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US
golfers on Lanka tour mean business Local officials
said they were hopeful that meetings between US executives and local
businessmen could become prospective deals. The November
1 to 6 visit of these senior executives working in US firms affiliated
to AmCham (American Chamber of Commerce) offices in Asia occurs
some seven weeks after Prime Minister Ranil Wickremesinghe's second
scheduled visit to the United States to unveil a peace-and-economy
plan at the United Nations. Contrary to
earlier plans of visiting only New York in September, Wickremesinghe
is now also expected to visit Washington - for the second time in
three months. The prime minister was in Washington last week for
meetings with US President George Bush and other senior officials.
"The prime minister's US schedule has been altered and we are
told he would like to visit Washington after New York," said
Maria Rasanayagam, executive director at Amcham Sri Lanka. Amcham is assisting
the Ceylon Chamber of Commerce in sending a 20-member business delegation
along with Wickremesinghe. Representatives on the delegation are
taking along bankable projects as joint ventures to offer to US
businessmen, she said, adding that a lot of preparations are underway
over the visit. The New York
and Manhattan chambers of commerce have been requested to submit
a list of the top 40 investment bankers there to be invited when
the prime minister addresses the New York Stock Exchange on September
20, a day after he addresses the UN General Assembly, the AmCham
official said. But apart from
the September event, Amcham Sri Lanka views the November charity
golf tournament as an excellent exposure for Sri Lanka's investment
potential given the presence of 200 top executives from US firms
in 22 countries in Asia and the Pacific including Japan, Singapore,
Hong Kong and Australia. "Unless
people come and see this country, they wouldn't know what to expect,"
Rasanayagam said, recalling how a US congressional delegation was
amazed at the development here during a visit to Sri Lanka last
year. This would
be the biggest gathering of business executives in Colombo since
the business-friendly United National Front won power at the polls
last December. "The golf
course is a relaxed place to talk business as you spend a lot of
time and are at ease," said Rasanayagam noting that another
200 local golfers, most of who are businessmen, would be pitted
against the visitors. "It's a case of mixing business with
pleasure." While the 200
golfing executives would spend two days in Kandy and three days
in Colombo on two golf courses, the Board of Investment is expected
to organise an investment seminar for them and other meetings if
necessary, she said. Susantha Pinto,
chairman of Amcham's golf committee, said Amcham was seeking the
collaboration of related official bodies such as the Tourist Board
and BOI as the visit would "undoubtedly benefit the tourism
and investment scenario in Sri Lanka". Tea
output to top 300-mln kg The crop had
recovered from the effects of drought earlier this year and has
exceeded last year's production levels, they said in a statement.
The output
to end-June was 159.2 million kg, up slightly on the same period
last year. John Keells
described the first quarter of the year as rather "lean"
for tea production mainly because of drought. But in May
production hit an all-time high for the month of 33 million kg,
exceeding the May 2001 output by 2.3 million kg. "This
increase and a further gain of 2.6 million kg in June has made good
the deficit in the first quarter," the brokers said. "It is
likely that Sri Lanka will reach the magical figure of 300 million
kg in the present calendar year," they said. The only time
production exceeded 300 million kg was in 2000. Brokers Asia
Siyaka Commodities said tea production in June rose 11 percent to
26 million kg compared with the same month last year. Sharp increases in tea production have been seen in the last three months, the gains mainly coming from the two higher elevations with low growns still trailing behind last year's output. Delays
hold up minerals exploration "We have
re-scheduled all pending applications," said Janapriya de Silva,
chairman of the Geological Survey and Mines Bureau. "Some applications
for exploration licences are as old as 1994." Under the Mines
and Minerals Act of 1992 applications must be processed in 30 days,
he said. The approval
of government agencies such as provincial councils was required
where land earmarked for exploration for mineral deposits came under
their purview. Exploration
licences are issued for apatite, ceramic raw materials, graphite,
gold and precious metals, limestone, mineral sands and other minerals.
Despite repeated
reminders by the bureau, there were lengthy delays on the part of
provincial councils in processing exploration applications. The delays
were earning the country a bad reputation among investors keen on
exploiting the island's mineral wealth, de Silva said. "We can't
afford to delay," de Silva said. "The faster we issue
licences, the faster they can start investigations and the better
the prospects of finding new deposits of minerals." The delays
had a snowballing effect because it meant delays in mining, royalties,
employment generation and tax revenue. The bureau earned Rs. 29 million in 2000 from royalties collected from minerals that have been mined. Caltex,
Shell eye fuel market The government
is keen to open up the petroleum sector and attract more players
to provide competition to the Ceylon Petroleum Corporation (CPC)
and the Indian Oil Corporation (IOC), Board of Investment chairman
Arjuna Mahendran said in Singapore last week. A third company will
be licensed to carry out fuel retailing and bulk storage to boost
competition, he said. "We're
looking for a third operator, preferably one of the big multinationals,''
Mahendran said, adding that the local units of ChevronTexaco, the
second-biggest U.S. oil company, and Royal Dutch/Shell, which operates
the sole gas terminal in the island, are interested in the licence. Shell Gas Lanka
and Caltex, the local unit of ChevronTexaco, both confirmed they
were holding talks with the government on the possibility of entering
the market. They said that, in response to government requests,
they had submitted position papers on their views on liberalising
the petroleum products market. "We are
interested in participating in the market and are awaiting guidelines,"
said Roberto Moran, managing director and country chairman of Shell
Gas Lanka. Shell was interested
in importing, distributing and marketing refined products as well
as in storage facilities, including the CPC's new storage complex
being built at Muthurajawela which the CPC has said is up for sale.
"It depends
on how they (the government) want to play it," said Moran.
"We suggested shared facilities and terminals. We would also
like to see a commitment from the government for a level playing
field, based on our experience in the gas sector. The rules should
be consistent for all players and should be transparent." Caltex Ceylon
is also exploring the possibility of entering the market for petroleum
products. "Yes,
we're interested," a senior company official said. "But
it is still in the very early stages. There are a lot of things
to be looked at." The government
recently opened up the market with an agreement with the Indian
Oil Corporation (IOC) to lease the CPC's storage facility in China
Bay, Trincomalee and sell 100 CPC petrol sheds to store and distribute
petroleum products mainly in the north and east of the island. Meanwhile,
the CPC last week signed a deal with the IOC to buy almost half
a million tonnes of petroleum products annually in what the Indian
oil giant described as one of its largest export orders in recent
times. The value of
supplies under the term contract, under which IOC would supply 30,000
tonnes of diesel and 10,000 tonnes of aviation turbine fuel each
month on a C&F Colombo basis starting in September, would amount
to over $100 million at current prices. "This
is the largest export order that Indian Oil has bagged in recent
times, and is in line with our corporate vision of becoming a transnational
energy major," IOC chairman M.S. Ramachandran said. "Through
this initiative we hope to expand our market base and to convert
the surplus petroleum products available into more wealth to the
stakeholders," he said in a statement. The CPC spent
a total of $731 million on importing 1.9 million tonnes of crude
oil and 1.4 million tonnes of refined products last year. Half of the
crude oil imports came from Iran with the rest from Malaysia, Saudi
Arabia and the United Arab Emirates. Sri Lanka imports
refined products mainly on the "spot market" because the
CPC's Sapugaskanda refinery is unable to meet the entire domestic
demand. The IOC said the agreement with the CPC would help Sri Lanka to lower import costs because of geographical proximity and reduce its exposure to the volatility of the "spot market" by almost 40 percent. RPC
and the "lone" raider Two weeks ago,
the High Court of Colombo, responding to an application by RPC's
corporate partner, Asia Capital Ltd (ACL), and ACL's chief executive,
Dirk Flamer Caldera, issued an order prohibiting trading in RPC
and ACL by a number of companies alleged to be associated with Dr.
Yaddehige. Caldera and
ACL claimed that Dr. Yaddehige, a UK-based Sri Lankan expat, had
breached the Takeovers and Mergers Code by accruing a stake of more
than 30 percent in RPC and ACL without making a formal takeover
offer for either company. The court declared
that the respondents make an offer to each company's shareholders
at the highest price they had paid for their shares - Rs. 140 for
RPC and Rs. 19 for ACL. The respondents
will be given an opportunity to respond to the allegations in court
this Wednesday. The saga began
in March when Dr. Yaddehige purchased a 27 percent stake in RPC. But ACL and
Caldera claim that through shareholdings held by a number of other
investment vehicles, Dr. Yaddehige actually controls more than 40
percent of the group - and that he intends to increase his influence
by building a larger stake in ACL. ACL and RPC
are closely aligned. Following a
strategic alliance struck in 1998, each has a stake in the other
of more than 20 percent. But the connections
between the two companies go far deeper than their share registers. Caldera is
the son-in-law of RPC managing director Ian "P.I." Pieris,
who is himself the cousin of the company's chairman, Henry Pieris,
and the father of its chief operating officer, Ranil Pieris. P.I. Pieris
is also the son of Percy Pieris, who helped found the company with
his brother Richard. The tight family
relationships between and within ACL and RPC have emerged as a central
aspect of the dispute with Dr. Yaddehige and the companies with
which he is allegedly connected. On Wednesday,
Sezeka Ltd - one of those companies - launched legal proceedings
against ACL and Caldera. Sezeka denied
any link with Dr. Yaddehige and instead alleged that Caldera was
running ACL not in the interests of its shareholders but for the
benefit of P.I. Pieris' aspirations for RPC. It also claimed
that Caldera and P.I. Pieris forged the 1998 alliance to secure
their control over the two companies. Thilan Wijesinghe,
the former Board of Investment chairman who has been acting as a
representative for Dr. Yaddehige in Sri Lanka, told The Sunday Times
that his friend was confident the court would find there had been
no wrongdoing. Asked what
might have caused the misperception about Dr. Yaddehige, Wijesinghe
said that when an outsider buys a large parcel of shares in a listed
company in Sri Lanka it can "create an anticipation of certain
cosy relationships being undermined". But P.I. Pieris
rejects any allegations that the dispute is about protecting his
family's grip on RPC and ACL. "It seems
to me that certain people seem to be clutching at straws by talking
about fathers-in-law and sons-in-law and all that nonsense,"
he said. "In a
sense it's a family company but it's also a public company. It's
just the way we have grown. We have professionals running each part
of the company. So it's not a question of family as such, it's a
question of tradition and culture and organisation." P.I. Pieris
said Dr. Yaddehige appeared to be pursuing a different agenda for
RPC, with plans to turn it into a low cost export company that fails
to look after the interests of its employees. "We feel responsible
for the lives and the careers of everybody. There's a lot of family
connections." But Wijesinghe
said Dr. Yaddehige's intentions have been misunderstood. "I do
not believe for a moment that it was Dr. Yaddehige's intention to
come over here and rabble rouse." "We see no reason for concern on the part of management or any party because essentially the shareholders concerned, including Dr. Yaddehige, have only the company's best interests at heart." |
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