DFCC to finance first private grid-connected solar power project

Another first in the renewable energy sector

Recording another first, DFCC Bank PLC, the pioneer in renewable energy financing, will soon add solar energy to its renewable energy portfolio, the bank announced on Friday.

It recently approved a project loan to Saga Solar (Pvt) Ltd; a ground breaking initiative undertaken by a team of investors and backed with the expertise of professionals in the solar energy sector.

"Analyzed and structured by DFCC’s own multifaceted team, this transaction speaks volumes of the Bank’s commitment to develop the renewable energy sector as well play a pivotal role in the economic development of the country," the bank said in a news release.

"Solar energy has been regarded as the green energy category with the highest potential and is expected to form the future of Sri Lanka’s green energy drive. There have been solar applications in the country before on a small scale such as domestic solar PV systems, solar powered drip irrigation, street lamps and electric fences. However, this project will be the first large scale commercial solar project with grid connectivity. The project will add 10 Mw of generating capacity and is located at a 45 acre site in Hambantota."

DFCC Bank has structured the financial solution sought by the borrower and is assisting the project promoter from concept to finish. It is confident that this project will set the stage for other solar energy developers, lending agencies and equity investors to increase their focus on the solar energy sector.

Founded in 1955, DFCC Bank is one of the oldest development banks in Asia, and recently celebrated its Diamond Jubilee. It possesses a proud heritage of achievements, which includes financing new economic sectors in the country and being the wind beneath the wings of many trail-blazing entrepreneurs especially in their early and risky start-up stages. Today these sectors have become mainstream businesses that support the national economy in many ways.

The foray into the renewable energy sector is significant. In 1994, DFCC financed Sri Lanka’s first ever privately owned, grid connected mini-hydro power plant, with both long term debt and equity. It also financed a pioneering manufacturer of turbines for local and foreign hydro power plants. This project was the recipient of ADFIAP’s award for ‘Outstanding Project – Technology Development’. Assistance has also been extended to local hydropower developers to set up projects overseas.

DFCC Bank was also the pioneer financier for private sector wind power projects in the country, when it part-financed the first wind power project in 2010. The bank’s involvement extended beyond mere financing - to facilitating the introduction of a cost-based, technology specific tariff structure. This enabled projects using wind technology to be commercially viable and has spurred development of this form of renewable energy in Sri Lanka.

The success of these pioneering projects has catalyzed the setting up of several other ventures resulting in thriving industries. Today, hydro and wind power combined supplies nearly 10% of the country’s power needs.

DFCC Bank has now merged with its commercial banking subsidiary DFCC Vardhana Bank, and has transformed into a full-service bank. The combined entity offers a breadth of seamless banking solutions which brings together the expertise of a pioneer development bank and the energy of a dynamic commercial bank. Its services are delivered through a network of 137 branches and service points located island-wide, the release said.

www.island.lk

World's largest sovereign wealth fund from Norway invests in Sri Lanka

ECONOMYNEXT - Norges Bank, the world's world's biggest sovereign wealth fund with about a trillion dollars invested in equities, fixed income securities and real estate has started to buy into Colombo-listed companies.

Norges Bank has bought 7.5 million shares in Textured Jersey Lanka Plc, a Colombo-based knit fabric maker with operations in the region, according to data released this week.

The fund started investing in TJL around September and is now the seventh largest shareholder.

Among other firms Norges Bank is believed to be buying into are a bank and a manufacturing outfit.

Norway's Government Investment Fund Global, connected to the country's central bank (Norges Bank) is the world's largest sovereign wealth fund.

It manage oil revenues and invests long term outside the country to keep for a rainy day with 60 percent of the funds in equities. Its largest holding include firms like Nestle, Royal Dutch Shell and Google.

By end September 2015 the fund was valued at 7,019 Norwegian Kroner (1,035 billion US dollars).

High costs, low demand trim Sri Lanka’s Haycarb profits

ECONOMYNEXT – Sri Lankan activated carbon manufacturer Haycarb PLC said September 2015 quarter net profit fell six percent to 122 million rupees from a year ago as raw material costs stayed high and demand depressed.

Sales fell seven percent to 2.6 billion rupees in the quarter, interim accounts filed with the stock exchange showed.

Quarterly earnings per share of the coconut shell-based activated carbon multinational fell to 4.12 rupees from 4.38 rupees the year before.

In the six months ending 30 September 2015, EPS fell to 8.67 rupees from 8.78 rupees the previous year.

Haycarb Managing Director Rajitha Kariyawasan said raw material prices in Sri Lanka stabilized in the first half of the year but were now increasing in India, Sri Lanka and Indonesia.

Haycarb had difficulty in sourcing enough raw material at competitive prices and faced “intense competition” in global markets due to the depressed gold industry and competition from low cost manufacturers from Philippines, India and Indonesia, he said.

It has launched initiatives to strengthen raw material supply chain networks and build partnerships through providing technology and funding of environment friendly charcoaling technology in Sri Lanka and overseas.

Initiatives last year targeting increases in throughput and energy saving impacted the bottom line favourably in the first half of the 2015/16 financial year, he said.

Haycarb said it estimates liability for a new one-off 25 percent Super Gains Tax imposed on firms whose profit exceeded two billion rupees in 2013/14 at 64.9 million rupees for the group.

Bank of Tokyo Mitsubishi gets Central Bank approval to open an office in Sri Lanka

Oct 30, Colombo: The Bank of Tokyo-Mitsubishi UFJ, Ltd. (BTMU) announced that it obtained approval from Sri Lanka Thursday to open its first representative office in Colombo.

This is the first approval granted to a Japanese bank by the Central Bank of Sri Lanka, the BTMU said in a release.

BTMU plans to open the new representative office by the end of March 2016, subject to regulatory approval in Japan.

The opening of a BTMU office in Colombo is aimed at facilitating investment by Japanese companies in Sri Lanka, which has been enjoying a high economic growth rate of 6-8% per annum, largely driven by rising demand for infrastructure construction and flourishing tourism.

The Japanese Bank noted that Sri Lanka is located astride the strategic sea lane which connects Asia with the Middle East and Africa.

Currently, there are more than 100 Japanese corporates invested in Sri Lanka, and more investments are expected, the BTMU said.

"Through the new representative office in Colombo, BTMU will continue to further enhance its financial solutions and offerings to better meet the needs of its customers operating in or trading with Sri Lanka by making the most of its extensive network, which is the largest among Japanese banks," the Japanese Bank said.

BTMU has offices in South Asia including five branches in India at Mumbai, New Delhi, Chennai, Bangalore, and Neemrana, at Karachi in Pakistan and a representative office at Dhaka in Bangladesh.

www.colombopage.com

Sri Lanka’s John Keells Hotels profits flat in September quarter

(LBO) – Sri Lankan hotel operator, John Keells Hotels Plc’s profits increased by only 2 percent to 350 million rupees in the September quarter 2015 despite a tourism boom in the Island, interim accounts showed.

Earnings per share was flat at 24 cents per share for the quarter.

The company’s revenue also increased by 2 percent to 2,768 million rupees compared to 2,701 million rupees a year earlier.

The group which has hotels in Maldives said cost of sales rose 4 percent to 910 million rupees and gross profits rose 2 percent to 1,857 million rupees.

Finance costs declined 34 percent to 45 million rupees from 68 million rupees, a year earlier.

Revenues in the Maldives branch rose to 1,441 million rupees in the quarter from 1,463 million rupees a year earlier giving 170 million rupees in profits, down from 223 million rupees.

In Sri Lankan segment, revenues rose to 1,351 million rupees up only 7 percent in the quarter from 1,260 million rupees a year earlier and it made a profit of 181 million rupees, up from 133 million rupees a year earlier.

Sri Lanka inflation accelerates to 1.7-pct in October

ECONOMYNEXT - Sri Lanka's consumer prices rose 1.7 percent in the 12-months to October 2015, up from a negative 0.3 percent last month, ending two months of falling prices.

The widely watched Colombo Consumer Price Index gained 0.7 points to 182.1 points.

The price index which was at 183.2 points in January fell sharply by 2.3 percent in February after the government cut prices of several traded goods including fuel.

Though the index gained steadily since then, except for the last two months, but 12-month inflation was low or negative due to one off effect.

In October food prices rose 0.8 percent but non-foods index was flat.

Sri Lanka rupee also fell sharply over September, but global commodity prices were flat and falling with a strong US dollar. Sri Lanka is facing balance of payments pressure with a recovery in domestic credit, and monetization of debt.

Concerns have been raised over core-inflation, which is made up mostly of non-traded items. Core inflation rose to 4.4 percent from 4.2 percent a month earlier.

Sri Lanka's 5 and 15-yr bond yields fall on auction

ECONOMYNEXT - Sri Lanka sold 10.39 billion rupees of 5 and 10 year bonds Friday with yields plunging after the sovereign bond sale, ahead of a large bond maturity on November 02.

The debt office sold 3.69 billion rupees of 5 year bonds maturing on 01.05.2020 at an average yield of 8.99 percent, sharply down from 9.58 percent at an auction on September 15.

Sri Lanka also sold 6.7 billion rupees of 15-year bond maturing on 15.05.2030 at an average yield of 10.33 percent.

On September 09, similar maturity bond were sold at 10.96 percent.

On November 02, and 70 billion rupees of bonds are coming up for maturity.

On October 26, another 45.4 billion rupees of bonds were rolled over with settlement on November 02, indicating that 55.8 billion rupees of bonds have been rolled over so far.

There are also coupon payments on this maturity and others due on the date. Some of the bonds are held by foreign investors.

Sri Lanka sold a 1.5 billion US dollar sovereign bond this week, which has pushed yields down ahead of any receipts coming to the country. However more debt was monetized at Wednesday's auction with about 12 billion rupees being printed to keep short term gilt yeilds down.

The Central Bank also sold 330 million dollars of floating rate dollar bonds with settlement on October 19, but the proceeds were taken into foreign reserves with domestic liquidity sterilized data showed.

Sri Lanka Mackwoods Energy minihydro power projects still delayed

ECONOMYNEXT – Sri Lankan energy firm Mackwoods Energy said it has clinched a deal to sell electricity from its Tudugala minihydro power plant to the national grid but still faced delays in getting approval for its other projects.

A stock exchange filing said the company recently signed the Standard Power Purchase Agreement with the state utility, Ceylon Electricity Board, for the Tudugala minihydro project for the purchase of power by the grid.

The Tudugalla Mini Hydro Project was to have a capacity of 12 kilowatt. But Mackwoods Energy Chairman Chris Nonis has told shareholders that the Power Purchase Agreement with the CEB was for a lower capacity.

The Mackwoods Energy stock exchange filing said timelines for implementing its remaining minihydro power projects, which are awaiting grid connectivity approval prior to the issue of Letters of Intent, have been extended.

This was owing to delays in the approval process, transmission line and grid availability issues and policy and administrative changes, Mackwoods Energy said.

“The company is making every effort to expedite during the next year the approvals for the remaining minihydro projects, which are a key aspect of its diversification into the renewable energy sector in line with the stated objectives of the company.”

Pending approval of its remaining mini hydros, the company still has to do site inspections, surveys and negotiate with funding agencies and potential investors, the statement said. 

Sri Lanka’s Dipped Products Sept net down 92-pct

ECONOMYNEXT – Sri Lankan rubber gloves manufacturer Dipped Products group said net profit for the September 2015 quarter fell 92 percent to 23 million rupees from a year ago as revenue fell and plantations made a loss.

A stock exchange filing said group sales for the quarter fell 16 percent to 5.3 billion rupees from the year before.

Earnings per share for the quarter fell to 38 cents from 4.93 rupees the year before. EPS for the six months ended 30 September 2015 fell to 2.57 rupees from 8.79 rupees the year before.

Interim accounts showed sales fell in the firm’s gloves and plantations businesses with profits from gloves falling by more than half and plantations slipping into a loss of 32 million rupees.

Dipped Products said in a statement its plantations business suffered losses of 117 million rupees in the six months period.

“The plantation sector was impacted by lower prices both in rubber and tea,” said the company which claims a five percent share of the global non-medical rubber glove market.