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Tuesday June 25th, 2024

Sri Lanka’s Litro promises continuous LP gas supply; CPC says fuel en route

File photo of fuel queue in 2022

ECONOMYNEXT – Sri Lanka’s state run liquid petroleum (LP) gas company Litro announced a continuous supply of cooking gas cylinders to the market starting Friday (18), while the Ceylon Petroleum Corporation (CPC) said a fuel consignment sufficient for 20-25 days is also expected.

A Litro spokesman said 120,000 cylinders of LP gas were to be released to the market on Friday after a consignment of 3,500 metric tons of gas was unloaded at the Muthurajawela gas terminal.

The spokesman said that, in the coming days, Litro will issue gas according to market demand.

However, media reports showed long queues of people outside gas traders for long hours till the cylinders arrived. An ongoing forex shortage has led to similar queues for many essentials including fuel.

The dealers said, even though cylinders have been issued by the supplier, they have yet to reach them for distribution.

With the government focusing on purchasing fuel for daily consumption as well as power generation, importers said that commercial banks are no longer opening letters of credit (LCs) for them.

Last week, both Litro and the private Laugfs Gas Pvt Ltd that make up the LP gas duopoly in Sri Lanka predicted a possible shortage. Both companies had suspended gas supply to the market for a few days until Litro recommenced distribution on Friday with the arrival of the new consignment.

Meanwhile, fuel stations said demand for kerosene has increased, and people waiting in line at fuel stations can also be seen along with vehicles waiting for petrol or diesel.

Several fuel stations that supply CPC fuel and Indian Oil Company (OIC) fuel told EconomyNext that several types of fuel are not available to consumers at the moment.

“We have no types of fuel yet. Not Until Monday (21). We have closed the station,” a spokesman for an IOC fuel station in Maharagama said.

Another IOC station in Colombo 07 told EconomyNext that diesel will not be available till late evening on Friday, but enough petrol stock is available for consumers.

Despite CPC claims that there is no fuel shortage in the country, media reports continue to show long ng queues of vehicles waiting in front of CPC fuel station island wide.

CPC chairman Samantha Ratnayaka on Wednesday (16) said Sri Lanka was due to receive 140,000 metric tons of diesel and 60,000 metric tons of petrol in the next few days.

“Apart from the petrol consignment we unloaded on Wednesday, we expect to receive 60,000 metric tons of petrol,” Ratnayaka said.

“We have yet to receive these consignments, but they will be sufficient for around 20-25 days, so there will be no fuel storage in the country in the near future,” he said.

Officials said even though Sri Lanka has enough fuel for daily consumption, panic buying by consumers has created shortages in the country. (Colombo/Mar18/2022)

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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.
(Colombo/Jun25/2024)

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