June 08, Colombo (LNW): Sri Lanka and Japan agreed to resume stalled bilateral projects including a US $1.5 billion Japanese-funded light railway following the signing of the Official Creditor Committee (OCC) agreements signed next month.

The Government is working to restructure its foreign debt as part of a $2.9 billion bailout from the International Monetary Fund (IMF), after its worst financial crisis in more than seven decades in Sri Lanka.

It is confident of concluding the necessary agreements in time to complete the next IMF review, Japan expects the early signing of a Memorandum of Understanding (MoU) between Sri Lanka and the official creditor committee appointed to assist in restructuring Sri Lanka’s bilateral debt, which Japan co-chairs, finance ministry sources said.

The Sri Lanka government has taken a cabinet decision recently to resume the Japan International Cooperation Agency (JICA)-funded US$2.2 billion ‘Light Rail Transit (LRT) project, stretching from Malabe to Colombo Fort which was abruptly terminated by the previous regime, Presidential Secretariat sources divulged.

The government is set to renew the LRT project contract with the JICA loan facility due to its favorable conditions including low interest rates and the grace period of 12 years which was completely ignored by the previous regime.

The Urban Development Authority (UDA) will call for expressions of interests soon  from interested international firms or joint venture companies to build the necessary infrastructure and implement the project, Urban Development and Housing Minister Prasanna Ranatunge disclosed. 

It has ben planned to operate the light rail transit service to complete the journey from Malabe to Colombo Fort in 30 minutes.

On the advice of the then President Gotabaya Rajapaksa, Presidential Secretary Dr. P.B. Jayasundera had instructed the Ministry of Transport Services Management to review and terminate the project and close the project office with immediate effect.

He cited the reason for this action and a subsequent cabinet decision in favour of it to the high cost incurred for the LRT project and it was not being the appropriate cost effective transport solution for the Urban Colombo transportation infrastructure.

The consultants started work in early 2019. Their seven-year contract was signed with the Ministry of Megapolis and covered detailed design and related engineering services, procurement assistance, construction supervision, testing and commissioning as well as defect liability check.

The Government has not yet settled a claim of around Rs 5 billion from the project consultants Oriental Consultants Global of Japan and Sri Lanka’s Consulting Engineers & Architects Associated for the work already done, expenses and loss of profit caused by the cancellation of the project in 2020.

Sri Lanka’s Auditor General has confirmed this claim adding that after loan agreement number 2019011 linked to the LRT was scrapped following a policy decision, a consultancy contract was terminated and the firm has demanded a sum of Rs.5.89 billion for losses and damages.

June 08, Colombo (LNW):In a landmark decision, the Parliament of Sri Lanka has approved the long-awaited Electricity Bill, marking a significant milestone in public sector reform. 

The Ceylon Chamber of Commerce, which has been advocating for this change for the past few years, warmly welcomes the decision, hailing it as a courageous and transformative step forward for the nation’s electricity sector.

The new bill paves the way for open access and the unbundling of the Ceylon Electricity Board (CEB), a reform that has been in the making since 2001. 

This move is expected to enhance efficiency, promote competition, and attract much-needed investment into the electricity sector, ultimately benefiting consumers with improved services and more competitive pricing.

The Chamber commends the government and Parliament for their visionary leadership in passing this critical legislation. 

This is a significant step towards modernizing our electricity sector, ensuring a reliable and efficient supply of electricity, and fostering a more competitive market environment.

While the overall reception of the bill is overwhelmingly positive, the Ceylon Chamber expresses a note of caution regarding the transfer of certain powers to an advisory council appointed by the minister, which can potentially undermine the role of the regulator, raising concerns about the independence and effectiveness of regulatory oversight. 

The Chamber suggests a clear demarcation of roles where advisory council focuses on policy development, while the regulator retains its regulatory powers.

A strong, independent regulatory framework is essential for the success of these reforms. Therefore, the Chamber urges careful consideration of the advisory council’s structure and its potential impact on the regulator’s autonomy.

Despite these concerns, the approval of the Electricity Bill represents a pivotal moment in Sri Lanka’s journey towards a more efficient and sustainable electricity sector. 

The Ceylon Chamber of Commerce remains committed to working with all stakeholders to ensure the successful implementation of these reforms and to address any challenges that may arise.

Currently loss making Ceylon Electricity Board (CEB) is now in for systematic restructuring process by unbundling it into eight separate corporate entities for power generation, transmission, and distribution, a recent board paper on administration specified.

The board paper clearly indicated that it plans to reduce massive losses of the CEB by transforming it into an efficient profit making institution by setting up these entities under eight new general managers.

These entities will undertake functions of the CEB relating to hydro electricity, thermal electricity, coal power and non renewable power generation, distribution, and other activities of CEB as well as Lanka Electricity Company (LECO).

June 08, Colombo (LNW): Billionaire business magnet Elon Musk’s satellite internet company Starlink is already approaching broadband speeds. Actually, Starlink Premium, a new higher-end tier, surpasses some of the best broad speeds available in the U.S., albeit, at an absurdly high price. 

While it’s still somewhat early on, Starlink is already having an impact on people living in rural parts of the world.

SpaceX has also launched Starlink RV which is a service meant for users on-the-go or who live in campers

So far, SpaceX has launched more than 5,300 Starlink satellites with new launches scheduled quite frequently. 

These satellites will continue to help cover the continental U.S., Canada and the U.K. At the same time, NASA and SpaceX have come to an information-sharing agreement to help avoid orbital collisions. 

Sri Lankans will need to pay between US$ 400 – US$ 600 to obtain a Starlink internet connection, once its services are launched in the country.

Director General of the Sri Lanka Telecommunications Regulatory Commission, Madusanka Dissanayake, said that the initial setup or the registration cost for the service ranges from between US$ 400 and US$ 600, with a monthly fee of US$ 99.

Starlink is not yet established as a telephone network company in Sri Lanka. However, the Telecommunications Regulatory Commission has approved it under Sections 17 and 22 of the Telecommunications Regulatory Act, granting it a frequency license. 

The Act will be amended in the future to issue a Telecommunication Service provider license.The satellite technology allows for internet access anywhere in the world and offers speeds several times faster than the existing fibre technology in Sri Lanka.

State Minister of Technology, Kanaka Herath, announced that the Telecommunications Regulatory Commission of Sri Lanka has granted preliminary approval for Starlink to provide satellite-based internet services in Sri Lanka.

The State Minister emphasized that a two-week period has been allocated for a formal public consultation process regarding the approval of this internet service. Following this period, the Telecommunications Regulatory Commission will take steps to implement the service in Sri LankaStarlink is also moving beyond providing satellite internet as SpaceX is also working on a Direct-to-Cell service that will start with text messages first before moving on to actual phone calls. In fact, the company sent out its first text messages at the beginning of 2024.

June 08, Colombo (LNW): Sri Lanka tea industry is bracing for revival with soaring sales amidst drop in crop but upward trend in prices as well as exports. Tea Board sources claimed. 

In the backdrop of declining volumes, tea prices are on the rise sharply with May establishing record National Sales Averages both in rupee and dollar terms. 

Forbes and Walker Tea Brokers said in May, as well as year to date, have seen significant gains except for High and Medium grown.

In May, the total auction average of Rs. 1,266.80 per kilo, the High grown average of Rs. 1,162.31 per kilo, Medium grown average of Rs. 1,074.79 per kilo and Low grown average of Rs. 1,608.57 were the highest ever.

Sri Lanka’s tea crop in April 2024 has dropped to a four year low of 21.46 million kilos, which is also the lowest since the COVID-19 lockdown year of 2020.

Forbes and Walker Tea Brokers said the National Tea Sales Average (TSA) for May 2024 registered Rs. 1,266.80 ($ 4.25), reflecting an increase of Rs. 49.95 and $ 0.16 compared to the April 2024 average of Rs. 1,216.85 ($ 4.09). 

This substantial growth also shows a positive year-on-year (YoY) variance, with the May 2023 average standing at Rs. 1,055.45 ($ 3.43). 

It also added that the current figures mark an impressive increase of Rs. 211.35 and $ 0.83 over the previous year.

Breaking down the averages by region, the High Grown tea segment showed a month-on-month (MoM) increase of Rs. 4.81 and $ 0.01. However, there was a decrease of Rs. 83.38 and a positive variance of $ 0.10 YoY.

 The Medium Grown tea average also recorded a positive MoM variance of Rs. 6.87 and $ 0.02, although it saw a slight YoY decrease of Rs. 5.36 while still achieving a $ 0.32 increase in Dollar terms.

Forbes and Walker Tea Brokers said the Low Grown tea segment particularly stood out, with increases in both rupee and dollar terms, recording Rs. 72.31 and $ 0.24 MoM. The YoY average for Low Grown tea also demonstrated substantial growth, with an increase of Rs. 18.35 and $ 0.47.

It added that despite some regional variances, overall, the tea industry has shown resilience. Both High and Mid Grown regions experienced negative variances in rupee terms during the period from January to May 2024 compared to the same period in 2023.

 However, all elevations recorded positive variances in Dollar terms, underscoring the sector’s strong performance on the international market.

The figures also highlight the robust demand and strategic positioning of Sri Lankan tea in global markets, setting a promising outlook for the remainder of the year.

June 08, Colombo (LNW): Muslims in Sri Lanka will mark the Hajj festival on Monday, June 17th, 2024, following the sighting of the crescent for the month of Dhul Hajj on June 7th.

June 08, Colombo (LNW): The International Monetary Fund (IMF) has expressed strong optimism that Sri Lanka will soon finalize agreements with external commercial creditors in line with program parameters. Julie Kozack, Director of the IMF Communications Department, stated during a press briefing on Thursday (06) that there has been “sufficiently strong progress on the debt restructuring front.”

On March 21st, IMF staff and Sri Lankan authorities reached a staff-level agreement on economic policies to conclude the second review of the economic reform program and the 2024 Article IV Consultation. The IMF Executive Board is scheduled to meet on June 12th to discuss this review and the Article IV Consultation.

Kozack noted that Sri Lanka’s macroeconomic policy reforms are yielding positive results, such as rapid disinflation, robust reserve accumulation, and initial signs of economic growth, while maintaining financial system stability. She highlighted that the program performance is strong, with most quantitative and structural benchmarks for the second review met or delayed, and ongoing reforms in some areas.

The next steps in the debt restructuring process include concluding negotiations with external commercial creditors and implementing agreements in principle with official creditors. Domestic debt operations are nearly complete, and discussions with external official creditors, including an MOU with the official creditor committee and final agreements with the Export-Import Bank of China, are well underway. Negotiations with external bondholders and the China Development Bank are also advancing.

“There is a strong expectation that agreements with external commercial creditors consistent with program parameters will be reached soon. So overall we assess that there has been sufficiently strong progress on the debt restructuring front,” Kozack reiterated.

June 08, Colombo (LNW): The Embassy of Sri Lanka in Brasilia participated alongside sixty other diplomatic missions in the International Food and Culture Exhibition 2024, held at the Museu de Arte de Brasilia on June 1, 2024.

The Sri Lankan stall, adorned with scenic pictures from Sri Lanka, offered visitors a taste of Sri Lankan culture through finger foods, sweets, and Ceylon Tea. To further promote Sri Lankan tourism, promotional videos were displayed on the wide digital screen in the main lobby, and Portuguese-language tourism leaflets were distributed to attendees.

This annual exhibition, supported by the Diplomatic Missions in Brasilia, attracted approximately 8,000 visitors this year, highlighting the diverse cultural and culinary offerings from around the world.

June 08, Colombo (LNW): The United States, through the United States Agency for International Development (USAID), is bolstering Sri Lanka’s investment climate by enhancing access to commercial alternative dispute resolution (ADR). This initiative has resulted in the U.S.-sponsored training and accreditation of 23 international commercial mediators in Sri Lanka, effectively doubling the number of qualified mediators available to offer businesses a faster and more cost-effective alternative to traditional court litigation.

As part of USAID’s Efficient and Effective Justice (EEJ) project, these mediators have undergone comprehensive training in key areas such as communication, problem-solving, managing emotions, and overcoming impasses. The training was conducted by the Singapore International Mediation Centre (SIMC), a renowned independent, not-for-profit organization specializing in ADR and ADR training. Following a four-month mentorship program, these mediators will employ their new skills to facilitate around 100 commercial mediations in Sri Lanka by October 2026.

Commercial mediation, a vital form of ADR, offers a quicker resolution for disputes between businesses, or between businesses and the government or consumers. This method is not only cost-effective but also aims to preserve business relationships and supports international trade by ensuring that international settlement agreements can be enforced more effectively.

At a ceremony honoring the newly trained commercial mediators, Doug Sonnek, Deputy Chief of Mission for the U.S. Embassy, remarked, “The United States is dedicated to collaborating with Sri Lanka to create a favorable investment climate by embracing international best practices. This partnership not only equips mediators with essential skills to sidestep expensive litigation but also supports their ongoing development, thereby contributing to economic resilience and growth in Sri Lanka.”

USAID provides extensive support for ADR in Sri Lanka through the EEJ project, which collaborates with local and international experts to offer training in commercial mediation, negotiation, and ADR best practices to lawyers, law students, ADR centers, and companies. The EEJ also participates in pilot programs for judicial and court-referred mediation in partnership with the Court of Appeal and Commercial High Courts, aiming to resolve disputes swiftly and reduce delays and backlogs in the justice system. Through these comprehensive initiatives, the EEJ enhances the overall efficacy of the judicial process in Sri Lanka.