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Wednesday June 19th, 2024

Sri Lanka to face 7.5 hour power cut on March 02 as energy crisis intesifies

ECONOMYNEXT – Sri Lanka will see a seven-hour scheduled power cut on Wednesday (02), with some areas expected to lose electricity for seven hours and 30 minutes.

The Public Utilities Commission of Sri Lanka (PUCSL) confirmed the decision to reporters Tuesday (01) afternoon.

Click here for the demand shedding schedule for Wednesday (02).

The island nation is in the midst of a power crisis on top of a severe forex shortage as the Ceylon Electricity Board (CEB) struggles to find fuel for thermal power generation, even as the reservoirs used for hydro power generation continue to run dry. On February 15, the CEB sought PUCSL permission for daily scheduled power cuts until further notice to provide electricity to meet peak demand during the day and at night.

On Tuesday, the CEB announced a three-hour power cut during day time and a possible 30-minute cut at night.

Even though the Central Bank of Sri Lanka (CBSL) has issued dollars for the Ceylon Petroleum Corporation (CPC) to pay for diesel off a ship that arrived last weekend, authorities have said it will not be sufficient to run the country’s thermal plants continuously.

The CEB said that, due to the unavailability of fuel, several thermal plants have been forced to shut down, while the MahaWeli Authority has instructed the utility provider to limit the drawdown of Castlereigh, Mausakelle and Samanalawewa reservoirs which are used for hydro power generation.

According to Wednesday’s power cut schedule, E and F areas will have outages of five hours each between 8am and 6pm and two hours power cuts between 6pm and 11pm.

In P, Q, R, S, T, U, V and W areas, power cuts of five hours will be imposed between 8am and 6pm and two hours and 30 minutes between 6pm and 11pm.

“If we can’t get credit from banks, if the government is not giving us any relief and if we also cannot increase prices, tell me where to find money to bring in diesel,” Energy Minister Udaya Gammanpila told the privately owned Derana Tv on Tuesday (01).

“We have 20,000 metric tonnes of diesel in stock, enough for four days. There is another ship coming tomorrow.”

Gammapila said the government should understand priorities when importing products into the country.

“Our imports bill for the last year was one of the biggest [on record], which was 21 billion US dollars. Only 2.8 billion dollars was spent on fuel,” he said.

“According to CBSL, we have spent 6 billion US dollars for non-essential items such as drinking water, dhal, apple, and other fruits. Their reason for importing these items such as fruits is that tourists are demanding these items,” Minister Gammanpila claimed, in a Mercantilist reaction.

“But if tourists come and they have to stay in the dark with no electricity, or can’t travel because of fuel shortages, they will not visit Sri Lanka again. So we have to identify the priorities. This is a more crucial situation than the war we faced in the past,”

Sri Lanka is printing money to keep interest rates low, driving imports to record levels. Money is now being printed to sterilize interventions and also to give a subsidy to expatriate workers sending dollars through official channels.

Analysts have urged interest rates to be raised and the rupee to be floated. Controlling imports cannot solve balance of payments problems. (Colombo/Mar01/2022)

Comments (4)

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  1. W.M.Nipuna Nimesha says:

    please given tomorrow power cut schedule kuliyapitiya,halmillawewa aria

  2. Frustrated citizen says:

    Every single day for the past week they have been telling they are going to cut and have not done so. Please stick to a final decision without wasting the publics time!

  3. Manel Kumari says:

    Jkmmm

  4. Arham says:

    Eppa current varum

View all comments (4)

Comments (4)

Cancel reply

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

  1. W.M.Nipuna Nimesha says:

    please given tomorrow power cut schedule kuliyapitiya,halmillawewa aria

  2. Frustrated citizen says:

    Every single day for the past week they have been telling they are going to cut and have not done so. Please stick to a final decision without wasting the publics time!

  3. Manel Kumari says:

    Jkmmm

  4. Arham says:

    Eppa current varum

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)

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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.

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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)

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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)

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