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Tuesday June 25th, 2024

Sri Lanka tuk-tuk drivers refuse to reduce fares despite drop in petrol price

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ECONOMYNEXT – Threewheeler taxi fares in Sri Lanka will not be reduced despite a drop in petrol prices, a threewheeler union said, blaming what they called an unfairly low allocation of fuel through a QR code-based quota system.

President of the All-Island Three-Wheeler Drivers’ Union Lalith Dharmasekera told EconomyNext on Monday October 03 that they’re not in a position to reduce fares at present.

On October 01, the state-run Ceylon Petroleum Corporation (CPC) reduced the price of petrol 92 will 40 rupees per liter and 95 by 30 rupees a litre.

“It’s not unreasonable that the public wants to know if there will be a tuk-tuk fare revision after petrol prices dropped; but we can’t reduce our rates because fuel supply to threewheelers is restricted,” he said.

Since July, Sri Lanka has been restricting fuel supply as a consequence of the island nation’s worst currency crisis in decades. A QR code based quota system was introduced to streamline the supply process and reduce the mile-long queues that were seen at filling stations around the country. However, threewheler drivers have been complaining that they’re only allowed five litres of petrol a week.

“We run hires and we have a family to back home to feed. So added to our quota we have obligations to meet for our families and five litres is not doing us any good. It’s simply not enough,” said Dharmasekara.

In September, Power & Energy Minister Kanchana Wijesekera announced an increase in the quota issued to full-time threewheeler drivers, requiring them to register themselves at their local police station.

“We are depressed and disappointed about the fuel situation in the country,” said Dharmasekera, adding that a majority of threewheeler drivers who run taxi hires by scanning the QR code multiple times and other “illegal” means of acquiring fuel. Often they resort to bribing filling station workers for more fuel.

Threewheeler drivers have been complaining of the meagre fuel quota, lamenting its inadequacy to run hires.

“Raise the quota and we will put down our prices. If our supply is unchanged, then so are the prices we charge,” said one driver.

Several tuk drivers charge various prices due to the fuel crisis and use different meters such as the inbuilt meter, phone meter and even rough estimates to calculate the fare.

Meanwhile, tuk commuters also complain of a lack of regulation in the industry and unfair pricing. (Colombo/Oct03/2022)

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Sri Lanka to sign Paris Club debt deals as fresh ISB talks to also start

ECONOMYNEXT – Sri Lanka will sign agreements on restructured debt with Paris Club creditors Wednesday, Cabinet spokesman Minister Bandula Gunawardana said as sources said talks with private creditors are also due to start later in the week.

The relevant senior officials and State Minister Shehan Semasinghe has already left the country to sign the agreements, Minister Gunawardana said.

Sri Lanka has held detailed negotiations with bilateral creditors ever since a sovereign default in 2022 and President Ranil Wickremesinghe has personally met leaders of friendly countries to expedite the restructuring, he said.

The finalizing of the restructure was a ‘great victory’ for Sri Lanka he said.

Details will be revealed to parliament by President Wickremesinghe and an address to the nation on Wednesday he said.

Discussion with private bondholders are also taking place separately, he said.

Face to face talks with bond holders are likely to start Thursday, sources said.

Investors in a steering committee representing key bondholders have halted trading and are in a ‘restricted’ period Bloomberg Newswires reported.

Sri Lanka is attempting to restructure 12.5 billion dollars of sovereign bonds and about 1.7 billion dollars of past due interest following the declaration of an external default in 2022.

Private investors are seeking some so-called macro-linked bonds whose final haircut is linked to dollar GDP as well as some standard or ‘plain vanilla’ bonds with an upfront haircut.

The style of bonds have not been used in sovereign restructurings before. In the latest round of talks more plain vanilla bonds may be discussed, sources aware of the thinking of some bond investors said.

The ISB holders have proposed a 28 percent haircut and a 1.8 percent consent fee. The macro-linked bonds would have principle re-stated up to 92 percent of the original depending on the evolution of gross domestic product.

Sri Lanka is restructuring debt using an IMF debt sustainability model applied to middle income countries with market access as opposed to debt sustainability model used in countries like Ghana applicable to low income countries requiring deeper haircuts on both domestic and foreign debt.

Hair cuts may also depend on the maturity of bonds and the coupon interest.

Ghana has higher levels of commercial debt having started to access capital markets from around 2007.

Ghana also has a bad central bank like Sri Lanka and has gone to the International Monetary Fund 18 times.

The country is also operating flexible inflation targeting (inflation targeting without a clean float), which critics say is the latest spurious monetary regime peddled to hapless unstable countries without a doctrinal foundation in sound money.

Having done broad domestic debt restructuring as well as continued currency volatility both interest rates and inflation remains above 20 percent.

Ghana’s central bank has a worse monetary anchor (8 percent inflation plus 2 percent) compared to 5 percent plus two in Sri Lanka and runs into currency trouble despite being an oil producer like Iran, Venezuela and neighboring Nigeria.

Nigeria has an inflation target of 6-9 percent but ends up with around 20 plus inflation and currency trouble.

Sri Lanka has undershot its inflation target since reaching monetary stability in September 2022 and has appreciated the currency, amid deflationary policy giving a strong foundation for economic activity to resume. (Colombo/June26/2024)

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Sri Lanka to seek investors for 200MW BOOT power plant

EONOMYNEXT – Sri Lanka’s cabinet has given approval to seek investors for a 200 MegaWatt independent power plant on a build-own-operate-and-transfer (BOOT) basis, a government statement said.

The internal combustion power plant will be capable of running on natural gas and is part of the Long-Term Generation Expansion of state-run Ceylon Electricity Board.

The investor will get as 20-year power purchase agreement.

Land next to the ‘Sobhadanavi’ combined cycle plant will be made available for the developer.

According to the generation plan, the 200MW IC plant is expected to come on stream by 2026.

In 2026, a 115 MW gas turbine, a CEB owned diesel plants of 68 MW and 72 MW are due to be retired. (Colombo/June25/2026)

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Sri Lanka rupee closes steady at 305.25/35 to US dollar

ECONOMYNEXT – Sri Lanka’s rupee closed fairly flat at 305.25/35 to the US dollar on Tuesday, down from 305.20/30 to the US dollar on Monday, dealers said, while bond yields up.

A bond maturing on 01.06.2026 closed at 10.75/11.05 percent.

A bond maturing on 15.12.2026 closed at 10.65/11.05 percent, up from 10.45/85 percent.

A bond maturing on 15.10.2027 closed at 10.65/11.10 percent.

A bond maturing on 15.03.2028 closed at 11.20/11.50 percent.

A bond maturing on 15.09.2029 closed at 12.10/15 percent, up from 12.05/17 percent.

A bond maturing on 01.12.2031 closed at 12.10/20 percent, up from 12.08/15 percent.

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