources, on the Central Bank, that has a clear conflict because we are responsible for the members.

“We have to give them a, as a custodian of the fund, we have to give them a maximum return for the members.

“For us to get the maximum return, on one hand, we determine the interest rates as multi-policy. On the other hand, we are managing public debt as a, raising funds for the government.

“And on the third hand, this EPF is investing 90 percent in government securities. And also, interest rates we determine, and they want to get the maximum interest. That’s a clear conflict, obviously, there’s no question.”

A separate agency is to be set up, he said.

“It’s up to the government or the members to determine to establish a new institution that has a trust and credibility and confidence of the members that this institution will be able to manage and secure an interest and give them a reasonable return, good return for their lifetime savings,” Governor Weerasinghe said.

“The question is that how whether we have whether we can develop that institution, whether we have the strong institution with accountability and the proper governance for this thing.

“I don’t think it should be given completely to a private sector business to run that. Because one is that here we have no regulatory institution. Pension funds are not a regulated business.

“First one is we need to establish, government should establish a regulatory agency to regulate not only the EPF business fund, there are several other similar funds are not properly regulated.

“Once we have proper regulations like we regulate banks, then we can have a can ensure proper practices are basically adopted by all these institutions.

“Then you can develop an institution that we who can run this and can be taken back by the Labour Department. I’m not sure Labour Department has the capacity to do all these things.”

While some EPF managers had come under scrutiny during the bondscam and for questionable stock investments, in recent years, it had earned better returns under the central bank management than some private funds that underwent debt restructuring according to capital market analysts with knowledge of he matter. (Colombo/May24/2024)

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