Author: TELO Admin

Sri Lanka has closed its sole refinery for 50 days to save foreign exchange for food and medicine Petroleum Minister Udaya Gammanpila said as the country faces severe foreign exchange shortages due to loss of credibility of a US dollar peg due to money printing.

“We decided to shut down the refinery for 50 days,” Gammanpila told reporters Monday. “We made this decision to manage limited foreign exchange to import essential foods.”

Gammanpila said the 51 year old refinery produced a relatively lower yield of distillates petrol and diesel but large volumes of furnace oil and naptha, which is usually used by the power sector.

“About 37 percent of the refined product is furnace oil and naptha,” he said. About 19 percent is jet fuel and kerosene. About 43 percent is petrol and diesel.”

He said heavy rains had pushed up hydro power and power ministry had said they did not need furnace oil. Jet fuel was also needed for long haul flights and short haul flights did not need much fuel from Colombo, he said.

“About 56 percent of the output of our refinery is furnace oil and jet fuel for which there is not much demand.

“So instead of getting crude, the limited foreign exchange will be used to import, petrol, diesel, medicines, gas and other essential goods.

“Our refinery supplies on 14 percent of the petrol demand and Diesel 29 percent of diesel needs,. Importing this requirement also as refined fuel is helping in managing foreign exchange.

“As soon we hope to resume operations as soon as forex crisis is solved. We think maximum 50 days we will have to keep it closed.”

Sri Lanka charges import duty for refined fuel, which is paid by rival Lanka IOC in full but crude imported by CPC is taxed at a lower rate. The tax relief covers the inefficiency of the refinery but the government loses tax revenues.

CPC has in the past also sold furnace oil to the Ceylon Electricity Board at higher than market price.

As news of the refinery closure spread, jittery motorists lined up to top up fuel leading to some fuel stations running dry.

“But this will only affect the Petroleum Corporation. People will not be affected,” Gammanpila said, adding that there will be uninterrupted fuel supply in the country.

The 50,000 barrel-per-day refinery was built in 1969 and used to refine light Iranian crude.

However after US sanctions imposed in 2012 it started to refine Oman light and Murban.

Sri Lanka has been trying to get a 3.6 billion US dollar credit line from Oman and a 500 million dollar credit line from India. However the deals have not been finalized as yet.

Sri Lanka’s foreign exchange reserves have plummeted 60 percent in the first nine months to 2.27 billion US dollars by end October as the central bank exchanged dollar for newly printed money to maintain a pegged exchange rate.

The Central bank has to allow rates to go up so that bond auctions do not fail and private credit slows. After price controls on bonds auctions were lifted, more bonds are being sold to real buyers but interbank forex markets are not working due to lack of credibility at the pegged exchange rate of 203.

Usually a float is required to get interbank markets to work and end a sterilized intervention trap (printing money to maintain a policy rate after intervening to maintain a peg).

The CPC also owes some suppliers who have given oil on credit.

As foreign exchange shortages worsened and there delays in settling letters of credit interest in CPC oil tenders are waning according to industry officials.

Lack of interest in crude tenders could also be contributing to the refinery closure.

“Though Sri Lankans do not know about the gravity of the forex crisis we are facing, the rest of the world knows it very much and that is why there are problems with tenders,” a source from the state-run Ceylon Petroleum Corporation said asking not to be named.

Chairman of Sri Lanka’s power utility MMC Ferdinando was quoted as saying in a state newspaper that two coal tenders were unsuccessful because Sri Lanka was facing a dollar crisis.

“We don’t have enough funds to open LCs,” he said.

The Supreme Court today ordered to release Riyaj Bathiudeen, the brother of former Minister Rishad Bathiudeen from the detention order under strict conditions.

However, the Supreme Court ordered to release Riyaj Bathiudeen from the detention after restricting his movement to the city limits of Colombo Municipal Council, in terms of Section 11 of the Prevention of Terrorism Act (PTA).

Riyaj Bathiudeen has been arrested by the officers of the CID on April 24 and is being detained at the said department under the detention order issued under the Prevention of Terrorism in connection with the Easter Sunday attacks.

Meanwhile, Supreme Court three-judge-bench comprising Justice Vijith Malalgoda, Justice Murdu Fernando and Justice Gamini Amarasekara granted leave to proceed with the Fundamental Rights petition filed Riyaj Bathiudeen challenging his arrest and detention.
The petitioner was further ordered to appear before CID on the first and third Sunday of every month. He was prevented from leaving the country without court’s permission.
The petition was fixed for May 10.

The Petitioner states that grave loss and damage have been caused to the Petitioner and to the members of his family due to the violation of his Fundamental Rights by the Respondents and it is just and equitable that the petitioner be awarded compensation in a sum of Rs. 5,000 million as compensation in respect of the violations of his Fundamental Rights.

This petition had been filed through Senior Counsel Gowry Shangary Thavarasha naming IGP, CID Director, DIG in charge of CID, Attorney General and several others as respondents.

In his petition Riyaj Bathiudeen denies the allegations that he aided and abetted the suicide bomb carried out by Ibrahim Insaf Ahamed on April 21, 2019 and he was engaged in any activity detrimental to religious harmony among communities.

The Petitioner said there was no reasonable suspicion to re arrest him and his arrest and detention are arbitrary and no new material to justify the requirement of issuing another detention order.

The Chinese organic fertiliser manufacturer Qingdao Biotech Group Co. Ltd has put forwarded a set of conditions to the Agriculture Ministry, demanding the payment of 70 percent of agreed price in the original tender agreement and additional freight charges.

The company is trying to push through a controversial shipment of organic fertiliser and has placed fresh demands for the return of its ship as the controversy over the shipment continues.

The Chinese company demands that it should be paid seventy percent (USD 5.6 million) of the initial tender agreement (USD 8 million), USD 36 million as freight cost and a joint statement with the Ministry to pronounce that the shipment was turned down on an import permit dispute, not on the quality of the fertiliser, according to ministerial sources.

In addition to these conditions, the company also indicated that the shipment should not be subjected to fresh testing of samples in future.

The demands were made in a November 9 letter sent by Chinese company director Song Hai Meito to Agriculture Minister Mahindananda Aluthgamage and State Minister Shasheendra Rajapaksa. The letter was copied to chairmen of Commercial Fertilizers Ltd and Ceylon Fertiliser Company Ltd.

The letter came in the wake of the Agriculture Ministry rejecting requests from the Chinese company to go for a third party test and made it clear that under no circumstances, would the contaminated shipment be allowed to discharge its cargo in any port in the country.

However, Minister Aluthgamage told the Sunday Times that the Government was willing to consider sharing losses if the current shipment was returned and a fresh shipment with fertiliser of accepted specifications was sent.

He said that if necessary, microbiologists from China and local microbiologists could sit together and test samples.

Early this week, Ministry officials met a delegation representing the Chinese fertiliser company to resolve the issue but the meeting ended inconclusively.

As of yesterday evening, the ship Hippo Sprint carrying 20,000MT of contaminated fertiliser was tracked near Kalutara, some 25 nautical miles from the Colombo port. Last week, the ship reappeared on maritime radars after briefly disappearing for days but remained in Sri Lankan waters.

Commercial Fertilizers Ltd Chairman Methsiri Wijegunawardana confirmed the receipt of the letter but declined to comment on the content since the matter was under judicial scrutiny. “There is a judicial process underway on this matter. Whatever the matter the party wants to negotiate, can do so through court process,”

The Colombo Commercial High Court is scheduled to hear the case on Friday.

Member of parliamentarian of British labour party, Sarah Jones says that the UK government must support to sanctions against Sri Lankan military commander Lt. General Shavendra Siva, who committed war crimes and human right violations against Tamils in the Civil war.

I am calling on the Government to support sanctions against Shavendra Silva. The wonderful Tamil community in my constituency continues to feel the impacts of civil war, and Tamils around the world deserve justice and accountability. Britain must lead on human rights, she further said in her tweet.

The Lanka Sama Samaja Party (LSSP) led by Prof. Tissa Vitarana, has decided to quit the government, reports say.

According to the ‘Lanka C News’ website, Prof. Vitarana had stated that although a request had been made to discuss the anti-public conduct and threats made by the members of coalition’s main stakeholder – the Sri Lanka Podujana Peramuna (SLPP), party leaders have not responded.

‘Lanka C News’ further reports :

Therefore, Prof. Vitarana is of the view that the LSSP shouldn’t remain a part of the government coalition any longer.

Accordingly, the proposal to leave the government would be submitted during the next politburo meeting of the party, he had further said.

Amidst lukewarm interest in what the Government had hoped will be one of its key means of attracting revenue, more than 50 prime lands in Colombo city and outstations are being offered on lease for local and foreign investors in a move to raise at least US$ 6bn.

The lands will be offered on Public Private Partnerships or joint ventures with the State holding 51 percent of shares, Urban Development Ministry Secretary Sirinimal Perera told the Sunday Times.

Some of the lands had previously been offered out without takers while additional properties have also been identified. Earlier expectations that a party named M/S Shumookh Investment and Services (SIS) of the Sultanate of Oman would take up the nine-acre Chalmers’ Granary land and the Air Force Headquarters have not materialised.

These two properties are also now on the list along with Summit Flats in Colombo 5—for which a Dubai investors had expressed interest—where ten acres are on offer for luxury apartments; six acres each in Vauxhall Street and D.R. Wijewardene Mawatha in Colombo; the Nugegoda and Kollupitiya markets; the Pettah World Market with four acres; three acres each in Rajagiriya, Denzil Kobbekaduwa Mw and Battaramulla; and lands located in Nuwara Eliya and Kandy. Fifty-five acres in Ekala, too, are available.

A Korean investor has come forward for the Welikada prison property, proposing to build the proposed new jail in Horana for relocation in exchange for the land on which the present facility stands.

The terms available are 33, 50 or 99-year leases for mixed development projects, residential towers, hospitality and leisure projects, logistic hubs and multi-storied car parks among others.

The Urban Development Ministry will facilitate loans and support for the respective projects after the leases. If, however, there is no progress after two years, the land will be taken back.

Despite aggressive marketing, however, interest has been lacking. One of the reasons is because of competition from Colombo Port City which also has prime property on offer with all supporting infrastructure in place, authoritative sources said. Meanwhile, the residential apartment market in Colombo is also now saturated.

However, the UDA is holding another investment forum on November 25 at Water’s Edge in Battaramulla to “energise Sri Lanka’s economy”. It will showcase all available prioritised real estate projects in the categories of mixed development, residential tower development, hospitality and leisure development, office tower development, logistic hub development, and multi-storied car park development.

On Friday, Finance Minister Basil Rajapaksa presenting the Budget for 2022 declared that the Government will look into whether conditions currently imposed to facilitate attraction of foreign direct investment should be relaxed. He also proposed that investment through local and international sources into mixed development projects on Railway Department lands should be considered.