An Echelon Media Company
Wednesday June 19th, 2024

Sri Lanka president reiterates power grid connectivity plans with India

ECONOMYNEXT – Sri Lanka President Ranil Wickremesinghe has reiterated his government’s plans for India-Sri Lanka power grid connectivity even as low-intesity protests begin to emerge around the country against a recent power tariff hike.

“India’s electricity system and Sri Lanka’s electricity system will be connected. This will be across Mannar,” Wickremesinghe said on Sunday October 22 speaking at the National Milad-Un Nabi Celebration held at the Musali National School Stadium in Mannar.

“This area has a high potential for a green economy and green energy, particularly with the available solar power. From Puttalam to Mannar through the Jaffna Peninsula to Mullaitivu, there is a great opportunity for this, and we aim to make Pooneryn the centre of this development,” he said.

Power & Energy Minister Kanchana Wijesekara said in June this year that Sri Lanka’s government has priortised regional energy integration with grid connectivity between Sri Lanka and India to be implemented by 2030.

The World Bank has been assisting the state-run Ceylon Electricity Board (CEB) in understanding the technical requirements and business models for the project, Wijesekara said at the time following a meeting with World Bank Director of Regional Integration Cecile Fruman and Country Manager Chiyo Kanda.

In 2022, Sri Lanka and India were eyeing an over-water cable to link the power grids of the two countries, dropping an earlier plan for a submarine cable.

In July this year, Sri Lanka and India entered memoranda of understanding (MoU) on renewable energy cooperation, an energy hub development in Trincomalee.

President Wickremesinghe’s remarks on power grid connectivity on Sunday come amid pocket protests organised around the island against a recent 18-percent power tariff hike. Some of the protests are organised by opposition groups.

Linking the India and Sri Lanka power grids had been discussed since the 1970s.

The new plan involves a joint venture between Power Grid Corporation India and the Ceylon Electricity Board.

The plan got renewed attention after 2002, United State Agency for International Development (USAID/South Asia Regional Initiative on Energy Project) and another feasibility study was also conducted in 2011 by Power Grid Corporation of India Ltd (PGCIL).

An earlier plan involves a 285 kilometre High Voltage Direct Current link from Madurai to Anuradhapura, with 50 kilometres of submarine cabling.

Both the studies have concluded that a short term and a medium term link was more feasible than a long term one.

The short-term link will generate 500MW and a medium and long-term link will be 1000MW between the two countries.

As per the studies based on the cost, the construction of a high voltage direct current (HVDC) link from Madurai to Anuradhapura was suggested.

According to the PGCIL, the cost of constructing a short-term link (500MW) would be 340 million dollars while the longer/medium term link would cost 430 million dollars.

The two countries were initially planning to set up a 500MegaWatt cable at 340 million dollars and which would be upgraded to 1000MW later. (Colombo/Oct23/2023)

Leave a Comment

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

Leave a Comment

Leave a Comment

Cancel reply

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

Central banks expect to increase gold reserves after buying 1,037 tonnes in 2023: Survey

ECONOMYNEXT – About 29 percent of central banks in the world intended to increase their gold reserves in 2023, up from 24 percent in 2023 and just 8 percent in 2019, a survey by the World Gold Council showed.

“The planned purchases are chiefly motivated by a desire to rebalance to a more preferred strategic level of gold holdings, domestic gold production, and financial market concerns including higher crisis risks and rising inflation,” the WGC said.

About 81 percent of 70 central banks that responded to the survey expected global central bank holdings of gold to go up, from 71 percent in 2023.

While in prior years, gold’s “historical position” was the top reason for central banks to hold gold, this factor dropped significantly to number five this year.

This year, the top reason for central banks to hold gold is “long-term store of value / inflation hedge” (88%), followed by “performance during times of crisis” (82%), “effective portfolio diversifier” (75%) and “no default risk” (72%).

Concerns about sanctions were listed as by 23 percent of emerging market central banks (0 advanced).

De-dollarization as a reason to hold gold gained ground, but was not among the main reasons.

About 13 percent of emerging market central banks listed de-dollarization as one of the reasons to buy gold up from 11 percent last year and 6 advanced nations said the same from zero last year.

Around 49 percent of central banks expected gold reserves to be moderately lower five year from now in the 2024 survey, against 49 percent in 2023 and 38 percent in 2022.

About 13 percent of central banks surveyed said US dollar reserves would be significantly lower in the 2024 survey, up from 5 percent in 2023 and 4 percent in 2022. (Colombo/June18/2024)

Continue Reading

Sri Lanka rupee closes weaker at 304.75/305.40 to US dollar

ECONOMYNEXT – Sri Lanka’s rupee closed weaker at 304.75/305.40 to the US dollar Tuesday, down from 304.15 to the US dollar Friday, dealer said, while some bond yields edged up.

Sri Lanka’s rupee has weakened amid unsterilized excess liquidity from earlier dollar purchases.

Excess liquidity fell from as high as 200 billion rupees, helped by some sales of maturing bills and also allowing some term contracts to run out.

However the central bank has started to inject liquidity again below its policy rate to suppress interest rates.

On Tuesday 30 billion rupees was printed overnight at an average yield of only 8.73 percent.

Separately another 25 billion rupees was printed till June 25 at 8.09 percent to 9.05 percent, which was still below overnight the policy rate of 9.5 percent.

Nobody has so far taken the central bank to court for printing money beyond overnight at rates lower than the overnight rate.

Sri Lanka operates an ad hoc exchange rate regime called ‘flexible exchange rate’ which triggers panic among market participants, as the central bank stays away when spikes in credit either creates import demand or unsterilized credit is used up.

“If large volumes of unsterilized liquidity is left, the exchange rate has to be closely defended to prevent speculation involving early covering of import bills and late selling of exports proceeds,” EN’s economic columnist Bellwether says.

“Just as an appreciating or stable exchange rate leads to late covering of import bills, a falling rates leads to immediate covering of import bills.

“Keeping exchange rates stable is a relatively simple exercise but it is difficult to do so if short term rates are also closely targeted with printed money, as liquidity runs out, as if the country had a free float and no reserve target.”

“When there is a large volume of excess liquidity remaining (except those voluntary deposited for long periods by risk averse banks) the the interest rates structure is under-stated compared to the reported reserves.

“Interest rates would be a little higher than seen in the market if the liquidity was mopped up and domestic credit and imports were blocked to prevent the reserves from being used up.”

In East Asia there is greater knowledge of central bank operational frameworks, though International Monetary Fund driven flawed doctrine are also threatening the monetary stability of those countries, critics say.


Vietnam selling SBV bills to stabilize the Dong, as Sri Lanka rupee also weakens

Sri Lanka’s rupee started to collapse steeply after the IMF’s Second Amendment in 1978 along with many other countries as flawed operational frameworks gained ground without a credible anchor.

A bond maturing on 15.12.2026 closed at 10.10/30 percent up from 10.05/30 percent Friday.

A bond maturing on 15.10.2027 closed at 10.60/57 flat from 10.60/80 percent.

A bond maturing on 01.07.2028 closed at 11.15/35 percent, up from 11.05/20 percent.

A bond maturing on 15.09.2029 closed at 11.80/90 percent unchanged.

A bond maturing on 15.10.2030 closed at 11.90/12.00 percent.

A maturing on 10.12.2031 closed at 11.95/12.10 percent.

A bond maturing on 01.10.2032 closed at down at 11.95/12.10 percent, down from 12.00/10 percent. (Colombo/Jun14/2024)

Continue Reading

Sri Lanka’s Ceylon Chamber links up with Gujarat Chamber

ECONOMYNEXT – The Ceylon Chamber of Commerce has signed an agreement with the Southern Gujarat Chamber of Commerce and Industry (SGCCI) to increase trade cooperation between India and Sri Lanka.

The MOU was signed by CCC CEO Buwanekabahu Perera, SGCCI President Ramesh Vaghasia, in the presence of Dr Valsan Vethody, Consul General for Sri Lanka in Mumbai, India.

“With the signing of the MoU, … the Ceylon Chamber of Commerce and SGCCI aim to facilitate trade between the two countries via initiatives such as trade fairs and delegations, business networking events, training programmes,” the Ceylon Chamber said in a statement.

“This partnership will open doors for Sri Lankan businesses to explore opportunities in Surat’s dynamic market and enable the sharing of expertise and resources between the two regions.”

Established in 1940, SGCCI engages with over 12,000 members and indirect ties with more than 2,00,000 members via 150 associations. It promotes trade, commerce, and industry in South Gujarat.

The region’s commercial and economic centre Surat has risen to prominence as the global epicenter for diamond cutting and as India’s textile hub, and is ranked the world’s 4th fastest growing city with a GDP growth rate of 11.5%

Surat’s economic landscape is vibrant and diverse. As India’s 8th largest and Gujarat’s 2nd largest city, it boasts the highest average annual household income in the country.

The nearby Hazira Industrial Area hosts major corporations like Reliance, ESSAR, SHELL, and L&T. (Colombo/Jun18/2024)

Continue Reading