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Monday March 4th, 2024

X-Press Pearl salvors mull boarding as Sri Lanka eyes pollution claim

ECONOMYNEXT – Sri Lanka police began to questions the captain of the stricken X-Press Peal, as part of probe in to the disaster and an interim damage claim while vessels operators said salvors were considering boarding to tow the ship with the fire being controlled to a large extent.

Sri Lanka’s Marine Environmental Protection Authority (MEPA), the Navy and Sri Lanka Ports Authority officials met the Attorney General on Monday.

MEPA Chairperson Dharshani Lahandapura said the AG’s advice had been sought on the next steps and he had also raised queries.

Pollution

The MEPA and related agencies had been collecting air, water and soil samples and sending them laboratory tests.

“To get compensations for environmental damage we need a very accurate specialist’s report,” Lahandapura told reporters.

“From specialists in chemistry to environmental scientists and environmental economics are needed. We are now collecting the data in a scientific manner and preparing the report.

NARA senior scientist Deeptha Amaratunga told local television that plastic granules which fell off the ship had gone beyond the Western coast.

“As the wind patterns changed with the onset of the South West Monsoon, the debris is going further south,” he said.

Sri Lanka had already banned fishing on an 80 kilometre stretch.

Bottom dwelling fish are also turning up dead on Sri Lanka’s shores. Some had burn injuries. Other fish had plastic pellets on their gills.

At least one sea turtle had also turned up the on beach to the North of the wreck dazed. Another dead was also found local television reports said.

Sri Lanka was collecting the debris, some of which could have hazardous chemicals and storing them.

Compensation Claim

Lahandapura said under international convention about three years is given to submit a claim.

In the case of MT New Diamond, another ship, the environmental claim had been just submitted after three months of work, she said.

The ship paid 442 million rupees in immediate fire fighting costs and a 12 million rupee fine was imposed on the captain before departure.

For X-Press Pearl, Sri Lanka is also looking into an interim claim.

“We are trying to see an interim claims to before we calculate the full damage,” Lahandapura said.

“If there is negligence, or omissions, we will also take steps against the party.”

A police team took a statement from the X-Press Pearl’s captain on May 31, after visiting him for the second day at a hotel in Colombo, where the crew is quarantined.

Nipuna Wimalaskera, lawyers acting for the crew told reporters a day earlier that when the police first visited, he had requested more time as he did not have the ships documents in possession, which were with the agents at the time.

X-Press Pearl was insured for protection and indemnity (P&I), the London P&I Insurance Company (Europe) Ltd or London P&I Club.

If the ship breaks up and sinks there will be massive damage from oil spill, SPGlobal, a risk assessor said.

MEPA and Sri Lanka Navy have so far managed to prevent an oil spill. The Indian Coast Guard also came with pollution control vessels.

X-Press Feeders, the operators container said salvors are looking at boarding the ship, with the fire largely under control.

“Firefighting tugs will continue spraying and misting the vessel with support from the Sri Lankan Navy and Indian coastguard, who remain on scene,” X-Press Feeders said.

“Salvors are also exploring the possibility of boarding the ship and making a tow connection so it can be moved.”

Fire Mystery

X-Press Pearl caught fire on May 20, shortly after requesting assistance to re-work a leaking nitric acid container.

Whether the fire was linked to the acid is not established Colombo Port Harbour Master Nirmal de Silva said and will require surveyors to board the ship to investigate, he said.

The fire had first broken out in the number 2 hold, while the containers were staked on the deck.

The crew had put out the first outbreak. The distressed ship then called for help when the fire flared for a second time.

The port dispatched its fire tug and the Sri Lanka Navy also came to help and doused the fire which was also on the deck. Sri Lanka Navy leads search and rescue in the waters around Sri Lanka.

The operators had also called SMIT Salvage and firefighting tug had arrived on the scene within 6 hours of being called.

However high winds of around 60 knots, gusting over 70 had made it difficult for the firefighter when it flared again. The was also a heavy swell, Sri Lanka’s Navy chief said.

The 2,700 TUE X-Press Pearl had been on the Straits to Middle East service (SMX) of X-Press Feeders starting from Port Klang-Singapore-Jebel Ali to Port Hamad and the return journey via Hazira and Colombo back to Malaysia.

“This was a scheduled caller,” de Silva said. “This was the third voyage of this vessel. This vessel having being delivered in February made her first call to Colombo on the 17th of March and departed on the 18th.

The second call was on April 17 and the departure on April 18. It had arrived in Sri Lanka on May 19 for the third time. (Colombo/May31/2021)

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Sri Lanka’s CEB reports Rs61bn profit for 2023 with Dec quarter gains

ECONOMYNEXT – Sri Lanka’s state-run Ceylon Electricity Bord has reported a profit of 61.2 billion rupees for the year to December 2023, turning around from a loss of 298 billion last year, with all the profits coming in the last year amid heavy rain and price hike, interim accounts show.

The CEB reported profits of 77.9 billion rupees for the December quarter, compared to a loss of 182 billion rupees last year.

About 94 billion rupees in losses were forex losses, coming from the central bank, which printed money to suppress rates and triggered a steep currency collapse in a failed float with a surrender rule.

CEB revenues rose 55 percent to 156 billion rupees in the December quarter, cost of sales fell 45 percent to 78 billion rupees amid heavy rains, giving a gross profit of 78.2 billion rupees for the quarter.

In the year to December, CEB revenues were 606.6 billion rupees, up 96 percent from 308 billion rupees, while cost of sales rose from 444 billion rupees to 506 billion rupees. Gross profits were 99.6 billion rupees.

At group level, which includes LTL Holdings, profits were 75 billion rupees for the year, with income taxes of 6.3 billion rupees, provided.

CEB consolidated profits were 68.4 billion rupees, with other shareholders of subsidiaries accounting for 7.2 billion rupees.

Equity was 498 billion rupees at company level by December 31, with 126 billion rupee capital contribution as well as profits earned in the last quarter. (Colombo/Mar05/2024)

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Sri Lanka rupee opens at 308.20/50 to the US dollar

Sri Lanka stocks reversed its falling trend and gained for the first time in six sessions on Tuesday closed stronger on Tuesday (21).

ECONOMYNEXT – Sri Lanka’s rupee opened at 308.20/50 to the US dollar Monday, from 308.80/90 on Friday, dealers said.

Bond yields were broadly steady.

A bond maturing on 01.08.2026 was quoted stable at 10.90/11.00 percent.

A bond maturing on 15.09.2027 was quoted at 11.90/12.00 percent from 11.90/12.05 percent.

A bond maturing on 01.07.2028 was quoted at 12.20/30 percent from 12.15/35 percent.

The Colombo Stock Exchange opened up; The All Share was up 0.60 percent at 10,755, and the S&P SL20 was up 1.24 percent at 3,077. (Colombo/Mar4/2024)

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Sri Lanka central bank swaps top $3.2bn by December

ECONOMYNEXT – Sri Lanka’s central bank borrowed US dollars from various counterparties through swap transactions, which had topped 3.2 billion US dollars by December 2024, official data show.

The net short position, including swaps disclosed by the central bank, grew by over almost 1.28 billion US dollars from December 2022 to 3,280 million dollars.

The gross position grew from 2,263 million dollars to 3,280 million US dollars over the year.

The central bank supported some state banks with dollars to cover their dollar exposures, which had since been paid back.

By December reported gross reserves of the central bank was 4,491 million US dollars, against swaps of 3,280 billion US dollars.

Swaps of around 1500 related to the People Bank of China.

Swaps allow a central bank to increase gross reserves, without raising domestic interest rates.

Swaps with domestic counterparties lead to liquidity being injected into money markets, which can be mopped if domestic credit growth is moderate.

At the moment many private banks have large dollar positions invested outside the country, which cannot be used for transactions domestically because of a money monopoly given to macro-economists. (Sri Lanka repays debt or collects reserves of U$5bn via banking system since rate correction)

However unwinding swaps after private credit has picked, or engaging in swaps after private credit has picked up, may lead to money being injected to maintain the policy rate, leading to excess credit by banks and balance of payments deficits and or currency collapses, analysts say.

Central bank swaps in the third quarter of 2018 led to a collapse of the currency under the ‘exchange rate as the first line of defence’ policy peddled to Sri Lanka, critics have said earlier.

Domestic currency proceeds of swaps were the primary ammunition to bust East Asian currencies in 1997-98.

Any depreciation after the swap proceeds have been used for imports (effectively mis-targeting rates) a central bank will run a forex loss.

The PBOC however had put a rule, preventing the use of the swap after gross reserves fell below 3 – months of imports, preventing Sri Lanka from getting into further trouble through the use of official reserves for private imports.

Sri Lanka’s central bank also used borrowings from the Reserve Bank of India, via the Asian Clearing Union to run BOP deficits.

Losses from exposed dollar positions of central banks which have gained ‘independence’ from fiscal rules and parliaments and engaged in macro-economic policy, including the Fed, have led to taxpayers bearing the losses in the end.

Swaps were invented by the Fed in the early 1960s, as it deployed macro-economic policy (printed money for growth) threatening its gold reserves and the Bretton Woods system.

Sri Lanka has other borrowings also, including from the IMF, which has made net foreign assets of the central bank negative. (Colombo/Mar05/2024)

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