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Monday February 6th, 2023

Sri Lanka coal power plants at breakdown risk without spare parts

ECONOMYNEXT – Sri Lanka’s three coal power plants which are overdue for major overhauls for two years are now running out of spare parts for routine maintenance due to forex shortages, putting them at risk of simultaneous shutdowns, engineers have warned.

Sri Lanka has three 300MW coal plants in the Lakvijaya complex in Puttalam, providing about 40 percent of the country’s energy needs running as baseload plants around the clock.

Unit 02 and Unit 03 scheduled maintenance is now delayed by two years and Unit 1 has to be overhauled now, maintenance engineers have warned CEB’s management.

If Unit 01 is also postponed for next year all three have to be overhauled in a single year as each Level A’ overhaul takes about 80 days.

But overhauls cannot be carried out on time due to a lack of foreign exchange for spares and also to pay for service contracts.

Cabinet approved contract and spare for Unit 02, ‘Level A’ maintenance is held up due to lack of foreign exchange.

There are 95 spare parts tenders pending. Some parts have to be specially manufactured. There were 7 service contracts pending from original equipment manufacturers.

Engineers say so far routine maintenance has been done, despite the delays in major overhauls.

But now foreign exchange is not available for spares for routine maintenance, sharply raising the risks of a coal plant breakdown.

About 12 million US dollars and 270,000 Euros were needed for spare parts 9.1 million dollars for service contracts.

Delays in opening letters of credit and placing orders have delayed spare part purchases, engineers said.

“If adequate spare parts are not received, there is no other option other than to shut down the machine,” engineers said, urging high priority to be placed on getting foreign exchange to prevent a collapse of the power sector.

Sri Lanka runs into frequent currency crises because intermediate regime central bank (flexible exchange rate or soft-peg) which every time economists print money to further their interventionism.

In recent years currency crises were triggered by money printed for flexible inflation targeting with a peg (2015/2016), output gap targeting with a peg (2018) and developmental state/production economy (2020/2021) with a soft-peg. (Colombo/Apr21/2022)

Comments (2)

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  1. Anders says:

    Hello. I came here 1981 first time and lived here permanent for the last 15 years and all the shit in this country has a name. Rajapakse 😬😬😬😬

  2. Kemo says:

    This news just comes after they received a shipment of coal in the last few days. Why the engineers did not mention the status of the plants before in order to redirect the funds to the maintenance instead of paying for the coal. What is the use of spending so much to build a massive stockpile of coal when your plants are going to grind to halt

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Your email address will not be published. Required fields are marked *

  1. Anders says:

    Hello. I came here 1981 first time and lived here permanent for the last 15 years and all the shit in this country has a name. Rajapakse 😬😬😬😬

  2. Kemo says:

    This news just comes after they received a shipment of coal in the last few days. Why the engineers did not mention the status of the plants before in order to redirect the funds to the maintenance instead of paying for the coal. What is the use of spending so much to build a massive stockpile of coal when your plants are going to grind to halt

Sri Lanka to address SME tax problems at first opportunity: State Minister

ECONOMYNEXT – Problems faced by Sri Lanka’s small and medium enterprises from recent tax changes will be addressed at the first opportunity, State Minister for Finance Ranjith Siyambalapitiya said.

Business chambers had raised questions about hikes in Value Added Tax, Corporate Income Tax and the Social Security Contribution Levy (SSCL) that’s been imposed.

It should be explored on how to amend the Inland Revenue Act, Siyamabalapitiya said, adding that the future months should be considered as a period where the country is being stabilized.

Both the VAT and SSCL are effectively paid by customers, but the SSCL is a cascading tax that makes running businesses difficult.

In Sri Lanka SMEs make up a large part of the economy, accounting for 80 per cent of all businesses according to according to the island’s National Human Resources and Employment Policy.

(Colombo/ Feb 05/2023)

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Sri Lanka revenues Rs158.7bn in Jan 2023 up 51-pct

ECONOMYNEXT – Sri Lanka’s government revenues were 158.7 billion rupees in January 2023 but expenditure and debt service remained high, Cabinet spokesman Minister Bandula Gunawardana said.

In January 2022 total revenues were Rs104.5 billion according to central bank data.

Sri Lanka’s tax revenues have risen sharply amid an inflationary blow off which had boosted nominal GDP while President Ranil Wickremesinghe has also raised taxes.

Departing from a previous strategy advocated by the IMF expanding the state and not cutting expenses, called revenue based fiscal consolidation, he is attempting to do classical fiscal consolidation with spending restraint.

President Ranil Wickremesinghe has presented a note to cabinet requesting state expenditure to be controlled, Gunawardana told reporters.

State Salaries cost 87.4 billion rupees.

Pensions and income supplements (Samurdhi program) were29.5 billion rupees.

Other expenses were 10.8 billion rupees.

Capital spending was   21 billion rupees.

Debt service was 377.6 billion rupees for January which has to be done with borrowings from Treasury bills, bonds and a central bank provisional advance of 100 billion rupees, Gunawardana said.

Interest costs were not separately given. (Colombo/Feb05/2023)

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Sri Lanka’s Ceylon Tea prices down for second week

ECONOMYNEXT – Sri Lanka’s Ceylon Tea prices fell for the second week at an auction on January 31, with teas from all elevations seeing a decline, data showed.

“In retrospect, the decline in prices would be a price correction owing to the overall product quality and less interest from some key importers due to the arrival of cargo at destinations ahead of schedule,” Forbes and Walker tea brokers said.

The weekly sale average fell from 1475.79 rupees to 1465.40 rupees from a week ago, according to data from Ceylon Tea Brokers.

The tea prices are down for two weeks in a row.

High Growns

The High Grown sale average was down by 20.90 rupees to 1380.23 rupees, Ceylon Tea Brokers said.

High grown BOP and BOPF was down about 100 rupees.

“Ex-Estate offerings which totalled 0.75 M/Kg saw a slight decline in quality over the previous week” Forbes and Walker said.

OP/OPA’s in general were steady to marginally down.

Low Growns

In Low Grown Teas, FBOP 1 was down by 100 rupees and FBOP was down by 50 rupees while PEK was up by 150 rupees.

The Low Growns sale average was down by 8.55 rupees to 1547.93 rupees.

A few select Best BOP1s along with Below Best varieties maintained.

OP1                     Select Best OP1’s were steady, whilst improved/clean Below Best varieties maintained.   Others and poorer sorts were easier.

PEKOE                 Well- made PEK/PEK1s in general were steady, whilst others and poorer sorts were down.

Leafy and Semi Leafy catalogues met with fair demand,” Forbes and Walker brokers said.

“However, the Small Leaf and Premium catalogues continued to decline.

“Shippers to Iran were very selective, whilst shippers to Türkiye and Russia were fairly active.”

This week  2.2 million Kilograms of Low Growns were sold.

Medium Growns

Medium Grown BOP and BOPF fell by around 100 rupees

The Medium Growns sale average was down by 33.40 rupees to 1199.4 rupees.

“Medium CTC teas in the higher price bracket witnessed a similar trend, whilst teas at the lower end were somewhat maintained subject to quality,” Forbes and Walker brokers said.

“Improved activity from the local trade and perhaps South Africa helped to stabilize prices to some extent.”

OP/OPA grades were steady while PEKOE/PEKOE1 were firm, while some gained 50-100 rupees at times.

Well-made FBOP/FBOPF1’s were down by 50-100 rupees per kg and more at times.

(Colombo/Feb 5/2023)

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