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CBSL instructs state banks not to lend to CEYPETCO beyond prescribed credit limit

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The Central Bank of Sri Lanka (CBSL) has instructed the state banks not to lend to the Ceylon Petroleum Corporation (CEYPETCO) beyond the prescribed credit limit, in a move to secure the stability of the state banks.

The above instructions have been made considering the non-payment of a significant amount of debts obtained in the recent past and the financial condition of the CEYPETCO.

The CBSL has also instructed the state banks to follow the same course of action with regard to other government bodies, which are incurring huge losses.

MIAP

Ruling Party MP meets public’s objection over land dispute, accused of assault (VIDEO)

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Ruling Party MP Gayashan Nawananda has met with the public’s objection for bringing in a JCB machine to evict a group of people from a land they had been enjoying in Mailawela, Hambegamuwa for 20 years.

Accompanied by his supporters, the Ruling Party MP went to the said location two days (19) ago and a video footage on the scene reveals a woman being assaulted by the handle of an ax. Another person is seen alleging that the MP Nawananda’s supporters had assaulted him as well.

MIAP

Government wishes to contest a local government election soon: Leader of the House

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The government wishes to contest an election for the local government units including Pradeshiya Sabhas, Urban Councils and Municipal Councils, said Leader of the House Minister Dinesh Gunawardena, addressing a ceremony yesterday (20).

“We have to protect the political mandate given to this government. It should be strengthened. In that context, we should be converting this political power. As the Chairman of the Election Committee of Parliament, I was given a message through your proposals to establish a mixed electoral system and ensure the representation of the youth. Therefore, the committee is meeting these days to turn it into a success. We hope that we will be able to come to a conclusion in the coming days and move the country towards a local government election soon, increase the power of the people of the villages and strengthen the public institutions of the villagers,” he said.

Tax concessions on fuel might curb percentage of price hike: Gammanpila (VIDEO)

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The provision of tax concessions for fuel might curb the percentage of any price surge and fuel imports may have to be ceased in any event was tax concessions not provided and a price hike not accepted, revealed Energy Minister Udaya Gammanpila speaking to reporters following a programme held yesterday (20).

“I sent the letter seeking tax concessions for fuel to the Finance Minister on Friday. It will take some time for him to sit down with his officials, discuss and decide how to do it. Either we have to stop importing fuel to the country, or the issue of not providing any tax concession may have to be put on the people. The only way to prevent this from happening is to lift the taxes on fuel,” Gammanpila warned.

The Energy Minister added: “If tax relief is given, the surge in fuel prices may be carried out on a very small scale. If we are to not provide the tax relief we will have to increase the price of a litre of diesel by Rs. 52 and a litre of petrol by Rs. 19. If neither should proceed, I can say with great confidence that we will lose money to import fuel. I was blamed for saying that a daily power cut of an hour or an hour and a half may have to be taken place. But now there are power outages without notice.”

MIAP

President’s Media Unit issues announcement on structural changes at Presidential Secretariat

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Following the appointment of Gamini Senarath as the new Secretary to the President, several structural changes will be taken place, revealed the Presidential Secretariat, responding to certain media reports promoting misinformation in this regard.

Accordingly, these structural changes, aiming a more efficient service, have contributed to the appointment of units which serve the people directly, including the President’s Fund and the Public Relations Unit, the announcement said.

“It should be noted that with the appointment of a new Secretary to the President, certain Social Media have tried to misinterpret the administrative changes being made using the names of certain people, which are misleading,” it added.

MIAP

Govt surcharge tax to recover Rs135 billion from profitable state institutions  

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At least five profitable state institutions and two superannuation funds  will have to forgo around Rs.135 billion for 25 percent super charge tax  which will come into effect in April this year.  

Sri Lanka’s public and private income generating institutions including groups of companies,, partnerships, banks and individuals earning over Rs2.0 billion will get a bashing from the 25 percent one off surcharge tax inflicting cascading effect on economy, annual  financial statements  analysis revealed. .

The one-off super gain style tax is aimed at collecting Rs 100 billion for government’s rural development initiative hitting profit making public and private sector institutions alike, they explained.

According official provisional estimates, three state owned banks and several profit making state institutions and around 62 big companies and several banks in the private sector are to be badly hit by this tax.

It will apply retrospectively from the year of assessment starting from April 2020. The tax has to be paid in two tranches in March and June 2022.

 A sum of Rs. 5.75 billion is to be taxed from the Bank of Ceylon, Rs.5.25 billion from the Peoples Bank and Rs.3.9 billion from the National Savings Bank, finance ministry assessment report on state banks disclosed.

The total tax rate on Sri Lanka banks is expected to be around 70 percent for the past financial year as a result of this surcharge tax and ‘financial VAT’ increase, a tax expert said.

A financial VAT was also increased by 3 percent to 18 percent, reversing a 2019 sudden removal of the Nation Building Tax.“Most banks earn over Rs 2 billion, he said adding that this will be unbearable of all these banks.

Sri Lanka Insurance Corporation will have to pay Rs.5.5 billion and a sum of Rs.4.5 billion from the Sri Lanka Ports Authority.

The government is to raise Rs 110 billion from two private sector superannuation funds EPF and ETF amidst mounting pressure from employees and trade unions.

 Although Finance Minister Basil Rajapksa has stated that the 25 percent surcharge will not be levied from these two funds but he has to follow tough official procedure including passing amendments to  relevant acts in parliament exempt that tax from these funds , economic experts said. 

These state institutions will have to face severe cash crunch making it difficult to pay bonuses and overtime payments for employees before the April Sinhala and Hindu New year, trade union leaders complained.

The private sector big companies considered as engines of growth will have to borrow money from banks to pay the surcharge tax, a senior tax consultant said. 

While there was a call for raising taxes, including from the formal private sector to overcome the government’s-fiscal difficulties which spilled into the external sector and several others, the surcharge tax will push the private sector into the abyss as they are already high tax payers.

CB Governor pushes for fuel price hike endorsing Energy Minister’s view   

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 Central Bank Governor Ajith Nivard Cabraal is pushing for a fuel price revision, saying it is long overdue.

Mr Cabraal tweeted saying petrol and diesel prices in Sri Lanka are less than half that of some countries in the region.

He issued this statement at a time when the oil ship ments had arrived at the Colombo port and waiting for clearance as the Ceylon Petroleum Corporation grappling to find money to buy dollars to make payment for imported fuel harboring LCs.

Fuel prices were increased by both the Ceylon Petroleum Corporation (CPC) and Lanka Indian Oil Corporation (LIOC) in December last year. .

Earlier this month LIOC increased fuel prices further but fuel sold by the CPC remained unchanged.

Energy Minister Udaya Gamanpilla has issued a red alert for Sri Lanka saying the country may run out of fuel very soon.

Gamanpilla said that the Ceylon Petroleum Corporation (CPC) does not have money to purchase oil.

The Minister said the crisis in the CPC was as a result of fuel being sold to the public at a concessionary rate.

 He proposedeither a fuel price hike or a tax revision in aletter sent to Finace Minister BAsil Rajapaksa last Friday. 

He said the world crude prices have increased to an all-time high of $ 19,286 per barrel, adding that the Finance Ministry has been informed on the rising world oil market situation, but the Ministry is yet to respond.

As per the data shared, the CPC at present suffers a loss of Rs. 551 million monthly on top of Rs. 83 billion last year.

The Minister noted that the CPC pays tax of Rs. 42 is imposed on a litre of 92 Octane Petrol, Rs. 64 on 95 Octane Petrol, Rs. 17 on diesel and Rs. 39 on Super Diesel. Thereby, the Treasury receives Rs. 368 million on a daily basis as taxes from the CPC.

At the current prices, Petrol is incurring a loss of Rs. 19 per litre and Diesel Rs. 52 per litre.

He explained that failure to remove taxes or increase prices will lead to an acute fuel shortage in the near future.

Minister Gammanpila also said the Central Bank Governor informed him in writing last month, that the bank is unable to release funds to import fuel, owing to the escalating foreign exchange crisis.

He clarified that the $ 500 million credit line from India to CPC, will only be active from April.

Central expressway project phase 3 tender to be challenged in Courts

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 The Highways Ministry’s move to award the construction contract of third phase Central expressway to local company causing a massive loss of over Rs 165 billion for the country bending the tender in cabinet memorandum submitted by Minister Johanston Fernando is to be challenged in Courts.

A will be filed in Courts soon urging the judiciary to issue an enjoining order preventing the awarding of this tender in an irregular manner Convener of the Voice Against Corruption MovementWasantha Samarasinghe disclosed.

 He noted that they will also seeka court order to recall the tender allowing all prpospective loval anf international bidders to submit their Expresseeions and bids for the tender.

This action has been taken following the Highways Ministry decision  of not  to cal, freh bids for the tenderas per print media reports, he added. .  

The elimination of a Chinese company from the long delayed, third phase Central expressway construction contract without opening their bid submitted for the tender has triggered concerns of irregularities in the tender process, several heads of leading construction companies said.

While a local consortium named LDIC has won the bid despite the bid being higher than the Chinese party, the Chinese company has complained to the President’s office that their bid was not even opened.

The disgruntled bidder, Metallurgical Corporation of China (MMC) was engaged in road construction in Sri Lanka for around two decades and their rejection of their bid without even considering their financial proposal has created a doubt, they added.

The proposed Central express highway was offered to international investors in May 2011, to be built as a privately financed toll road on BOT (build, own and transfer) basis without funding from the Government, while costs were to be recovered with collected toll charges for an agreed time period.

The Cabinet approved awarding the construction of 100 km Kandy Expressway originally to two Chinese companies, China Merchant Holdings (CMH) and China Merchant Huajin Investment Company (CMHC) in July 2012, and a Memorandum of Understanding (MOU) was signed.

Completely deviating from the original MOU, the then government decided to implement the Central expressway in four stages calling for fresh tenders to award construction for new investors local, international or consortiums or both in 2013.

“Allegations of tender irregularities, corruption, political bungling and official interference in the construction of Central expressway cropped up after phasing out of the whole project,” one construction company head told the Business Times.

With the change in the scope of Central expressway, the first three sections were expected to be completed by 2018. But today the entire project is further delayed; also funding requirements keep on mounting.

Under this set up the Ministry of Finance has given instructions for the construction of the third section of the Central Expressway from Rambukkana to Galagedara expeditiously as it was delayed since 2015.

Accordingly a Request for Proposals (RFP) was called and the bid opening took place on 08-10- 2021 in which only two companies MCC and LDIC, the local construction consortium submitted bids, official documents revealed.

The Cabinet appointed Procurement Committee has awarded the tender to construct 20 km section of the Central Expressway from Rambukkana to Galagedara the third stage of the project, to LDIC.

MCC has sent a letter expressing their concern to the President copying it to six other top officials including Commercial Counselor – Chinese Embassy, Presidential Secretary, Treasury Secretary, Central Bank Governor and Highways Ministry Secretary.

The company informed the President, that only the financial proposal of the local consortium was opened rejecting their bid.

While claiming their price was lower than the local bidder they noted that it is customary in a democratic procurement evaluation that the examination of just one offer does not facilitate price comparisons.

A senior official of the Highways Ministry said that the selection was made by the Cabinet appointed Negotiation Committee and he cannot comment on the awarding of tenders.

According to the letter sent to the president the Chinese company had submitted a bid of Rs. 210 billion and had agreed to provide US$120 million directly to a local bank at the time of signing the agreement while the Sri Lankan company had submitted a bid of Rs. 375 billion, Rs.165 billion more than the Chinese bid.

In case, the government goes ahead and awards the tender to the local consortium, this company has requested a guarantee from the Treasury to secure a loan from the local bank.

CaFFE holds Janani project in Matara

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Campaign for Free and Fair Elections (CaFFE) successfully concluded Northern and Southern Provincial workshops of the Janani Project, carried out by the organization to enhance the digital literacy of grassroots female politicians.

Addressing a large number of female local councillors and female political activists in Matara, CaFFE Executive Director, Mr. Ahmed Manas Makeen said that there was great enthusiasm among grassroots female politicians.

Mr. Makeen said that they assessed the knowledge, of digital literacy, of grassroots female politicians inn the first stage of the workshops. The next stage of the project will focus on providing tailor made solutions to their concerns.

The workshop in Matara was held at the Sarasi Hotel, Matara.

The participants were educated on the importance of digital literacy as well on holding media briefings and facing questions from the media. Well known elections monitor, Mr. Manjula Gajanayake led the proceedings, while former DCLG Mr. Dharmasiri Nanayakkara also addressed the gathering.

The event was coordinated by Mr. Premabandu Jayatilake, CaFFE Southern Provincial Coordinator.

(Please contact mr. Manas Maken for more details –  0776539793 )

Media Unit

CaFFE Organization

February 20, 2022   

Successful trial run of an AC train supplied by India

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       Officials from the High Commission of India accompanied by representatives from RITES and the Sri Lanka Railways travelled aboard an air conditioned train [AC Diesel Multiple Unit (DMU)] on its successful trial run in Sri Lanka on 18 February 2022. This AC DMU has been supplied under a US$ 318 million Line of Credit (LoC) from India. The first AC DMU supplied under this LoC was put into operation on 09 January 2022.

2.     The US$ 318 million LoC was finalized in 2014-15 for the supply of railway rolling stock to Sri Lanka, upgradation of railway tracks and other mutually agreed projects in accordance with request and requirements of Government of Sri Lanka. Since then, high quality railway coaches and AC DMUs supplied from India have helped strengthen the railway infrastructure as well as travel experience in Sri Lanka. Various other projects under this LoC including the upgradation of railway tracks are at different stages of implementation.

3.      Lines of Credit from India have contributed to the upgradation of the railway line from Colombo to Matara, track laying on sectors such as Omanthai-Pallai; Madhu Church-Tallaimannar;   Medawachchiya-Madhu; and Pallai-Kankesanthurai, installing signalling systems, and supply of rolling stock to Sri Lanka railways. India looks forward to continue mutually beneficial cooperation in the transport sector, including in railways where India’s world class capabilities and assistance have contributed significantly to the development of railway infrastructure and facilities, job creation, economic growth, enhanced connectivity and passenger comfort and safety in Sri Lanka.

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Colombo
20 February 2022