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Thursday December 1st, 2022

MT New Diamond fire: Sri Lanka forwards Rs 3.4 bn claim to Greek shipping company

ECONOMYNEXT – Sri Lanka’s Attorney General Dappula de Livera has forwarded a marine environmental pollution claim of Rs 3.4 billion (USD 19.02 million) to the owners of the MT New Diamond oil tanker that caught fire in Sri Lankan waters last September, an official said.

The owners, Porto Emporios Shipping Inc, a shipping company based in Greece, paid Rs 442 million in October for expenses incurred by Sri Lanka in dousing the fire, but compensation for damages caused to the marine environment has yet to be paid.

Marine Environmental Protection Authority (MEPA) Chairperson Dharshani Lahandapura told EconomyNext that out of the Rs 442 million, some 52 million was for the MEPA.

“Investigations revealed that the captain of the ship had not acted responsibly, so we also pressed criminal charges against him and filed a case in the Supreme Court seeking Rs 12 million in damages,” she said.

The MT New Diamond was carrying 270,000 metric tons of crude oil from the port of Meena Al Ahmadi in Kuwait to the Port of Paradip in India when, on September 03, 2020 a fire erupted in the ship’s boiler in the main engine room about 38 nautical miles away from the Sri Lankan shore. There were 23 crew members including five Greeks and 18 Philippine nationals aboard, one of whom died before rescue teams arrived.

It was also reported that 1,700 metric tons of diesel required for operating the tanker were also stored onboard the 20-year old, 333m-long ship.

The fire was put out in a joint mission by the Sri Lanka Navy, Sri Lanka Air Force, Sri Lanka Cost guard, the Indian Navy and Indian Coast Guards.

According to Lahandapura, a report was submitted to the Attorney General after a panel of 18 experts assessed the environmental cost of the accident.

“We demanded compensation from the shipping company in three stages. This is the third stage, where compensation is sought for environmental damage caused by the stricken ship.”

Assessing the environmental damage was a complicated process in which four factors into consideration, said Lahandapura: the damage to Sri Lanka’s fisheries and marine life, property damage, the impact on tourism or other aspects of the economy and miscellaneous costs.

“Since this happened in the deep sea, and not close to land, there was no property damage or economic loss. But we can approximately calculate the fisheries loss, because there was a temporary ban on fishing activities at the time,” she said, adding that a US model was used for the calculation.

“It took a long time but we were able to calculate the damage to the environment, and we submitted a report to the attorney general,” she said.

Based on the report, AG dde LIvera forwarded the environment pollution claim of Rs 3.4 billion this week.

Lahandapura said permission for the tanker to leave Sri Lankan waters was given in the first week of October only after the Rs 442 million was paid for the expenses incurred.

“Until those payments were settled, the ship was under the jurisdiction of the Sri Lanka authorities,” she said.

“This was the first time Sri Lanka faced this kind of a situation. If it happened closer to the shore, we could’ve calculated the losses more clearly. We don’t even have a base line to calculate the damage, because this is the first time something like this happened,” Lahandapura said.

“We took this legal action forward because we need to gain the experience and the knowledge in case it happens again,” she added.

Lahandapura further said authorities are planning to conduct a drill in collaboration with the security forces and coast guards in May this year on the waters off Trincomalee to prepare for such accidents.

The MEPA chairperson said there are three categories of oil spill events: 50 metric tons, 50 to 100 metric tons, and over 100 metric tons.

“The third scenario is an international level threat where you have to get international help to contain the situation. It will be a regional matter. In such situation, the president will have to declare an environmental emergency and will have to call other countries to help.”

Lahandapura believes such accidents are “very likely” in Sri Lanka’s territorial waters given the island’s location.

” Sri Lanka itself is a threat zone for ships because we are in the middle of the silk route where 350 to 400 ships are crossing our seas at any given time. There is a lot of traffic,” she said.

Discussions are under way with Scandinavian countries to acquire funds and expertise in order to prepare Sri Lanka for such an eventuality, she added. (Colombo/Apr09/2021)

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Sri Lanka’s inflation eases to 61-pct in November

ECONOMYNEXT – Sri Lanka’s 12-month inflation in the capital Colombo fell to 61 percent in November 2022 from 66 percent in October as price stabilized after interest rates were allowed to go up and the exchange rate was pegged around 360 to the US dollar.

The widely watched Colombo Consumer Price Index fell absolutely 0.5 percent to 242.6 points in November after falling .04 percent in the October.

Food prices fell 1.5 percent after falling 2.0 percent a month earlier. The sub-index containing gas fell 0.5r percent and transport fell 3.6 percent.

But some services continued to go up, as relative prices adjusted to the steep fall in the currency after two years of money printing to suppress rates.

Health costs went up 5.7 percent. Furnishing and routine maintenance rose 0.4 percent.

Sri Lanka’s central bank hiked policy rates to 15.5 percent in April and pulled back on longer term money printing, allowing market rates to go to around 30 percent.

The exchange rater is pegged around 363 rupees with a surrender rule where banks are forced to sell dollars to the central bank for new liquidity.

The ongoing currency and inflation crisis is the worst in the history of the central bank.

Sri Lanka’s Latin America style central bank was set up in 1950 giving powers to the country’s macro-economists the power to mis-target rates, create currency crisis and high inflation. (Colombo/Nov30/2022)

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Sri Lanka shares close at one-month high

ECONOMYNEXT – Sri Lanka shares closed at one month high on Wednesday gaining for the fourth session on news that government is in talks with ADB and World Bank to get a 1.9 billion dollar loan facility, brokers said.

The main All Share Price Index (ASPI) closed 3.3 percent or 276.02 points higher at 8,651.23, highest index gain in since November 01.

“Investor participation improved on the back of confirmed talks with multilateral and bilateral lenders including world banks and ADB for USD 1.9Bn after IMF board level agreement is reached,” First Capital Market Research said in it’s daily note.

Former Central Bank Governor Indrajit Coomaraswamy said in a forum on Monday that the government is in discussion with ADB and World Bank to get loans of 1.9 billion US dollars after a reform program with International Monetary Fund is approved

A policy loan now being discussed with the World Bank may bring around 700 million US dollars, Coomaraswamy told a business forum organized by CT CLSA Securities, a Colombo-based brokerage.

The Asian Development Bank may also give around 1.2 billion US dollars most of which will be budget support, he said.

The market witnessed a turnover of 3.3 billion rupees, higher than this year’s daily average turnover of 2.9 billion rupees. This is the highest turnover generated since October 04.

In the last few sessions market gained after Central bank governor said market rates should eventually ease despite the fears of a domestic debt restructuring as inflation falls, increased liquidity in dollar markets, and the inter-bank liquidity improves.

In the past sessions, the index continued to fall on the speculation of a local debt restructuring although no proper decision has been taken so far.

The market saw a foreign inflow of 39 million rupees. The total net foreign inflow stood at 18.33 billion rupees so far for this year.

The more liquid index S&P SL20 closed 3.4 percent or 89.78 points higher at 2,730.08.

The ASPI has fallen 0.5 percent in November after losing 13.4 percent in October.

It has lost 29.2 percent year-to-date after being one of the world’s best stock markets with an 80 percent return last year when large volumes of money were printed.

Sampath Bank pushed the index up to close at 10.9 percent to 36.6 rupees.

Other top gainers were Browns Investment gained 15.4 percent to close at 7.5 rupees and LOLC gained 9.4 percent to close at 411.3 rupees.(Colombo/Nov30/2022)

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Sri Lanka bonds, T-bills ease, overall market dull

ECONOMYNEXT – Sri Lanka’s treasury bonds eased and T-bill yields fell on the speculation on talks with ADB and World Bank to obtain financial aid but the over all market was dull on Wednesday while the Central Bank’s guidance peg remained unchanged, dealers said.

“During the day, secondary market witnessed some buying interest on the back of speculations on yields easing while talks about financial aid from ADB and World Bank further strengthened interest,” First Capital Market Research said in it’s daily note.

A bond maturing on 01.05.2024 closed at 32.00/60 percent on Wednesday, down from 32.30/90 percent on Tuesday.

A bond maturing on 07.07.2025 bond closed at 30.80/31.30 percent up from 30.30/31.25 percent on Tuesday.

A bond maturing on 15.05.2026 closed at 31.00/30 percent down from 31.10/31.30 percent on Tuesday.

The three-month T-bills closed at 32.30/33.25 percent, down from 32.60/33.00 percent.

The Central Bank’s guidance peg for interbank transactions remained unchanged at 363.19 rupees against the US dollar.

Commercial banks offered dollars for telegraphic transfers between 371.79 and 372.10 for small transactions, data showed.

Buying rates are between 361.79 – 362.00 rupees. (Colombo/Nov 30/2022)

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