While scaling-down Sri Lanka LP Gas operation due to dollar crisis in the island, LAUGFS Gas PLC announced that it has divested its retail LPG business in Bangladesh for $ 23.4 million (around Rs. 8.5 billion).The divestment was via stakes held by two entities.

LAUGFS Gas sold 69% stake in LAUGFS Gas Bangladesh Ltd. for $ 16.146 and the remaining 31% stake held via the fully owned subsidiary – Slogal Energy DMCC (Specializes in procurement and trading of LPG) registered in UAE for $ 7.254 million.

Proceeds are net of LAUGFS Gas Bangladesh debt and will be utilized to reduce the debt exposure of LAUGFS Gas Plc Group.

LAUGFS entered Bangladesh in 2015 becoming the first Sri Lankan energy brand to become a multinational with the acquisition of Petredec Elpiji Ltd., and established LAUGFS Gas (Bangladesh) Ltd. In 2018 it signed agreement with Total Gas Bangladesh on cylinder filling as well as installed a cylinder re-qualification plant in Bangladesh which has over 30 companies engaged in LP retail business.

LAUGFS Gas Chairman W.K.H. Wegapitiya said that despite exit from retail business, the Company will continue to enhance its LPG upstream business, transportation and logistics, trading as well as focus more on LAUGFS lubricants, the latest entrant in Bangladesh.

As at 30 September 2022, LAUGFS Gas Group held long-term borrowings of Rs. 21.2 billion, up from Rs. 15.3 billion a year ago and Rs. 16.5 billion as at end FY22.

Short term borrowings amounted to Rs. 25.7 billion as at 30.9.2022, up from Rs. 18.6 billion a year ago and Rs. 23.3 billion by end FY22.

In 1Q of FY23 finance cost incurred was Rs. 859.4 million and it rose to Rs. 1.2 billion in 2Q. The Company in its interim accounts said there was no change in the loan portfolio in 2Q and the increase was solely due to the increase of interest rates charged by the banks.

“If the finance cost remained same as for the first quarter the company would have ended with better operational results during the 2Q ended 30 September 2022.

The financial results of LAUGFS Gas PLC were impacted with further escalation of interest rates charged by the respective banks with the corresponding policy rate increases by the Central Bank of Sri-Lanka from time to time.

LAUGFS Gas also faced constraints continued to prevail in drawing Letters of Credit in favour of international suppliers of LP Gas during 2Q as well due to limited foreign exchange availability in the banking system, and this affected the regular supplies of LP Gas.

Group revenue in 2Q was Rs. 8.1 billion down year on year by 27% whilst in 1H it declined 22% to Rs. 16 billion.

The second quarter saw an operating profit of Rs. 755 million as against a loss of Rs. 590 million. In the first half operating loss was reduced to Rs. 146 million as against a loss of Rs. 1.1 billion a year ago.

Pre-tax loss in 2Q was Rs. 811 million, lower in comparison to Rs. 1 billion loss. In 1H pf FY23, the pre-tax loss was Rs. 2.9 billion, higher as against Rs. 2.1 billion loss in 1H of FY22.

Sri Lankan authorities have decided to carry out island-wide raids in search of individuals involved in human trafficking operations in the country and to punish them regardless of their status.

The decision has been taken during a meeting held between the Minister of Labour and Foreign Employment, Manusha Nanayakkara and the Minister of Public Security, Tiran Alles along with the high-ranking officers of the Police Department.

IGP C.D. Wickramaratne, officials of Sri Lanka Bureau of Foreign Employment (SLBFE), and the Department of Immigration and Emigration attended the meeting held yesterday (Nov 16).

Accordingly, the raids which are being continuously carried out, based on the information received by the SLBFE in relation to the Sri Lankans involved in human trafficking both domestically and abroad, will be further accelerated, the ministry said in a statement.

Moreover, it has been decided to hold an officer-level progress review every two weeks regarding the progress of measures taken against people involved in human trafficking.Meanwhile, public awareness programmes will also be implemented regarding human trafficking, it said.

According to US State Department report, the Government of Sri Lanka does not fully meet the minimum standards for the elimination of trafficking but is making significant efforts to do so.

It demonstrated overall increasing efforts compared with the previous reporting period, considering the impact of the COVID-19 pandemic on its anti-trafficking capacity; therefore Sri Lanka was upgraded to Tier 2.

These efforts included slightly increasing investigations, including of several Sri Lankan officials allegedly involved in child trafficking, and establishing a specialized unit to strengthen trafficking investigations.

The government identified more victims, including among migrant workers exploited abroad while enhancing coordination among agencies to further implementation of the 2021-2025 national action plan (NAP).

It has expanded its trafficking hotline services to include online support for referrals and secured a new shelter location to accommodate victims of crime, including trafficking victims.

However, the the relevant authorities did not meet the minimum standards in several key areas as they have prosecuted fewer trafficking cases, and sentences for convicted traffickers remained inadequate.

Law enforcement efforts against labor trafficking were disproportionately low compared with the number of identified labor trafficking victims.

The capacity of local officials to identify trafficking victims remained low, especially among women in commercial sex.

The government did not effectively address vulnerabilities to trafficking faced by migrant workers, including high worker-paid recruitment fees, largely unregulated sub-agents, and policies and procedures that undermined safe and legal migration, the report revealed.

Sri Lanka’s road map with guidelines and work plan along with new development strategy for short medium and long term periods to achieve economic stabilization and recovery from the present fiscal crisis is to be unveiled at the end of next two weeks.

A group of top government officials and senior economic consultants is working on developing the road map according to the timelines to release the best final report relating to the country’s long term national economic policy.

According to presidential secretariat official sources It will also introduce new social market economic system with a strong safety net for the poor underprivileged and vulnerable groups while strengthening small and medium entrepreneurs.

Sri Lanka’s long term National Economic Policy will be formulated in accordance with the vision of President Ranil Wickremesinghe with the endorsement of parliament to make it stable and unchanged for the next 25 years.

The main aim of the national policy is to create a surplus in the primary budget by the year 2025 and raise the economic growth rate to a stable stage

Currently, public debt is 140 per cent of GDP and the government’s plan is to bring it down to less than 100 per cent by the year 2032.

It includes development policy operations, which provide direct budget support to successive governments for policy and institutional reforms aimed at achieving specific development results.

These operations are aimed at transforming Economic governance, enhancing growth and competitiveness and protecting the poor and vulnerable to provide rapid financial assistance to allow Sri Lanka to deal with actual or anticipated development financing requirements.

It will be enhancing oversights of State Owned Enterprises (SOEs), reducing the anti-export bias of national tariff policy eliminating barriers to foreign investment, making energy and transport sector less dependent on imported fuels and more climate-friendly, and strengthening social protection institutions and delivery systems.

A new surcharge tax on fuel imports will be used to cover Rs 700 billion (2 billion US dollar) loan taken over from state-run Ceylon Petroleum Corporation, State Minister for Finance Shehan Semasinghe said.

“There are loans of 7rs 00 billion which are under a Treasury guarantee that will be taken over from CPC,” Shemasinghe said.“The surcharge tax will be used over 10 years to recover the money.”

The CPC was forced to borrow dollars from commercial banks each time the central bank printed money to mistarget interest rates and created foreign exchange shortages, going back several periods of currency crises.

A part of the loans were usually paid back after rates were hiked and monetary stability was restored such as in the year 2017.

However in the next currency crises triggered by liquidity injection tools CPC was forced to borrow from state banks again.

Bank of Ceylon and People’s Bank have loaned the CPC about 2.0 billion US dollar by the time the 2019 – 2022 currency ended.

In addition to the CPC loan the central government also borrowed dollars heavily as forex shortages came from liquidity tool employed to target an overnight rate in the middle of the policy corridor and longer term yields through term reverse repo injections and outright purchases and the country lost the ability to settle dollar loans from inflows.

A top CPC official pointed out that State enterprises such as the Ceylon Electricity Board (CEB) and the loss-making National Carrier SriLankan Airlines owed the fuel supplier millions of dollars in arrears.

He noted that had the monies owed been paid, the CPC would have been able to provide the banks with the necessary rupee equivalent to the dollar price of shipments, thereby securing Letters of Credit (LCs) to import crude oil, which would allow them to refine fuel locally.

The tanker nowunloading fuel is carrying approximately Rs. 28 billion ($ 80 million) worth of crude oil.

Sri Lankan Airlines has $ 300 million in arrears to the CPC. The power sector, the CEB, and Independent Power Producers (IPPs) owe the CPC approximately Rs. 100 billion.

If these state institutions fulfill their financial obligations then the CPC could settle payment of the lineup crude oil shipments to keep the refinery going for months.

The inability to squeeze the current account to repay financial outlflows, when liquidity is injected by a note issue bank, is generally called the ‘transfer problem’ by Keynesian macro-economists.