By: Bandula Sirimanna

Sunday Times: A flagship government initiative to procure 100 luxury low-floor buses under the 2025 Budget has ignited a storm of controversy, as mounting allegations suggest the tender may have been structured to favour a single dominant player in Sri Lanka’s motoring industry.

Valued at over Rs. 3 billion, the project aims to establish a “Metro Bus Company” to modernise urban transport on key corridors such as Kottawa-Pettah, Kadawatha-Pettah, and Moratuwa-Pettah.

While the government hails it as a milestone in public mobility and digitalised transport, procurement analysts and civil society groups are questioning whether the tender process was manipulated to restrict fair competition.

The row deepened when the share price of a flagship listed motor company which was among the bidders jumped sharply weeks after the government announced the tender for the purchase of buses. Political commentators and market analysts pointed out that the timing of the sudden surge seemed anything but coincidental, and claims were made that inside information could have been leaked prior to the official announcement of the tender release.

According to government reports, officials who took part in the preparation of the bid documents are now facing an internal investigation.

The most contentious point is a financial eligibility clause requiring bidders to have maintained an annual turnover exceeding Rs. 6 billion (US$ 18 million) during at least three of the past five years, alongside stringent balance sheet and liquidity conditions including a positive asset-to-liability ratio below 60 per cent, and working capital exceeding Rs. 3 billion or $ 9 million for two of the last five years.

Procurement specialists argue that such criteria are excessive and inconsistent with the project’s scale.

“Turnover thresholds should ensure competence, not exclude credible competitors,” one former senior transport ministry official said. “These requirements effectively rule out most local bus importers who have reliably supplied vehicles to the government in the past.”

The technical specifications have also drawn scrutiny. The bid requires manufacturers to have produced at least 750 buses annually over three of the last five years, exported to five or more countries, and obtained multiple ISO certifications.

While such standards may seem reasonable for international procurements, critics contend that the combined requirements form a narrow filter that aligns almost perfectly with the production profile of one specific manufacturer effectively precluding competition from other qualified suppliers.

By: Staff Writer

October 19, Colombo (LNW): Sri Lanka is stepping up the global positioning of its iconic “Ceylon Tea” brand as export earnings surge and a European Union Geographical Indication (GI) registration is pursued to protect its identity and value. The push for GI status backed by a €1 million French-funded programme—comes as the tea industry posts robust figures and braces for new challenges.

At a recent forum in Colombo, Sri Lanka Tea Board Chairman Raaj Obeysekere described the GI move as “a major step toward safeguarding the authenticity of Ceylon Tea and securing higher export prices.”

The initiative, supported by Agence Française de Développement (AFD) in partnership with France’s Agricultural Research Centre for International Development (CIRAD), is designed to reinforce legal protection for the brand, combat counterfeiting and strengthen the premiums earned by producers and rural communities.

Meanwhile, the numbers point to a tea industry experiencing a weather-rebounce and increasing value-added transformation. Earnings for the first quarter of 2025 reached US $370.9 million, up about 5 percent from a year earlier, with export volumes at 63.2 million kg and average Free on Board (FOB) price of US $5.87 per kg.

From January to August 2025, tea export earnings had already surpassed US $1 billion, up 9.04 percent year-on-year, with 174.55 million kg shipped. For the first eight months, tea export revenue stood at around US $1,026.03 million, marking an 8.89 percent increase.

On the volume front, production for the full year of 2025 is projected at 275-280 million kg, up from 245.7 million kg in 2024. Export earnings are forecast at US $1.4-1.5 billion marginally above 2024’s US $1.435 billion.

Sri Lanka holds a reputable position in the global tea map: though no longer the world’s top producer, the country remains a significant exporter of orthodox black tea and holds a strong presence in value-added forms (tea bags, instant tea, branded packets). The shift to higher margin products is clearly underway. For example, in the first quarter of 2025 value-added selections grew their share to 56 percent of total exports.

Yet while momentum is positive, industry watchers caution that Sri Lanka still faces structural headwinds. Rising wages, older plantations, soil fertility concerns, and stiff competition from large-scale producers such as India and Kenya all present ongoing challenges.

The GI campaign is tailored in part to bolster Sri Lanka’s branding edge in a crowded marketplace. As Plantations Minister Samantha Vidyaratne noted, “Given current market conditions, internationally recognised standards through GI certification are essential.”

The GI process began around 2021 with input from over 500 stakeholders, as noted by AFD Country Director Yazid Bensaïd: “This initiative had to be participatory.” With an EU GI seal in place, “Ceylon Tea will join a global family of products whose quality and origin are celebrated,” said French Ambassador Rémi Lambert.

For Sri Lankan tea producers, the timing may be auspicious: global tea markets are undergoing shift from bulk commodities toward branded, traceable product lines, and demand from major markets such as India, China, Iraq, Russia and Libya remains strong. Analysts suggest that the GI tag, combined with the industry’s improving export performance, could help Sri Lanka leverage its premium positioning.

Overall, the tea sector’s current trajectory blends robust export growth, improved value-added offerings and strategic branding moves even as it navigates cost pressures and structural reforms. The sector’s next challenge will be converting its headline numbers and GI momentum into sustained profitability for estates and workers across the island.

By: Staff Writer

October 19, Colombo (LNW): Sri Lanka’s ambitious plan to build a China National Petroleum Corporation (“Sinopec”)-backed oil refinery in the southern port city of Hambantota has entered a critical phase of gridlock, exposing a tangle of strategic and commercial challenges behind the touted US $3.7 billion investment.

Announced formally in January 2025, the project envisages a 200,000-barrel-per-day (bpd) greenfield facility, making it the largest foreign-direct-investment (FDI) venture in Sri Lankan history.

Land has reportedly been allocated and initial infrastructure push-forward underway, yet final investment agreements and construction commencement remain unscheduled.

At the heart of the delay is a dispute over domestic market access, equity structure, and export quotas. Initially the government insisted that only 20 % of output be sold domestically and 80 % earmarked for export. Sinopec, however, seeks a higher proportion for local sales, citing commercial viability.

The mismatch in expectations has triggered a negotiation stalemate.On top of commercial wrangling, the project sits amid a broader strategic contest: India, China and Sri Lanka’s Western partners are all vying for influence in Sri Lanka’s rapidly evolving energy and infrastructure landscape.

For China, the Hambantota port and adjacent refinery represent a toehold in the Indian Ocean energy-supply chain. For India, the project raises concerns of strategic entrenchment near its maritime periphery.

Sri Lankan officials publicly emphasise that most “major issues” — such as land, water and tax clearances have been resolved. Foreign Minister Vijitha Herath met with Sinopec Vice President Liu Liangong in recent weeks to “expedite the remaining hurdles”.

Yet, insiders warn of latent political risk: the government remains under pressure to balance foreign-investment openings with national economic sovereignty. A local energy-industry source described the state’s approach as “cautious rather than eager”.

Critics point to Sri Lanka’s previous heavy debt accumulation tied to Chinese infrastructure, notably the Hambantota port lease, as a cautionary backdrop. The refinery now reignites debate over whether major Chinese FDI carries long-term strategic strings.

Analysts note that if the refinery becomes fully operational, its impact could be transformative. Estimates suggest annual export revenues of US $6–8 billion, plus reduced import-bill burdens for refined fuels.

But for now the project remains suspended in limbo.It is not just Sinopec’s patience being tested: Sri Lanka’s ability to attract and structure mega-projects in a politically sensitive environment is being scrutinised. With global competitors queuing up, any further delay could push Sri Lanka into the margins of the very global investment recovery wave it hopes to ride.

By: Staff Writer

October 19, Colombo (LNW): The $1.4 billion Port City Colombo reclamation project has now reached a defining moment with the completion of its first infrastructure phase, officials announced yesterday. This milestone marks the transformation of the 269-hectare artificial island into Sri Lanka’s most ambitious urban and economic development.

Phase 1 covers critical infrastructure links, including connection of electricity and water supply systems to the existing city grid and integration of wastewater drainage networks with the mainland.

“This milestone marks an essential step in the progress of Port City Colombo and ushers in the next stage of development and future investments,” said Harsha Amarasekera, Chairman of the Colombo Port City Economic Commission (CPCEC).

According to the CPCEC, the project has already benefited from an investment of around US $1.4 billion by developer China Harbour Engineering Company (CHEC) and its parent China Communications Construction Company (CCCC). These investments make Port City Colombo one of Sri Lanka’s largest foreign-direct-investment ventures to date.

Looking ahead, the overall investment value of the development is projected at up to US $20 billion when fully developed, featuring over 6.3 million m² of built-up space and housing a projected population of around 273,000.

Despite delays the project originally commenced land reclamation in 2014 and the finishing of this phase took longer than expecte government officials say the completion now arrives at a time of renewed investor confidence in Sri Lanka’s economy.

The Finance Ministry’s Secretary, Harshana Suriyapperuma, noted “while the completion of Phase 1 took longer than expected, it marks a defining opportunity for Sri Lanka to demonstrate its potential as a destination for better foreign investments, business, trade, tourism and lifestyle.”

Project Director, Udaya Nanayakkara (Retd Major General), said the master-plan emphasises sustainability and livability: a “walkable city” with reduced traffic emissions, a clear road hierarchy, and underground utility networks. The 12-kilometre internal road network will link the city’s northern and southern ends seamlessly, positioning the island as a central South Asian hub.

Now that Phase 1 is complete, the focus shifts to attracting anchor investors for commercial, residential and lifestyle developments within the Special Economic Zone (SEZ). Four major projects were recently granted “Primary Business of Strategic Importance” status, unlocking incentives and visa-facilitated investment into real-estate, finance, and tourism.

However, analysts caution that despite the projections, the bulk of future investment hinges on global economic conditions, domestic regulatory clarity, and delivering infrastructure on cost and schedule. With household incomes in Sri Lanka still under pressure, ensuring tangible yields from such mega-projects remains a challenge.

For now, Port City Colombo’s infrastructure milestone sets the stage for Sri Lanka’s next chapter one where reclaimed land, deep-water location and strategic connectivity are meant to converge into a high-end urban-lifestyle and business hub.

By: Staff Writer

October 19, Colombo (LNW): Sri Lankan credit- and debit-card users are facing mounting financial pressure as invisible charges, steep interest rates and surging card debt converge amid high living costs and low incomes. Despite directives from the Central Bank of Sri Lanka (CBSL), many cardholders find themselves caught in a punishing financial trap.

Banks charge annual interest rates on credit-card purchases as high as around 20 percent, and up to 26 percent for cash advances—far above the policy rate of 7.75 percent. On top of this, surcharges of 2.5–3 percent are still routinely passed onto customers by merchants when payments are made by card. Since these are often calculated on tax-inclusive prices, consumers end up paying a “tax on tax” in effect.

The emerging scale of the problem is stark. By August 2024, total outstanding credit-card debt at licensed commercial banks stood at Rs. 150.6 billion, up by Rs. 942 million in that month alone.

The number of active credit-cards has climbed as well: by April 2024 there were 1,914,126 in use, though the figure edged up just marginally from end of December 2023.

Consumer advocates say these numbers undershoot the anguish faced by many cardholders whose monthly incomes are squeezed and whose living-costs are rising. One recent study reported that although active card numbers were under 2 million, the value of defaulted cards as of Q2 2024 was Rs. 20.7 billion even though the number of defaulted accounts fell slightly to 168,978.

On top of high interest and surcharges, card users face ATM withdrawal fees (especially at machines of other banks), foreign-exchange mark-ups, and stamp duties embedded in overseas cards. For instance, some “Gold” credit-cards levy Rs. 25 for every Rs. 1,000 spent abroad, in addition to currency conversion costs.

A significant government reform is under review: the Ministry of Finance, Sri Lanka has confirmed it is considering a proposal from the Ministry of Digital Economy, Sri Lanka to eliminate extra fees on card transactions. Initial consultations have been held with the CBSL and the Inland Revenue Department of Sri Lanka to assess how to cover losses borne by consumers. The reform forms part of a broader push towards a fully cash-less economy, routing payments through QR-based mobile systems.

Yet until reforms take effect, millions of Sri Lankans with cards will continue to bear the brunt of hidden costs and high-interest debt. With many households already living on tight margins, the combination of surcharges, interest and default risk poses a growing threat to household financial stability.