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Thursday April 18th, 2024

Sri Lanka’s Ceypetco hikes petrol, diesel prices, halts rationing

ECONOMYNEXT – Sri Lanka’s state-owned Ceylon Petroleum Corporation (Ceypetco) raised petrol to 338 rupees a litre and auto diesel to 289 rupees from the mid night of Monday after saying it suffered big losses due to a collapse of the rupee and higher global prices.

It also removed a fuel rationing introduced last week to limit sales to individual customers at pump to stop sheds from running out of fuel faster.

The latest price hike will see the price of mostly used Octane 92 rising by 33.1 percent to a record 338 rupees a litre while auto diesel jumping by 64.2 percent to 289 rupees, in par with the prices of Lanka IOC, the Indian Oil Corporation unit .

Octance 95 will go up to 373 rupees, higher than the 367 rupees at LIOC. Octane 95 fuel is usually sold at a profit. Super diesel, which is also usually profitable was raised to 329, higher than LIOCs 327 rupees.

Since the central bank on March 7 announced a flexible exchange rate, the rupee has fallen nearly 70 percent to around 340 rupees. The Lanka IOC raised prices thrice since the central bank’s decision to allow flexible exchange rate, though the Ceypetco has increased only once.

The move came after thousands of motorists turned to Ceypetco as Lanka IOC prices were expensive. Some Ceypetco filling stations ran out of fuel, as a result.

Ceypetco chairman Sumith Wijesinghe on April 11 said the state-owned fuel retailer was losing between 800 to 1000 billion rupees a day as it was losing 110 rupees per litre of diesel when it was sold at 176 rupees and 52 rupees for a litre of petrol when it was priced at 254 rupees.

The Lanka IOC has been raising fuel prices in line with the global market price, but Ceypetco, under pressure from the government, was not allowed to raise prices because such move would be make the ruling Sri Lanka Podujana Peramuna (SLPP) unpopular.

Sri Lanka is facing its worst economic crisis since the independence from the British colonial rulers in 1948. The island nation last week announced a “preemptive default” on its sovereign debts.

The government is facing strong protests from both public and opposition parties for mismanagement of economic policies. A youth-led protesters have spearheaded a campaign, demanding President Gotabaya Rajapaksa and his government to resign due to their failure.

A severe shortage of fuel was seen in the last few weeks because the Ceypetco also has to supply for power generation amid extended power cuts as high as 13 hours in some days.

When prices are not raised and losses are financed with bank credit, which in turn is re-financed by the central bank through its 13.5 percent window, inflation goes up. The money printed to finance losses also creates forex shortages.

The dollar shortage has led to a lack of fuel and extended power cuts, crippling many industries related to manufacturing and transport, and disrupting the country’s economic activities. (Colombo/April 19/2022)

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Sri Lanka’s discussions with bondholders constructive: State finance minister

ECONOMYNEXT – Sri Lankan authorities continue to engage all debt restructuring negotiations in good faith, within principles of equitable treatment among creditors, and with maximum transparency within the norms of such negotiations, State Minister of Finance, Shehan Semasinghe has said.

“It is standard practice, when a representative group of bondholders is formed, to entertain confidential discussions with such group and its appointed advisors. In the case of Sri Lanka, the Ad Hoc Group of Bondholders represents holders controlling more than 50% of the bonds, which make them a privileged interlocutor for Sri Lanka,” Semasinghe said on X (twitter).

“It is well understood that given the price sensitive nature of the negotiations, and according to market regulations, discussions with the Group and its advisors are to be conducted under non-disclosure agreements. This evidently restricts the ability of the Government to unilaterally report about the substance of the discussions.

“The cleansing statement, which was issued on the 16th of April, at the conclusion of this first round of confidential discussions with members of the Group, aims at informing the Sri Lankan people, market participants and other stakeholders to this debt restructuring exercise, about the progress in negotiations. It provides the highest possible level of transparency within the internationally accepted practices in such circumstances.

“As informed in this statement, confidential discussions held in recent weeks with bondholders’ representatives proved constructive, building on the restructuring proposals presented by both parties. During the talks both sides successfully bridged a number of technical issues enabling important progress to be made. Sri Lanka articulated key remaining concerns that need to be addressed in a satisfactory manner.

“The next steps would entail further consultation with the IMF staff regarding assessments of the compatibility of the latest proposals with program parameters. Following these consultations, we hope to continue discussions with the bondholders with a view to reaching common ground ahead of the IMF board consideration of the second review of Sri Lanka’s EFF program.”

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Sri Lanka rupee weakens at 301.00/302.05 to the US dollar

ECONOMYNEXT – Sri Lanka’s rupee closed at 301.00/302.05 to the US dollar in the spot forex market on Tuesday, from 299.00/10 on Tuesday, dealers said. Bond yields were broadly steady.

A bond maturing on 15.12.2026 closed stable at 11.30/35 percent.

A bond maturing on 15.09.2027 closed at 11.90/12.05 percent up from 11.95/12.00 percent.

A bond maturing on 15.12.2028 closed at 12.10/20 percent down from 12.10/15 percent.

A bond maturing on 15.07.2029 closed at 12.25/40 percent.

A bond maturing on 15.03.2031 closed at 12.30/50 percent. (Colombo/Apr17/2024)

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Sri Lanka Treasury Bill yields down across maturities

ECONOMYNEXT – Sri Lanka’s Treasuries yields were down across maturities at Wednesday’s auction with the 3-month yield moving down 7 basis points to 10.03 percent, data from the state debt office showed.

The debt office sold all 30 billion rupees of 3-month bills offered.

The 6-month yield fell 5 basis points to 10.22 percent, with 25 billion rupees of bills offered and 29.98 billion rupees sold.

The 12-month yield dropped 4 basis points to 10.23 percent with 18.01 billion rupees of bills sold after offering 23 billion rupees. (Colombo/Apr17/2024)

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