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World
Bank's Lanka deal in April *
Grants, for the first time, to exceed $ 50 million this year By Feizal
Samath "We are
announcing it before the Tokyo meeting because we (World Bank board
of directors) would approve it next month. We want to make it known
as soon as possible because there is a lot of interest in (what
the bank is offering)," said Peter Harrold, country director
at the World Bank office in Colombo. "The pre-Tokyo offer is
also in line with our aid announcement cycles." He declined
to give the quantum of World Bank support for the crucial next four
years but said a grant, for the first time by the bank of $ 50 million
would be made available this year. The bank has in the past provided
only zero interest loans. In a wide-ranging
interview (details of which are reported on Page 8 and 9), Harrold
told The Sunday Times FT that the Tokyo meeting of donors and international
institutions on June 9 and 10 would be raising a massive amount
of funds for the reconstruction phase and development in the rest
of Sri Lanka. "It could be thousands … millions of dollars.
We are looking at very large numbers," he said, when pressed
to give figures. The World Bank
and the Asian Development Bank (ADB) are leading an international
reconstruction effort in Sri Lanka's war-battered northeast region
amidst ongoing peace talks. Figures of around $ 500 million have
been suggested as the possible cost of rebuilding the northeast
region. Harrold said
it was unlikely that donors would back out in case war breaks out
in the Gulf region. "The primary resources of assistance that
are anticipated (for Sri Lanka) are not from resources that are
likely to be diverted to the Middle East. The resources that the
World Bank makes available to Sri Lanka is not the same resources
that we may make available (in case of conflict) to Iraq, which
is a much less poorer country." But he noted
that Sri Lanka would be worst affected by lower tourist arrivals
if the crisis escalates in the Gulf, much more than the impact on
remittances, oil prices and tea markets. Harrold said preparatory meetings ahead of the Tokyo meeting would be held in Washington and Colombo. The Washington meeting would bring together finance ministers, development leaders and Sri Lankan leaders attending the mid-April spring meetings of the IMF and the World Bank while a Colombo discussion in May would bring together donors, civil society, the private sector and academics. Proposed
"sili sili" bag ban on hold He was clarifying
a statement by Sarath Wijesinghe, Chairman, Task Force for Plastics,
who told a Colombo seminar last week that the planned ban on polythene
bags was off. Wijesinghe,
presenting the five-year plan for the industry, said pollution was
not (only) caused by the industry but by the consumer too, arguing
that paper too was a cause for pollution and blocked waterways.
He said the
best solution would be to create more public awareness on the recycling
process. Pethiyagoda
told The Sunday Times FT that if a ban on polythene bags were to
be imposed it would affect agricultural plant nursery bags, garbage
disposal bags and a range of uses in medical products including
the life saving saline containers. He said that
there were 400 polythene bag manufacturers and the ban would affect
the industry and lots of people would be unemployed. The most reasonable
solution would be to raises taxes by about one percent and use this
money to launch an awareness campaign through media and schools
and encourage recycling. The entire issue relating to pollution by plastics and polythene would also be placed before the public, the industry and environmentalists among other interested parties, and a consensus decision reached, he said. Aitken
Spence still headless Cooray, who
remains on the main Board for the time being as a non-working director,
said last week his successor was not known yet and would be named
in due course. A Colombo Stock
Exchange spokesman said the company had informed the CSE, as required
under the trading rules, that Cooray would be resigning on February
28. Jayawardena,
a director with a sizeable stake in the conglomerate whose entry
in April 2001 triggered speculation of a takeover, refused requests
for an interview and dismissed suggestions that he would succeed
Cooray. Aitken Spence has been in the news with the Securities and Exchange Commission investigation into alleged insider dealing in its shares by former chairman and SEC chairman Michael Mack and two other ex-directors of the conglomerate. IBIS
bus privatization heading for a major scam? Latest reports
indicate that authorities involved in the transaction are attempting
to provide a loan to the British company sans control of the 39
percent stake in the six bus companies, which is a violation of
the bid document rules of the Public Enterprise Reforms Commission
(PERC). "Apart
from that, a fresh valuation of the stock has been called for to
raise the valuation figure originally recommended by Ernst and Whinney
so that the loan amount could be increased," said one senior
official. Officials from PERC or the Transport Ministry were not
immediately available for comment. Accountancy
industry officials said they had also heard reports that a second
audit firm has been asked to provide a fresh valuation of the stock. The IBIS bus
deal has run into a storm of protests from trade unions and opposition
parties who have cried foul over the proposed transaction. The British-led
consortium which successfully bid for the 1.5 billion-rupee stake
is yet to make full payment though the deadline has passed. The Transport
Ministry has extended the payment date on two occasions. According
to the PERC rules relating to this particular privatization, which
are available on the commission's webside, the last date for final
payment was March 10. If payment is not made, PERC has to cancel
the bid and execute the bid bond which amounts to five percent of
the purchase price, and then call for fresh bids. "Now why
isn't the bid bond being executed by PERC even though the (extended)
deadline has passed?" asked a bus industry source. Under PERC
rules, the successful bidder would be entitled to a loan as working
capital through a government guarantee with the bidder's 39 percent
stake in the company being surrendered to the government as collateral.
But since IBIS doesn't so far own these shares, transport authorities
are trying to provide the loan without any collateral. "If IBIS
misappropriates the money, there is no way to recover the money
in the absence of collateral. This could be one of the biggest scams
in recent times," the industry source said. The loan amount
is likely to be in the region of US $ 75 to 80 million. Officials from the British-led consortium were also not available for comment. Industry officials said one of the biggest problems with the IBIS bus deal is that it lacks transparency. "The new United National Front government promised transparency in all its dealings but it is sadly lacking in this vital deal," the industry source added. Petrol
prices to rise again - Daham "There
has to be a very significant price increase this month," CPC
chairman Daham Wimalasena said in an interview last week. The CPC also
plans to get into the liquid petroleum gas business by entering
into a joint venture with Laugfs Gas with which it already has an
agreement, allowing the latter to reduce its LPG prices, he said. International
crude oil prices have shot up to $37 a barrel although they eased
last week on the possibility that any war against Iraq might be
delayed to later in the year when demand is expected to fall as
winter thaws in key oil-consuming countries. Wimalasena
declined to say by how much domestic petroleum product prices could
rise but noted that under the CPC's market-based pricing formula
it cannot raise the price of any one product by more than two rupees
a litre at any one time. "Even
if prices are raised by the maximum possible the CPC would still
suffer a loss of around Rs. 500 million this month," he said.
"The loss would be a billion rupees if we maintain current
prices because crude oil and petroleum product prices are so high." CPC reported a profit of Rs. 8.5 billion last year. which it used
to pay off part of its huge debt burden. It had Rs. 23 billion in
debt at the time the government came to power in early 2001. Turnover for
the year ended December 31, 2002 rose to Rs. 105 billion from Rs.
95 billion the year before. The corporation also made the highest
tax contribution to government coffers paying Rs. 26 billion in
turnover and excise taxes, and about Rs. 6 billion more than the
revenue expected. "The government wants CPC to get back into the LPG business because of concern over rising gas prices," he said, referring to the proposed deal with Laugfs . "This is not possible immediately because we disposed of the infrastructure to Shell when the Gas Company was privatised. So if an immediate solution is needed the CPC must enter into a joint venture with existing players." The CPC refinery at Sapugaskanda produces a small amount of LPG - around 50 tonnes a day - which can supply about 10-12 percent of the market. While the quantity itself is not significant the CPC has proposed giving LPG to Laugfs at a reduced price if it passes on the entire price reduction to consumers by spreading it across all its products, Wimalasena said. |
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