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Thursday April 18th, 2024

Sri Lanka petro firms should be regulated by PUCSL, not committee under minister: MPs

ECONOMYNEXT  – Sri Lanka’s petroleum sector which is on track to be liberalised following a change to the sector law should be regulated by the Public Utilities Commission of Sri Lanka (PUCSL) and not a committee under the minister, legislators said.

“There will be no independent regulation if the sector is overseen by a committee under the Minister,” opposition legislator Kabir Hashim told parliament during a debate on the new legislation, which was passed.

The PUCSL which has some shadow regulatory power over petroleum, however, had no powers to issue licenses for petroleum players.

A plan to set up a committee under a minister will not solve the problem or inspire confidence in foreign investors, the one-time petroleum minister Hashim of the opposition Samagi Jana Balawegaya (SJB) said.

Anura Priyadarshana Yapa, a former petroleum minister who was elected on the ruling Sri Lanka Podujana Peramuna (SLPP) ticket said the involvement of the Finance Ministry in regulating petroleum has been counterproductive in the past.

The Finance Ministry had powers to set prices of petroleum in the past, and most of the time prices were kept down.

“It is not fair to blame the CPC or its workers for losses. The orders to keep down prices come from the top,” said Yapa.

“If the Finance Ministry is involved there will be interference.”

However, the PUCSL had also failed to raise prices of electricity since 2013, raising questions about its usefulness.

The regulator quickly cut prices as a coal plant came on stream following shortly after the last price increase but had since failed to hike rates as economists printed money and progressively destroyed the rupee from 113 to 200 to the US dollars.

Prices were raised only after soft-pegging economists destroyed the rupee from 200 to 360 to the US dollar. (Colombo/Oct24/2022)

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Sri Lanka’s discussions with bondholders constructive: State finance minister

ECONOMYNEXT – Sri Lankan authorities continue to engage all debt restructuring negotiations in good faith, within principles of equitable treatment among creditors, and with maximum transparency within the norms of such negotiations, State Minister of Finance, Shehan Semasinghe has said.

“It is standard practice, when a representative group of bondholders is formed, to entertain confidential discussions with such group and its appointed advisors. In the case of Sri Lanka, the Ad Hoc Group of Bondholders represents holders controlling more than 50% of the bonds, which make them a privileged interlocutor for Sri Lanka,” Semasinghe said on X (twitter).

“It is well understood that given the price sensitive nature of the negotiations, and according to market regulations, discussions with the Group and its advisors are to be conducted under non-disclosure agreements. This evidently restricts the ability of the Government to unilaterally report about the substance of the discussions.

“The cleansing statement, which was issued on the 16th of April, at the conclusion of this first round of confidential discussions with members of the Group, aims at informing the Sri Lankan people, market participants and other stakeholders to this debt restructuring exercise, about the progress in negotiations. It provides the highest possible level of transparency within the internationally accepted practices in such circumstances.

“As informed in this statement, confidential discussions held in recent weeks with bondholders’ representatives proved constructive, building on the restructuring proposals presented by both parties. During the talks both sides successfully bridged a number of technical issues enabling important progress to be made. Sri Lanka articulated key remaining concerns that need to be addressed in a satisfactory manner.

“The next steps would entail further consultation with the IMF staff regarding assessments of the compatibility of the latest proposals with program parameters. Following these consultations, we hope to continue discussions with the bondholders with a view to reaching common ground ahead of the IMF board consideration of the second review of Sri Lanka’s EFF program.”

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Sri Lanka rupee weakens at 301.00/302.05 to the US dollar

ECONOMYNEXT – Sri Lanka’s rupee closed at 301.00/302.05 to the US dollar in the spot forex market on Tuesday, from 299.00/10 on Tuesday, dealers said. Bond yields were broadly steady.

A bond maturing on 15.12.2026 closed stable at 11.30/35 percent.

A bond maturing on 15.09.2027 closed at 11.90/12.05 percent up from 11.95/12.00 percent.

A bond maturing on 15.12.2028 closed at 12.10/20 percent down from 12.10/15 percent.

A bond maturing on 15.07.2029 closed at 12.25/40 percent.

A bond maturing on 15.03.2031 closed at 12.30/50 percent. (Colombo/Apr17/2024)

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Sri Lanka Treasury Bill yields down across maturities

ECONOMYNEXT – Sri Lanka’s Treasuries yields were down across maturities at Wednesday’s auction with the 3-month yield moving down 7 basis points to 10.03 percent, data from the state debt office showed.

The debt office sold all 30 billion rupees of 3-month bills offered.

The 6-month yield fell 5 basis points to 10.22 percent, with 25 billion rupees of bills offered and 29.98 billion rupees sold.

The 12-month yield dropped 4 basis points to 10.23 percent with 18.01 billion rupees of bills sold after offering 23 billion rupees. (Colombo/Apr17/2024)

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