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Tuesday February 27th, 2024

Sri Lanka tea firms lose 40-pct output, working with tight Covid-19 rules

ECONOMYNEXT – Sri Lanka commercial tea plantations which have thousands of workers per farm said they were operating with tight health rules amid curfews imposed to spread Coronavirus in the country while losing 40 percent of the output to drought in the last three months.

The firms were keeping sanitation practices and social distancing while all workers were issued protective equipment.

Meanwhile, all staff and worker dwellings, as well as factory premises will continue to be disinfected on a regular basis.

“RPC mangers and staff are also on the frontlines in order to ensure that all estate communities are safeguarded and supported through this unprecedented global pandemic,” PA Media Spokesperson, Roshan Rajadurai said.

“Despite the challenges, RPCs are fully committed to ensuring the health and safety of its employees.

“The PA and its members will also be carefully monitoring the situation as it develops, and will be ready to implement any further directives issued by the Government and health authorities on an urgent and immediate basis,”

“While work on the estates was halted by 13th March, as soon as the COVID pandemic worsened, most RPCs were able to resume work after only 4-days interruption,” Sunil Poholiyadde Chairman of the Planters’ Association which represents the biggest tea and rubber firms said.

“This was due to the remarkable initiative taken by the RPCs with the assistance of health authorities to institute stringent health and safety protocols, while ensuring that all workers and the wider estate community had their essential needs met.”

“The challenges around COVID-19 add to the already pressing difficulties of tea producers who have been facing an unprecedented drought for the past 3 months which is estimated to have caused as much as a 40 percent reduction in estate production.

“The loss in crop had already created an increase in the cost of production (COP).”

The Regional Plantations Companies have workforce of135, 000. Food rations were delivered to them directly. With many migrant workers having come back there is a population of about a million the PA said.

Sri Lanka has started e-auctions for tea and prices had moved up due to production fall of 40 percent currency depreciation. Rubber auctions had been delayed.

Currency falls would hit input costs, Poholiyadde said.

Sri Lanka’s central bank has the worst record among South Asian central banks in monetary stability with the steepest fall and its soft-pegged framework was weakened further recently by narrowing the policy corridor and targeting a call money rate with excess liquidity, analysts have said.

The resumption of auctions would ease some of the cash flow problems of the companies.

“The resumption of auctions has been an extremely welcome development for the rubber sector as well,” Poholiyadde said.

“Prices have remained at relatively similar levels to before the COVID outbreak; however we will need to pay careful attention here given the sharp declines which were seen in global oil prices.” (Colombo/Apr17/2020)

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Sri Lanka president appoints Supreme Court-faulted official as police chief after CC clearance

ECONOMYNEXT – Sri Lanka President Ranil Wickremesinghe appointed Deshbandu Tennakoon as the 36th Inspector General of Police (IGP) of the country after the Constitutional Council (CC) cleared the official who along with three other police officers were asked by the Supreme Court to compensate 2 million rupees in a fundamental rights case last year.

“President Ranil Wickremesinghe has appointed Deshbandu Tennakoon as the IGP in accordance with the provisions of the Constitution,” the President’s Media Division (PMD) said.

The island nation’s Supreme Court on December 14 ordered Tennakoon when he was the Acting IGP and three other officials to pay a compensation of 500,000 rupees each for the violation of the fundamental rights of an individual.

The Supreme Court also instructed the Police Commission to take disciplinary action against the said Police officers after it considered the petition filed by W. Ranjith Sumangala who had accused the Police officers of violating his fundamental rights during his detention at Mirihana Police Station in 2011.

The Supreme Court held that the four police officers violated the fundamental rights of the petitioner by his illegal arrest, detention and subjection to torture at the Mirihana Police Station, which was under the supervision of Tennakoon at the time of the arrest.

President’s Secretary Saman Ekanayake presented the official appointment letter to Tennakoon on Monday (26) at the Presidential Secretariat.

When Tennakoon was asked over if the Supreme Court decision would have an impact on his appointment as the IGP last week, he declined to comment, saying that it was a Supreme Court matter and he does not want to say anything about it.

Tennakoon was also criticized by Colombo Archbishop Cardinal Malcolm Ranjith when he was appointed as the Acting IGP citing allegations against him related to security lapses leading up to the Easter Sunday attacks which killed at least 269 in April 2019.

However, Tennakoon rejected the allegations. (Colombo/Feb 26/2024)

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No water tariff hike in Sri Lanka this year: Minister

Millennium Challenge Corporation Photo.

ECONOMYNEXT – Sri Lanka’s planned water tariff formula is ready, and the government will implement it this year only if the formula’s tariff is lower than the current price, Water Supply Minister Jeevan Thondaman said.

President Ranil Wickremesinghe’s government has been implementing IMF-led pricing policies on utilities and the Water Supply Ministry has already come up with a formula.

“There is a water tariff formula in place right now and we are waiting for it to be drafted and seek approval from the cabinet,” Thondaman told reporters at a media briefing in Colombo on Monday.

“Once this water tariff formula is in place, there will be an annual revision with an option of biannual review.

The formula has been developed with the help of the Asian Development Bank. The formula includes electricity and exchange rate among many others as components like the fuel formula.

The National Water Supply and Drainage Board (NWS&DB) increased the water tariff in August 2023, claiming that the operating cost had been increased owing to high interest payment for bank loans and increased electricity prices.

The last year revision saw the consumers paying 30-50 percent increase from the existing water bill.

Minister Thondaman said he will implement the new formula this year only if there is a reduction.

TARIFF CUT WILL BE IMPLEMENTED 

“We will have to wait to see what the formula is. If the formula shows us there needs to be a reduction in the water tariff, we can implement it. But if there is an increase, why should we burden the people when we are on a road to recovery?” he said.

He said a group of experts including University Professors are working on the formula and the numbers.

“Once they come with the number, we will have to take a decision on whether we are going to impose on the people or not,” he said.

“We have already spoken to the Asian Development Bank and informed them we have established the formula. But according to the ADB requirement of this policy-based loan, the implementation period is only in 2025.”

“But right now, you want to take the approval for the formula for sustainability.”

The Energy Ministry is considering a drastic slash in electricity tariff soon. Thondaman said the exact numbers will be decided on after the finalized electricity tariff.

However, he said that as per the formula, there has to be a up to 10 percent increase in the water tariff as of now.

“Given the current formula set up, there must be around a 9-10 percent increase. It was actually at 14 percent. What we have done is since it is at 14 percent, we also did a calculation to see how we can do a cost cutting,” he said.

“So, despite our cost cutting measures, there will be an increase of 9 or 10 percent. But we will not be imposing it as of now because this year is meant to be policy sector reforms. Next year is meant to be the implementation.”

“As per August 2023 water tariff hike, we are able to come close to sustainable. So right now, there is no issue in the water sector. But a formula eventually needs to be established.” (Colombo/Feb 26/2024)

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Sri Lanka rupee closes at 310.80/311.00 to the US dollar

ECONOMYNEXT – Sri Lanka’s rupee closed at 310.80/311.00 to the US dollar Monday, from 310.95/311.05 on Thursday, dealers said.

Bond yields were down.

A bond maturing on 01.02.2026 closed stable at 10.60/80 percent.

A bond maturing on 15.09.2027 closed at 11.80/90 percent down from 11.90/12.05 percent.

A bond maturing on 15.03.2028 closed at 12.00/12.15 percent down from 12.10/25 percent.

A bond maturing on 15.07.2029 closed at 12.20/70 percent from 12.20/95 percent.

A bond maturing on 15.05.2030 closed at 12.30/70 percent down from 12.40/95 percent.

A bond maturing on 15.05.2031 closed at 12.60/80 percent from 12.45/13.00 percent.

A bond maturing on 01.07.2032 closed at 12.50/90 percent from 12.50/13.30 percent. (Colombo/Feb26/2024)

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