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Sri Lanka plans price controls on sand after load ceilings drive up prices

ECONOMYNEXT – Sri Lanka is planning price controls for construction sand after weight ceilings slammed on trucks drove up prices, the mining regulator said, in the latest in a spate of restrictions on economic activities.

Using a mining law Sri Lanka’s Geological Survey and Mining Bureau had slammed a weight ceiling on trucks carrying sand limiting a load to 3 cubes.

“The practice of fixing wooden slats to increase the capacity is also banned,” the GSMB said.

The new economic controls had pushed up the cost of transport. The GSMB said the price had risen by about 6,000 rupees a load.

The GSMB however blamed sand suppliers for the price hike, not controls, saying it was ‘fraudulent.’

“Reports are coming in unceasingly that higher prices are being charged for sand,” GSMB Chairman Anura Walpola said in a statement.

“This amount that is being charged is as much as 6000 rupees.”

“These prices are being raised to create a artificial shortage in the market and abolish transport licenses,” he claimed.

In addition to weight controls driving transport costs up per cube, Sri Lanka’s sand prices fluctuate based on rainfall (which may limit the sand being dug from rivers) as well as changes in construction activity which drive up demand.

When prices rise more sand is supplied or some projects shift to sea sand. Most house builders however are reluctant to use sea sand.

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Meanwhile the GSMB said it was planning prince controls for individual districts.

“To control this situation, a fixed price will be introduced for sand each district,” the GSMB said.

“This will be introduced in the next two weeks.”

“Already field offices from regional offices have been deployed to carry out raids.

Due to classical economic illiteracy there is little understandings in Sri Lanka that price controls create shortages.

Sri Lanka’s Consumer Affairs Authority, the main price control agency, routinely disrupts economic activities with price controls, triggering shortages and black markets.

The CAA created shortages and black markets in both dhall and tinned fish during a Coronavirus crises.

Ironically, raids were carried out on ‘blackmarketeers’ that the agency itself created.

The price controls were eventually lifted.

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Sri Lanka slaps price controls on masks amid medical emergency

The cAA also disrupted the supply of vegetables with price controls, while a licensing system prevented new buyers coming in.

Sri Lanka’s National Medical Regulatory Authority, also triggered shortages in masks by slamming controls as cost of raw materials shot up and demand rocketed.

The overall economy is also under import controls, after excess rupees money printed to control the overnight call money rate, triggered forex shortages.

The excess rupees should either lead to a steep fall in the currency against the US dollar, or there will be a shortage of dollar. Instead of correcting monetary policy, Sri Lanka has slammed import controls. (Colombo/June07/2020)