By: Staff Writer

January 13, Colombo (LNW): The Alcohol and Drug Information Centre (ADIC) revealed that a 20% excise tax increase on alcohol last year led to a staggering reduction of 8.3 million litres in alcohol consumption while boosting government revenue by Rs. 11.6 billion.

Welcoming the latest hike on alcohol and tobacco taxes, ADIC Executive Director Sampath de Seram said the move is a significant step toward reducing public health risks.

He noted that such measures align with recommendations from the World Health Organization (WHO) to discourage harmful habits like excessive drinking and smoking.

“The latest step is helpful in both ways,” de Seram said, explaining that higher taxes not only reduce consumption but also provide a significant boost to state revenue.

According to ADIC, cigarette sales also saw a sharp decline last year, with volumes dropping by 521.5 million units. Despite this, tax revenue from cigarettes rose by Rs. 7.7 billion, demonstrating the dual benefits of excise tax increases.

However, de Seram urged that such measures be implemented scientifically, factoring in inflation and other economic variables to ensure long-term effectiveness.

Alcohol tax increases in Sri Lanka have been shown to reduce alcohol consumption and increase government revenue:

A 20% increase in alcohol excise tax in Sri Lanka led to an 8.3 million liter reduction in alcohol consumption. A survey found that 64% of participants saw a decrease in alcohol consumption during celebrations in 2024.

Alcohol tax increases generate additional excise tax revenue for the government. For example, a 20% increase in alcohol excise tax generated an additional LKR 1.8 billion in revenue.

Alcohol tax increases can reduce alcohol-related harm and improve public health. Alcohol-related harm is a significant burden on Sri Lanka’s health system.

Alcohol tax increases can have a progressive effect because economically disadvantaged groups are more likely to reduce their consumption when prices increase.

Taxation is a well-recognized policy tool in preventing alcohol harm. In 2023, Sri Lanka increased alcohol taxation rates in order to increase government revenue and reduce costs due to alcohol harm. In 2024, the Alcohol and Drug Information Center (ADIC) of Sri Lanka carried out a survey to investigate the impact of the policy change on alcohol consumption and harm.

ADIC carried out this survey during the Sinhala and Tamil New Year celebrations in 2024, the period when alcohol consumption is typically the highest in the country.

The survey used a sample size of 415 individuals from across all nine provinces. 46.2% of the participants were female and 53.7% were male.

According to the survey results, 64% of the participants stated that they saw a clear decrease in alcohol consumption during celebrations in 2024.

Respondents report lower alcohol consumption in their communities 64% of survey respondents stated that they saw a clear decrease in alcohol consumption during New Year celebrations in 2024.Only 26% believed that there was no change in the alcohol consumption in the country. 10% stated that they witnessed an increase in alcohol consumption during the festive period in 2024.

By: Staff Writer

January 13, Colombo (LNW): Pensioners in Sri Lanka are facing significant challenges in claiming refunds for the Withholding Tax (WHT) deducted from their bank deposit interest. While the government has implemented a refund mechanism, several difficulties hinder the smooth processing and relief for retirees:

Complex Documentation and Process: Pensioners must gather various documents, such as bank statements, to prove that WHT has been deducted. Banks usually provide an annual summary, but the process of filing a tax return and applying for a refund can be daunting, particularly for those not well-versed in tax procedures.

Reports indicate that with the increase in the Withholding Tax on deposits held in banks, a significant amount of deposits has been withdrawn from the banks.

It is noted that a portion of these funds is being redirected towards investments in the Colombo Stock Exchange and other ventures, with depositors feeling anxious.This situation has also contributed to the rise in the Colombo Stock Exchange.

As a result of the withdrawal of fixed deposits from banks, a crisis regarding liquidity in the banking and non bank financial sector is currently unfolding.

This crisis is affecting not only banks but also several other major companies.

Delays and Administrative Bottlenecks: Many pensioners face frustration due to delays in processing their refunds. Mistakes in documentation or system glitches can further complicate the process, leading to additional stress for retirees who are already financially vulnerable.

Increased Administrative Burden: Both the pensioners and the government must deal with an administrative load. Filing tax returns, verifying WHT deductions, and processing refunds can be time-consuming and cumbersome, particularly if many pensioners are involved. This can create bottlenecks and delays in disbursement.

Financial Stress Due to Uncertainty: The lack of clarity regarding the exact timeline and process for receiving refunds can cause financial strain for pensioners. Many retirees rely on their bank deposit interest for daily living expenses, and any delay in refunding WHT can disrupt their financial stability.

Risk of Fraud: The refund process could potentially be vulnerable to fraud if not carefully monitored. Pensioners may find themselves at risk of being misled or manipulated due to their limited understanding of tax laws and refund procedures.

Lack of Understanding of Tax Mechanisms: Many pensioners may not fully understand how WHT applies to their interest income, leading to confusion and financial stress. The complexity of tax systems and the specific rules for retirees can contribute to a lack of awareness and frustration with the system.

Given these challenges, the government is under pressure to ensure that the refund mechanism is streamlined, transparent, and user-friendly to prevent further hardship for retirees.

By: Staff Writer

January 13, Colombo (LNW): The Colombo Port is facing severe congestion as container volumes have surged dramatically, exposing critical shortcomings in infrastructure and Customs operations.

According to Additional Director General of Sri Lanka Customs, Seevali Arukgoda, the daily volume of containers passing through the port has increased significantly, rising from an average of 800–1,200 containers to over 1,500, with peak days seeing as many as 3,000 containers.

 This unprecedented increase has overwhelmed existing systems, prompting urgent intervention by the government.

In response to the crisis, President Anura Kumara Dissanayake held discussions with stakeholders, resulting in Sri Lanka Customs agreeing to operate continuously, 24 hours a day, seven days a week, to clear the backlog of import containers.

A statement from the President’s office confirmed that Customs officers would work around the clock to expedite the clearance process.

Additionally, President Dissanayake emphasized the need for both public and private sector stakeholders to collaborate in addressing the crisis and implementing solutions to prevent future delays.

Delays caused by regulatory agencies such as the Sri Lanka Standards Institution (SLSI), the Department of Food Commissioner, and the Plant Quarantine Division were highlighted as major contributors to the congestion.

Staff shortages in these institutions were identified as a key factor, significantly slowing down the clearance process.

The President directed the relevant authorities to fill these vacancies immediately and improve welfare allowances for officers, ensuring that these institutions can function more efficiently.

To further alleviate congestion, a 5-acre plot of land in the Bloemendhal area was allocated for storing containers pending investigation.

Two acres of this land will be made available by January 31, with the remaining three acres ready by February 28.

This initiative is expected to provide much-needed space to accommodate the overflow of containers, easing the pressure on the port terminals.

Another measure to reduce congestion involves redirecting idle container trucks, which have been contributing to traffic within the terminals, to a designated parking area in Peliyagoda. This decision is expected to free up space within the port and improve the flow of operations.

Importers have also agreed to comply with stricter regulations to avoid delays. Food-related products must now be accompanied by mandatory certificates issued by accredited foreign laboratories, following proper testing.

Violations of these requirements will result in legal action in accordance with government regulations. Wharf clerks and other private service providers have been instructed to work 24/7 to ensure the efficient clearance of containers.

During the discussions, President Dissanayake stressed the importance of implementing short-term, medium-term, and long-term plans for the development of the port sector.

 He urged all stakeholders, including the port, Customs, and private service providers, to work as a unified team to resolve the crisis. Ports Minister Bimal Ratnayake added that the expedited clearance measures would remain in effect until June 30, underscoring the need for sustained cooperation.

This comprehensive approach aims not only to resolve the immediate congestion but also to create a foundation for long-term improvements in port operations.

 By addressing systemic inefficiencies and enhancing collaboration between the public and private sectors, the government is working to transform Colombo Port into a more efficient and resilient hub for trade.

By: Staff Writer

January 13, Colombo (LNW): Sri Lanka’s new government has decided to reactivate a previously suspended liquefied natural gas (LNG) agreement with US-based New Fortress Energy, marking a significant step toward reducing energy costs and transitioning to cleaner fuels. This decision reflects the government’s effort to modernize its energy infrastructure while balancing relationships with global partners, including India and China, despite controversies surrounding past LNG procurement processes.

The government views LNG as a transitional energy source that complements its renewable energy goals while ensuring affordable and reliable power for citizens. Energy Minister Kumara Jayakody announced plans to revive a tender for an LNG terminal to support two major combined-cycle power plants, which currently rely on costly liquid fuels.

 Speaking in parliament, Jayakody highlighted the importance of LNG in reducing energy expenses and supporting the shift to cleaner energy, although he acknowledged coal remains the cheapest thermal option. Despite this, Sri Lanka has pledged not to expand coal-based energy projects.

Renewable Energy Expansion and LNG’s Role

Sri Lanka is striving to enhance its renewable energy capacity, particularly through solar and wind projects. However, these energy sources are intermittent and require backup to maintain supply reliability. LNG is positioned as a crucial transitional fuel to bridge the gap between liquid fuels and the country’s expanding renewable energy portfolio.

Controversies and Policy Revisions

In 2023, an open international tender awarded a China-Pakistan consortium, led by Engro, the contract to supply LNG and develop a pipeline network aimed at significantly reducing power production costs. However, this initiative was suspended in 2024 when the government, under a new energy policy, halted key LNG projects.

These included plans for a floating storage and regasification unit (FSRU) off Kerawalapitiya, an offshore and onshore LNG transmission pipeline network, and an onshore receiving facility.The suspension created an opportunity for India’s Petronet LNG Ltd. to enter the market.

India’s Petronet LNG Entry

India’s largest LNG supplier, Petronet LNG Ltd., is set to begin supplying Sri Lanka with LNG in 2025. Initially, Petronet will deliver 850 tonnes of LNG daily using containers, eventually transitioning to a floating LNG receipt facility at Colombo Port.

 According to CEO Akshay Kumar Singh, Petronet plans to source LNG from Qatar, Australia, and other suppliers, with shipments originating from its terminals in Gujarat and Kerala. This initiative aligns with Sri Lanka’s goal of diversifying energy partnerships while reducing costs.

US-Based New Fortress Energy’s Resurgence

New Fortress Energy (NFE), a US-based energy developer, has resumed its plans for LNG infrastructure in Sri Lanka after the Supreme Court dismissed opposition petitions in 2022. NFE originally signed an agreement in 2021 to develop an LNG terminal off Colombo’s coast and supply LNG to major power plants.

Under the agreement, NFE secured gas supply rights for the Kerawalapitiya Power Complex, which includes the operational 310 MW Yugadanavi Power Plant and the 350 MW Sobadanavi Power Plant, expected to begin operations in 2023.

NFE plans to supply an initial volume of 1.2 million gallons of LNG per day, significantly advancing Sri Lanka’s energy modernization efforts. Wes Edens, CEO of NFE, emphasized the project’s importance, stating it delivers cleaner, reliable, and affordable energy, while supporting sustainable development and economic growth.

Balancing Global Partnerships

Sri Lanka’s energy strategy highlights the country’s balancing act among major global players: the US, India, and China. While China’s earlier bid encountered setbacks, India’s Petronet LNG is now positioned to play a central role in Sri Lanka’s energy transition. Meanwhile, New Fortress Energy remains committed to advancing its LNG projects.LNG is seen as a transitional fuel bridging the gap to renewable energy by addressing supply reliability issues. However, Sri Lanka faces the challenge of navigating complex international partnerships while meeting domestic energy needs. Balancing these priorities will require careful policymaking as the nation seeks to achieve energy sustainability and affordability.