Sri Lanka calls international bids to add 60MW to national grid

(LBO) – Sri Lanka’s cabinet has decided to purchase 60 megawatts of power through an open international competitive bidding process for a short term period of six months starting from February.

This 60MW is to be installed at three or more suitable locations to ease the transmission constraints that has arisen in the Central and Southern Provinces.

According to the recommendations made by Public Utilities Commission, more generation capacity should be added to the national grid to ensure uninterrupted power supply.

Met Department said adequate rainfall could not be expected during the coming 4 months and therefor it is not prudent to rely on the existing hydropower capacity of 1,350MW which is 30 percent of the 3,900MW of total installed capacity.

The cabinet approval has also been received to extend the expired agreement periods of three furnace oil power plants for six months.

Accordingly, agreement periods will be extended for Ace Power Plant Embilipitiya (100MW), Ace Power Plant Matara (20MW) and Heladhanavi Power Plant Puttalam (100MW).

The CEB requested to extend the power purchase agreements of these power plants by five years.

The ministry however said it is not appropriate to extend the period by 5 years as the government is also looking at purchasing these three power plants for the future energy demands.

In case the procurement process is completed to purchase the three power plants, the power purchase agreements will be terminated.

European Commission proposes restoring Sri Lanka’s GSP+

(LBO) – The European Commission said it proposed to the European Union to remove significant import duties on Sri Lankan products, to restore GSP Plus trade access to Europe’s export market.

“The Commission today proposed that a significant part of the remaining import duties on Sri Lankan products should be removed by the European Union in exchange for the country’s commitment to ratify and effectively implement 27 international conventions on human rights, labour conditions, protection of the environment and good governance,” the EU statement said.

The European Parliament and the Council have now up to four months to raise potential objections before the measures become effective.

“These one-way trade preferences would consist of the full removal of duties on 66 percent of tariff lines, covering a wide array of products including textiles and fisheries.”

However they said removal of customs duties would be accompanied by rigorous monitoring and conditional on continued commitment to sustainable development, human rights and good governance.

“GSP+ preferences can make a significant contribution to Sri Lanka’s economic development by increasing exports to the EU market,” Cecilia Malmström, Trade Commissioner for the EU said.

“But this also reflects the way in which we want to support Sri Lanka in implementing human rights, rule of law and good governance reforms.”

The full statement follows

Brussels, 11 January 2017

Removal of customs duties would be accompanied by rigorous monitoring and conditional on continued commitment to sustainable development, human rights and good governance.

The Commission today proposed that a significant part of the remaining import duties on Sri Lankan products should be removed by the European Union in exchange for the country’s commitment to ratify and effectively implement 27 international conventions on human rights, labour conditions, protection of the environment and good governance. These one-way trade preferences would consist of the full removal of duties on 66% of tariff lines, covering a wide array of products including textiles and fisheries.

These preferences would come under a special arrangement of the EU Generalised Scheme of Preferences, known as GSP+. This arrangement is designed to support developing countries by fostering their economic development through increased trade with Europe and providing incentives to take tangible measures towards sustainable development. The European Parliament and the Council have now up to four months to raise potential objections before the measures become effective.

Trade Commissioner Cecilia Malmström said: “GSP+ preferences can make a significant contribution to Sri Lanka’s economic development by increasing exports to the EU market. But this also reflects the way in which we want to support Sri Lanka in implementing human rights, rule of law and good governance reforms. I am confident of seeing timely and substantial further progress in these areas and the GSP+ dialogue and monitoring features will support this reform process. This should include making Sri Lankan counter-terrorism legislation fully compatible with international human rights conventions.”

Granting access to the GSP+ scheme does not mean that the situation of the beneficiary country with respect to the 27 international conventions is fully satisfactory. Instead, it offers the incentive of increased trade access in return for further progress towards the full implementation of those conventions, and provides a platform for engagement with beneficiaries on all problematic areas. As is the case for all GSP+ countries, the removal of customs duties for Sri Lanka would be accompanied with rigorous monitoring of the country’s progress in the area of sustainable development, human rights and good governance.

Sri Lanka had already benefited from GSP+ in the past. In 2010 the EU decided however to stop the preferential treatment for Sri Lankan imports due to the failure to address reported human rights violations in the country. In 2015, the new government of Sri Lanka set out a path of major reforms aiming for national reconciliation, respect of human rights, the rule of law and good governance principles, as well as sustainable economic development. The Sri Lankan government applied for GSP+ in July 2016 and the Commission’s assessment has concluded that it met the GSP+ entry criteria set out in the EU Regulation.

Colombo Stock Exchange Market Review – 11th Jan 2017

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Colombo Stock Exchange Trade Summary 11-Jan-2017

Colombo bourse regained lost grounds on Wednesday despite foreign outflows. All Share index gained 31.95 index points (+0.5%) to close at 6,184.54 while high cap constituent, S&P SL20 index closed at 3,503.07, with a gain of 40.76 index points or 1.18%.

Price gains in blue-chips namely, Melstacorp (closed at LKR 65.10, +6.9%), John Keells Holdings (closed at LKR 141.90, +1.0%) and Commercial Bank (closed at LKR 142.00, +1.4%) contributed positively to the index performance. Gainers outweighed the losers 79 to 50, while 84 stocks remained unchanged.

Daily market turnover touched two week high of LKR 1.1bn. John Keells Holdings (LKR 879mn) led the turnover list along with Lanka Hospital (LKR 74mn), Melstacorp (LKR 19mn) and Nestle Lanka (LKR 16mn) respectively. Single negotiated deal was recorded in Lanka Hospital where 0.8mn shares changed hands at LKR 63.00.

High investor activity was seen in Melstacorp, Commercial Credit & Finance and John Keells Holdings.

Subsequent to disclosure on land sale by Hayleys Fibre to Alumex, share price of Hayleys Fibre increased to LKR 89.90 but closed at LKR 88.50 with a gain of 10.5% while Alumex share closed at LKR 20.60 (+1.5%).

Access Engineering invested LKR 2.3bn in ‘Hotel 10’ (Private) Limited, a joint venture between Mustafa’s Pte Ltd, China Harbour Engineering Company (Lanka) Limited and Access Engineering. ‘Hotel 10’ signed a supplementary agreement with BOI to set up a mixed development project comprise of 250,000 sq. ft of commercial & recreational areas and approx. 1,000 dwellings units. Total development cost is estimated at approx. LKR 10bn. Share price advanced to LKR 25.40 (+2.4%).

Foreign investors stood on sell side with a net foreign outflow of LKR 903mn. Foreign participation was 44%. Net foreign outflows were seen in John Keells Holdings (LKR 845mn), Lanka Hospital (LKR 74mn) and Nestle Lanka (LKR 16mn). Net foreign inflow was mainly seen in Marawila Resorts (LKR 10mn).

Please note Colombo Stock Exchange will be closed tomorrow (12th January 2016) due to public holiday.
Source: LSL

Sri Lankan shares end at over 1-wk high amid EU trade concession news

Reuters: Sri Lankan shares ended at their highest in over a week led by market heavyweight John Keells Holdings as speculation over the country regaining a trade concession helped boost sentiment, stockbrokers said.

The market shrugged off foreign outflows in an oversold market, dealers said.

The European Commission, after close of market hours, said in a statement that it has proposed increased market access for Sri Lanka as a reform incentive.

The Colombo stock index ended 0.52 percent up at 6,184.54, its highest close since Jan. 2.

"The market was in oversold region and investors have been waiting for an opportune moment. The news of Sri Lanka regaining the EU trade concession also helped sentiment," said Hussain Gani, deputy CEO at Softlogic Stockbrokers.

The 6-7 percent concession earlier offered by the Generalised Scheme of Preferences (GSP) Plus had brought substantial benefits to the garment industry, Sri Lanka's second biggest foreign exchange earner after remittances.

Sri Lanka lost the EU concession in 2010 after then-president Mahinda Rajapaksa rejected demands from the international community to address human rights abuses allegedly committed during a 2009 offensive to crush a Tamil insurgency.

The day's turnover stood at 1.12 billion rupees ($7.48 million).

Foreign investors sold a net 903.4 million rupees worth of equities on Wednesday, extending the year-to-date foreign outflows to 1.7 billion rupees.

John Keells Holdings, which accounted for around 80 percent of the day's turnover, closed 1 percent higher.

($1 = 149.6500 Sri Lankan rupees) 

(Reporting by Shihar Aneez; Editing by Sunil Nair)

Sri Lanka to sell US1.5bn in dollar bonds in domestic markets

ECONOMYNEXT - Sri Lanka's cabinet of ministers had approved the sale of 1.5 billion US dollars of bonds in domestic markets this year, Information Minister Gayantha Karunathilake said.

The so-called Sri Lanka Development Bond are bought by banks and also domestic investors authorized to hold dollar denominated instruments.

In 2017 more than 1800 million dollars of SLDBs are maturing.

The bonds are sold in floating and fixed rates.

Sri Lanka's Alumex buys land to expand capacity

ECONOMYNEXT - Sri Lanka's Alumex Plc, an aluminium extrusions firm, said it is purchasing land for Rs420 million to expand capacity.

The Hayleys group unit said it was buying the land from Hayleys Fibre.

Hayleys Fibre said the land in Minuwangoda Road, Ja-Ela, was now rented out to third parties, the firm said in a stock exchange filing.

Hayleys Firbre said the deal was on 'normal commercial terms'.

Access Engineering invests in Rs10bn mixed development

(LBO) – Sri Lanka’s Access Engineering has invested 2.295 billion rupees in a joint venture to build a mixed development project at Colombo 15.

The joint venture, Hotel 10 (Private) Limited, comprises of Mustafa’s PTE LTD, China Harbour Engineering Company (Lanka) Limited and Access Engineering PLC.

The company said in a stock exchange filing that they entered into a supplementary agreement with the BOI yesterday.

The development will take place on a five acre land situated at No.250, Srimath Ramanathan Mawatha, Colombo 15.

“This land which overlooks the Colombo port is located 2 kilometers from the City Centre and the Port City Development,” Access Engineering said.

The company said this development under the title “Harbour Village” will comprise of around 250,000 square feet of commercial and recreational areas and around 1,000 dwelling units.

“It will cater to the middle income and upper middle income group with the objective of providing affordable luxury at a prime location.”

The total development cost is estimated at approximately 10 billion rupees.