The crucial decision whether to effect the dreaded power cuts now seem to hinge on the intermonsoonal rain expected by mid March. Last year they failed.
Rainfall figures of the Meterology Department are gloomy. Rainfall in December '96 and January '97 was lower than in the corresponding period last year.
Mid-March intermonsoonal dampness is the last ray of hope an a gloomy horizon.
Met Chief Dr. A.W. Mohottala said it was yet too early to predict the viability of the mid March monsoon which could fail as it did last year.
Meanwhile, the Power and Energy Ministry and the president have promised uninterrupted power at any cost.
Secretary, Power and Energy Ministry J. Medagama assured
The Sunday Times Business that there would be no power cuts this year.
When asked how the government hopes to achieve this if the monsoon fails this March, he said that "they would go to the extent of hiring more private sector generated power to meet a power crisis."The Sunday Times Business reported in its 26.1.97 issue, more than 43mw of additional power has arleady been added to the national grid with a further 160 mw to be added by mid 1997.When asked about the proposed tariff increase Mr. Medagama said that he was aware of the situation the CEB is currently facing but added that the ministry has not made any representations to the government regarding a tariff increase thus far and that he did not anticipate any such move for the time being.
CEB Chairman Arjun Deraniyagala did not rule out a power crisis this year in the event of a prolonged drought but declined to comment on the severity of the crisis as much defended on the mid March monsoon rains.
He added that the Sri Lankan power sector was facing a crisis situation and that the CEB's primary concern was to prevent a power shortage which in turn has meant that the CEB has had to purchase power from two private sector generation companies. The prices quoted by these companies are very much higher than the Rs. 4.20 per unit which is the average cost of a unit of electricity available to the consumer.
Mr. Deraniyagala said that a feasibility study was already underway in Puttalam for the construction of a coal power plant but hastened to add that a permanent solution could be brought about only after the commissioning of viable thermal plants. He added that the gestation period for large plants could vary from three to seven years and thus the plants being constructed now will only come into operation during the next century.
With the ministry dousing fears of a power crisis and the CEB in contrast adopting a wait and see strategy, the Sri Lankan commercial and industrial sector have once again been thrown into a state of indecision, confusion and mounting anxiety.
The Federation of Chambers of Commerce and Industry headed by Patrick Amarasinghe said at the recent press briefing that industrialists would be severely affected should the CEB decide to abruptly cut power for long hours every day. Instead they advocated that in the event of an impending crisis, the CEB start immediately with shorter power cuts to ease the situation.
Mr. Amarasinghe was also very critical about the CEB's lack of response to the numerous requests made by the Federation to enlighten them on the actual situation.
He also wanted an assurance from the government that there would be no price hikes as it would put unbearable pressure on the industrial sector which at present has to contend with labour unrest and a depressed economy.
The Sunday Times Business also highlighted this fact in its January 26 issue. An Institute of Policy studies report on Policy Issues in the Electricity sector of Sri Lanka by Dr. Tilak Siyambalapitiya says that industrial tariffs in most countries are lower than domestic rates. Dr. Siyambalapitiya argues that subsidised electricity to industrialists would result in the production cost coming down which in turn would benefit the economy at large pushing prices and inflation.
Presented with this theory, CEB's Deputy General Manager (Generation Planning), Shavindranath Fernando admitted that there was substantial disparity between the domestic and industrial tariffs here.
"Sri Lanka's domestic tariffs are among the lowest in the world, while the industrial tariffs are among the highest. But it should be the other way about.
"All developed countries and most developing countries including India and China subsidise the industrial market through the domestic demand.
"As only 40% of Sri Lankan households are connected to the national grid this would not be a bad proposition," Mr. Fernando said.
"The government is however reluctant to act on this issue obviously fearing public unrest," he added.
More than Rs 36mn from the bills discounting portfolio of the Merchant Bank of Sri Lanka had not been accounted for by the end of the Financial year 1996.
The company's external auditors had first discovered a discrepancy of Rs 63 mn in the books of the bank during the 1995 audit.
A firm of chartered accountants had been employed to look into the matter.
The firm had been able to reconcile Rs 21.1 mn but Rs 36.7 mn remained unreconciled.
Both amounts had been charged to brought forward profit as the items related to prior years.
Meanwhile the auditors also highlighted that no provision had been made for a total of Rs 40.2 mn due from Lanka Loha Hardware since 1993.
A sum of Rs 82.7 mn was also due from the Employees Share ownership Trust which was set up in 1994.
The bank is now hoping to issue 10 per cent of new equity to the fund to enable it to pay off the amounts.
However some shareholders have expressed concern that it would dilute their stake in the Merchant Bank and are saying that it would be better to write off the balances against profits than lose 10 per cent of the bank.
At the time of going to press Merchant Bank officials were not available for comment.However in a statement to the Stock Exchange the management has said it would be much easier to show a better performance next year if new shares were issued to settle the debt.
No provision has also been made for falls in value of investments as they were of a long term nature and the Directors did not expect a permanent diminution in value.
The auditors said except for the issues highlighted the accounts gave a true and fair view of the affairs of the company.
However they did not qualify the accounts.
The accounts showed a profit of Rs 51.6 mn after tax for the year ended 31st December 1996, up from 31 mn in 1996. Profit after minority interest was Rs 54.9 mn.
Turnover was up Rs 256 mn to Rs 1,134 mn from Rs 878 mn in 1995.
Interest charges however had shot up to Rs 765 mn up from 534 mn eroding profits after interest to only 26 mn.
However other income of Rs 38 mn including rent of Rs 31 mn had helped boost profits.However the bank had been able to structure long term loans to strengthen its balance sheet.
The Bank of Ceylon had injected Rs 1.75 bn by purchasing an unsecured debenture.
"This performance can be viewed with some optimism since the ban, its subsidiaries and associates have had to work in a hostile environment, mainly brought about by the continued depression of the Colombo Stock Exchange, relatively high interest rates and a lukewarm business and commercial environment," Chief Executive Changa Samaraweera told shareholders in the annual report.
The Federation of Licensed Foreign Employment Agencies of Sri Lanka, a trade organisation of foreign employment agencies with a majority of recruiting agencies now in operation was recognised by the Registrar of Companies, recently, a news release states.
The Federation will be collaborating with the Sri Lanka Bureau of Foreign Employment, the sole authority under law, to promote foreign employment and instil respect and due recognition to this trade that fetches foreign exchange to the country - Rs. 40.9 billion in 1995.
The Federation has already pledged the minister of youth affairs, sports and rural development, it would provide over 25,000 foreign employment opportunities for youth, both men and women, at the request of the minister of labour and vocational training as a Samurdhi Project.
The Federation since its recognition has planned more welfare schemes for those in foreign employment with the assistance of the Bureau of Foreign Employment.
Road to ME through Mashreq Bank
TheUAE-based Mashreqbank said it hoped to act as a conduit to channel investment from the Middle East to Sri Lanka.
"Being a bank headquartered in the UAE with a large customer base, we always can be a conduit for businessmen between the two countries," Mashreq-bank Head of International Banking Rahim Khanani said in Colombo.
The bank has 27 branches in the UAE and 13 branches overseas, including in Sri Lanka, Pakistan, India, Sudan, Kenya, Qatar, Bahrain, Egypt and the UK.
It has subsidiaries in Hong Kong and New York.
The bank was set up in 1967 under the name of Bank of Oman and the name was changed to Mushreqbank in 1993. It is owned by the Al-Ghurair family of the UAE.
It has net assets of US $ 440 mn and gross assets of US $ 4.2 bn. The bank set up its branch here in 1980.
Mr. Khanani said Dubai was already a hub to the Middle East, like Singapore was to South East Asia.
"There is a strong will and a commitment on the part of the government towards privatization and infrastructure development," Mr Khanani said.
The US $ 700 mn Colombo Port development project would very well pave the way for Sri Lanka to be a hub.
"This has been the beginning of the success stories elsewhere," he said. "What we need is a change in the mindset."
The perception that Sri Lanka is being increasingly marketed as a hub, is growing even in the UAE.
He said Mashreqbank had been internationally strong in corporate trade finance but would be intensifying its retail banking operation in 1998.
"With economic development raising disposable incomes, we see increasing demand for banking services," Mr. Khanani said.
Air Lanka and Cellular operator Mobitel have tied up their customer loyalty programmes to keep ahead of the competition.The cream of Mobitel's Club Magnate programme called Platinum members are allowed the privileges of Air Lanka's Serendib Club members while Serendib members are entitled to discounts on call charges.
Officials said this would enhance the value of the services offered by both firms helping retain existing customers, as well as luring new customer in.Around half of Serendib Club members are resident overseas, Serendib Club Manage Johann Wijesinghe said.
Mobitel Managing Director Walter McKenzie said Serendib members would be able to rent a Mobitel at concessionary rates.Frequent travellers of AirLanka who earn points according to their trips, may enter the Serendib Club.Club Magnate members are able to earn points based on their monthly bills which entitle them to Serendib Club benefits.These benefits included upgrading of class of travel, 50 per cent extra baggage allowance, lounge facilities, special discounts at hotels, restaurant and selected retail outlets.Serendib club members were able to claim a 10 per cent discount on of an instrument purchased from Mobitel and a 10 per cent discount on all accessories.A Mobitel could be rented at a 50 per cent discount.
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