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Sunday December 4th, 2022

Sri Lanka bus operators look for loan bailout as Coronavirus curbs hit revenues

PUBLIC TRANSPORT: Sri Lanka’s three wheeler fleet ihas e

ECONOMYNEXT – Sri Lanka is looking at mortgaging route licenses of private buses to raise cash with operators saying revenues had halved amid Coronavirus health rules and reduced travelling by the public hit revenues.

Sri Lanka was locked down in strict curfews from late March but controls were relaxed in late May with domestic cases of Coronavirus reducing, but not all offices are working at full strength.

Health Rules

Health rules have also limited passengers to the number of seats though buses have usually made money with standing passengers, especially during peak hours.

“And now the income has dropped 50 percent,” Gemunu Wijeratne, President of Lanka Private Bus Owners’ Association said.

“It is same for the long distance busses as well. That is because passengers are not coming yet. In the morning we have some crowd but that is all.”

He said buses used to make about 75,000 to 100,000 margin but with revenues dropping they did not make money.

However the government has announced a debt moratorium which is expected to ease of the lease payment for six months.

Sri Lanka’s health authorities have asked offices to stagger staff clock in times to prevent congestion.

Transport Minister Mahinda Amaraweera said asked the public not to go on non-essential travel yet.

“Coronavirus is somewhat under control in Sri Lanka,” Amaraweera told reporters. “But it is not yet fully eliminated so refrain from going to see relatives and other non-essential travel.”

Mortgage Loan

Sri Lanka’s central bank has also asked lenders to give a debt moratorium to buses on lease subject to paying interest.

“Bus owners have problems,” Amaraweera said. “In addition to not having revenues, buses have also developed mechanical problems after lying idle for two months. Sometime batteries have run down.

“There was a suggestion to give 300,000 rupee low interest loan keeping the route license as security. We have discussed this with the National Transport Commission and Provincial Authorities and they have agreed.

“Now we have to talk with the banks and come up with a program,”

The route licenses are issued by National and Provincial transport authorities and are not easily transferable, which analysts have said is a key reason that the sector has not consolidated into larger companies and there is no innovation.

Wijeratne also expressed concerns whether banks would give loans against the license as a bankable document if it’s not transferable.

“They tell us do get it but practically it should be decided by the banks,” Wijeratne explained.

“Banks have to talk with the relevant authorities on how to get the license as a bankable document. Or what will happen if we didn’t pay the loan of 300,000 rupees.”

Due to over-regulation and low quality, people have been shifting to cars and motorcycles from buses.

Related

Tuk-tuk, school van regulation in Sri Lanka can create a bus-style fiasco – Bellwether

Unhampered by government regulation, taxis have grown with call centres and ride-sharing applications giving flexibility and speed.

Declining Sector

Wijeratne says about 1500 persons a day is estimated to be dropping off bus transport each day.

About 30,000 motorcycles are sold each month.

“Passengers are now leaving the busses to find alternatives,” Wijeratne said. “They have moved onto other vehicles such as motorcycles.

“This is happening even before this pandemic. According to our calculation 1500 passengers per day are moving to other travel option from buses. With this pandemic I think it has increased up to 3000 per day.”

Sri Lanka however has halted vehicle imports after the central bank printed large volumes of money and created foreign exchange shortages.

Minister Amaraweera said the government is looking to develop a program to give low interest loans to bus owners to buy low floor passenger buses and discontinue the practice of using uncomfortable buses which are built on truck chassis.

Sri Lanka’s nominal interests are high, leading to calls for subsidized credit due to chronic currency depreciation which destroy real capital and makes interest rates volatile to correct balance of payments pressure, critics have said.

Wijeratne said bus operators were also keen to get into low floor buses when the existing buses are taken off the roads. (Colombo/June11/2020)

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Paris Club proposes 10-year moratorium on Sri Lanka debt, 15 years of debt restructuring

ECONOMYNEXT — The Paris Club group of creditor nations has proposed a 10-year debt moratorium on Sri Lankan debt and 15 years of debt restructuring as a formula to resolve the island nation’s prevailing currency crisis, India’s The Hindustan Times reported.

While the Paris Club has yet to formally reach out to India and China, Colombo has yet to initiate a formal dialogue with the Xi Jinping regime, the newspaper reported on Saturday December 03, inferring that the chances of the International Monetary Fund (IMF) approving its 2.9 billion dollar extended fund facility for Sri Lanka in December now ranges from very low to nonexistent.

“This means that Sri Lanka will have to wait for the March IMF meeting of the IMF before any aid is extended by the Bretton Woods institution,” the newspaper reported.

“Fact is that for Sri Lanka to revive, creditors will have to take a huge hair cut with Paris Club clearly hinting that global south should also take the same cut as global north notwithstanding the inequitable distribution of wealth. In the meantime, as Colombo is still to get its act together and initiate a dialogue and debt reconciliation with China, it will need bridge funding to sustain the next three month before the IMF executive board meeting in March 2023. Clearly, things will get much worse for Sri Lanka before they get any better—both economically and politically,” the report said. (Colombo/Dec04/2022)

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Sri Lanka’s Ceylon tea prices up amid low volumes

ECONOMYNEXT – Sri Lanka tea prices picked up at the last auction in November amid low volumes, brokers said.

“Auction offerings continued to record a further decline and totalled 4.2 million Kilograms, of which Ex-Estate offerings comprised of 0.6 million Kilograms. There was good demand,” Forbes and Walker Tea brokers said.

“In the Ex-Estate catalogues, overall quality of teas showed no appreciable change. Here again, there was good demand in the backdrop of extremely low volumes.”

High Growns

BOP Best Westerns were firm to 50 rupees per kg dearer. Below best and plainer types were Rs.50/- per kg easier on last.

Nuwara Eliya’s were firm.

BOPF Best Westerns were firm to selectively dearer. Below best and plainer teas declined by 50 rupees per kg.

Uva/Uda Pussellawas’ were generally firm and price variances were often reflective of quality with the exception of Select Best Uva BOPF’s which were firm and up to 50 rupees per kilogram dearer.

CTC teas, in general, were mostly firm.

“Most regular buyers were active, with perhaps a slightly more forceful trend from the local trade,” brokers said.

Corresponding OP1’s met with improved demand. Well-made OP/OPA’s in general were fully firm, whilst the Below Best varieties and poorer sorts met with improved demand. PEK/PEK1’s, in general, were fully firm to selectively dearer.

In the Tippy catalogues, well-made FBOP/FF1’s sold around last levels, whilst the cleaner Below Best and cleaner teas at the bottom appreciated. Balance too were dearer to a lesser extent.

In the Premium catalogues, very Tippy teas continued to attract good demand. Best were firm to selectively dearer, whilst the Below Best and cleaner teas at the bottom appreciated

Low Growns

Low Growns comprised 1.8 million Kilograms. Market met with improved demand, in general.

In the Leafy & Semi Leafy catalogues, select Best BOP1/OP1’s were fully firm, whilst the Below Best/bolder BOP1’s were barely steady.

Low-grown teas, farmed mainly by smallholders and exported to the Middle East and Central Asia, are the most sought-after and expensive Ceylon Teas.

Low-grown CTC prices have gained this week to 982.80 per kilogram this week from 934.76 per kilogram last week.

Few Select best BOP1s maintained, whilst best and below best were irregularly lower. Poorer types maintained.

BOPF’s in general, firm market.

FBOPF/FBOPF1’s select best and best increased in value, whilst the below best and bottom held firm.

Selected best BOP1’s maintained, whilst best and below best were irregularly lower.Poorer types maintained.

OP1’s selects best together with best and below best were firm to dearer. Poorer sorts were fully firm.

Medium Growns

BOPF’s, select best gained by 50 rupees per kilogram. Others maintained.

BOP1’s select best dearer by 100 rupees per kg whilst all others moved up by 50 rupees per kg.

OP1: select best gained by 100 rupees per kg whilst all others dearer by 100 rupees per kg.

OP/OPA’s in general, dearer by 50 rupees per kg whilst the poorer sorts were firm.

PEK’s Select best gained by 50 rupees per kg whilst all others maintained. PEK1: In general, dearer by 50 rupees per kg. (Colombo/Dec 04/2022)

 

 

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Sri Lanka Ports Authority East Terminal contractor paid: Minister

ECONOMYNEXT – Sri Lanka’s Ports Authority had paid a deposit for a gantry crane and made the required payment for the contractor to complete building the East Container Terminal, Minister Nimal Siripala De Silva said.

The East Container Terminal, a part of which is already built is being completed as a fully SLPA owned terminal at a cost of 480 million dollars Ports and Shipping Minister de Silva said.

“ECT we are funding with money available in the ports authority,” he said.

“Up to now we have paid an advance for the gantry crane. And for the construction we have paid all the money agreed with the contractor. So that is going on well.”

Sri Lanka is undergoing the worst currency crisis in the history of the island’s soft-pegged (flexible exchange rate) central bank which has created difficulties in funding the project.

“Every penny we collect as dollars we are keeping them separately and utilizing that for the Eastern Terminal work,” Minister de Silva said.

“We are confident that the ECT will be completed within the envisaged time. It is a difficult task in view of the dollar problem.

Banks were also not releasing the dollar deposits of the SLPA earlier but are now doing so, he said.

“Our deposits in banks they have utilized for urgent other national purposes,” he said.

“So they are releasing that money slowly. I am happy that they are releasing that money little by little. So with that we will be able to manage that.”

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