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Sunday December 10th, 2023

Sri Lanka Transport Board to re-fuel private buses, more diesel promised

ECONOMYNEXT – State-run Sri Lanka Transport Board will pump fuel for privately owned buses from Monday, as forex shortages coming from money printed by the central bank to maintain low interest rates made it difficult to import oil.

Chirman of state-run Ceylon Petroleum Corporation Sumith Wijesinghe said the firm had started delivering fuel to SLTB pumping stations following discussion with newly appointed transport minister Dilum Amunugama.

Private bus owners had requested fuel from SLTB to avoid being in queues with the rest of the public.

“There are 1200 CEYPETCO fuel stations and 210 IOC fuel stations,” Wijesinghe said. “We gave the facility for the bus owners to get diesel from these stations.

“We had the discussion on Friday (4), and we have started deploying fuel for CTB fuel stations and by Monday or Tuesday we will be able to complete it.”

Sri Lanka is facing delays in unloading fuel due to foreign exchange shortages coming from money printed by the central bank. The central bank has been giving reserves for imports at a 200 to the US dollar peg, but has been printing money at 6.5 percent to prevent rates from going up.

Last week the rate was hiked to 7.5 percent. Money is also being printed to given a 8 rupee per dollar subsidy to expat workers sending dollars through banking system, which boost imports and boomerang on the reserves of the central bank.

Further rate hikes and float of the currency is needed to end forex and fuel shortages, analysts say.

There have been calls to change the governing law of the central bank to prevent its domestic operations department from printing money to keep interest rates artificially low, trigger currency crises and social unrest.


Sri Lanka central bank hikes policy rate 100bp to counter forex crisis

Meanwhile Wijesinghe said, fuel supply for the agricultural areas will also be boosted.

” The agriculture minister requested us to provide adequate fuel for the agriculture areas in the country,” Wijesinghe said.

“With that we deployed fuel for those areas, not only in western province but also in other areas as well. From yesterday till tomorrow we will deploy these fuels,”

The general public was stocking more fuel than in the past and are also running generators, boosting demand.

“People are using more fuel than they usually started stacking up extra fuel in cans and barrels. This is the cause for shortage of fuel in the country,” Wijesinghe claimed

“We have now started unloading fuel for the consumption in the country. And the ques are getting shorter and by the end of the day it will settle.

“We did not say that we don’t have enough fuel since we had enough fuel for the daily consumption with us. So we ask the general public to not to panic and use fuel as usual,”

Wijesinghe said, from each fuel ship, CPC received 35- 40,000 metric tons and for the monthly consumption Sri Lanka needs around 200,000 metric tons of Diesel.

Asking the general public to preserve fuel without overconsumption, he said, the price of fuel has gone up to a record high in the international market, mainly due to Russia – Ukraine conflict.

However, Wijesinghe said, CPC has ordered the necessary amount of all types of fuel for daily consumption.

“And on next Monday and Tuesday we will receive more diesel consignments. And all the fuel we need, including furnace oil, Jet AL, Diesel and etc we have placed orders” Wijesinghe said.

“We responsibly say there won’t be any shortage of fuel in the coming days.”

Commenting on the ongoing power crisis due to shortage of furnace oil and diesel, Wijesinghe said, as agreed in the discussions held with Ministers of Power and Electricity, CPC will start supplying necessary furnace oil and diesel stocks from Monday onwards.

“We are having meeting on Saturday (5) and we will finalize on how to continuously supply the necessary fuel to CEB,” WIjesinghe said.

“CEB said, with demand decreases in the weekend, it can be managed with the current stocks they have and from Monday onwards we will supply the needed diesel and furnace oil for power generation without any interruption,” (Colombo/ March 6/2022)

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ADB USD200mn loan for Sri Lanka economic stabilization efforts

ECONOMYNEXT – The Asian Development Bank (ADB) has approved a US 200 million dollar concessional loan to Sri Lanka to help stabilize the country’s finance sector.

The Financial Sector Stability and Reforms Program comprises two subprograms of IS 200 million dollars each, according to a statement by the ADB.

“The program’s overarching development objective is fully aligned with the country’s strategy of maintaining finance sector stability, while ensuring that banks are well-positioned for eventual recovery,” ADB Country Director for Sri Lanka Takafumi Kadono was quoted as saying in the statement.

“The expected development outcome is a stable financial system providing access to affordable finance for businesses in various sectors of the economy.”

The ADB statement continues:

“Subprogram 1 targets short-term stabilization and crisis management measures that were implemented in 2023, while subprogram 2 is planned to be implemented in 2024 and focuses on structural reforms and long-term actions to restore growth in the banking sector.

The program will help strengthen the stability and governance of the country’s banking sector; improve the banking sector’s asset quality; and deepen sustainable and inclusive finance, particularly for women-led micro, small, and medium-sized enterprises.

According to the International Monetary Fund’s (IMF) latest review, Sri Lanka’s economy is showing tentative signs of stabilization, although a full economic recovery is not yet assured.

The program is a follow-on assistance from ADB’s crisis response under the special policy-based loan that was approved for Sri Lanka in May 2023.

It is aligned with the fourth pillar of the IMF’s Extended Fund Facility provided to Sri Lanka to help the country regain financial stability.

It is also in line with the government’s reform agenda, including strengthening the operational independence of the Central Bank of Sri Lanka (CBSL) and its designation as the country’s macroprudential authority.

In designing this subprogram 1 loan, ADB has maintained close coordination and collaboration with the IMF to design targeted regulatory reforms for the banking sector—including the asset quality review—and with the World Bank on strengthening the deposit insurance scheme.

“The loan is accompanied by a $1 million grant from ADB’s Technical Assistance Special Fund to provide advisory, knowledge, and institutional capacity building for Sri Lanka’s Ministry of Finance and CBSL.”

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Sri Lank in blackout as power grid hit by cascading failure

ECONOMYNEXT – Sri Lanka suffered a blackout as Saturday evening as the state-run Ceylon Electricity Board grid was hit by a cascading power failure.

The cascading failure is believed to have been triggered by the failure of the Kothmale-Biyagama transmission line.

“The Ceylon Electricity Board wishes to inform our customers that due to the failure of Kotmale – Biyagama main transmission line, an island wide power failure has occurred,” CEB Spokesman Noel Priyantha said.

“Step by step restorations are underway and it may take few hours to completely restore the power supply.”

With hydro plants running flat out, a outage of the line tends to create a big imbalance in the demand and supply, leading to tripping of more lines and generators.

Lines can trip due to lightening strikes, or equipment failures.

Sri Lanka last suffered a cascading failure in December 2021, due to the failure of the same transmission line.

RelatedSri Lanka power blackout as grid hit by cascading failure

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Sri Lanka to host regional Food and Agriculture Organization conference

ECONOMYNEXT – Sri Lanka will host the 37th session of the Asia Pacific Regional Conference (APRC) of the United Nations Food and Agriculture Organization (FAO), from February 19-22, 2024 in Colombo.

The Conference will bring together agriculture ministers and officials from 46 countries across the region to discuss challenges in food and agriculture.

“The 37th APRC will provide a vital platform for regional collaboration, benefitting the agricultural landscape, fisheries sector and environment of Sri Lanka,” Minister Mahinda Amaraweera said at a press briefing on Friday (8) to announce the conference.

FAO has had an active presence in Sri Lanka for over 40 years. “FAO has supported the country in the implementation of Good Agricultural Practices (GAP), and the development of the fisheries sector for growth and climate resilience,” Vimlendra Sharan, FAO Representative for Sri Lanka and the Maldives said.

“The APRC conference will be an opportunity to highlight the innovative approaches introduced in partnership with the government.”

By hosting APRC, Sri Lanka hopes to demonstrate the country’s dedication to the growth of sustainable agriculture, and showcase its commitment to sustainable agricultural development.

The APRC agenda will include a forum on agritourism, especially requested by the Sri Lankan government.

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