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Banks have not passed on reduced interest rates announced by CB to entrepreneurs; lack of demand another bugbear

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By Saman Indrajith

Entrepreneurs have not really benefited from the drop in inflation, due to the lack of demand and shrinking economy, Chairperson of Sri Lanka United National Businesses Alliance (SLUNBA), Tania Abeysundara said on Wednesday in a televised interview.

She said that their businesses are operating at 40 percent capacity and most of the money they earn is taken back by the government, through increased utility bills and taxes.

“We are not benefiting. We need to buy goods to ensure the businesses keep on operating. What we produce goes into the market, people consume and we get money. It’s a rotation. Now the consumer market is down by 40 to 60 percent. Food consumption is down by at least 40 percent, and the finished clothing market is down by 60 percent,” she said.

Abeysundara mentioned that inflation has dropped because there is more supply than demand. Companies can’t reduce supply further without shutting down certain operations.

She said that the Central Bank has asked the banks to reduce interest rates. However, the banks only give loans at a floating rate and the rate is still about 23 percent, she said.

“How do we run a business after taking a loan at 23 percent?” she said.

Abeysundara added that the government has also not done enough to encourage foreign investments. Even now, most foreign investors have to come meet the Minister and his or her family, she said.

“There is no reason to invest in Sri Lanka. Even Sri Lankan entrepreneurs aren’t getting any benefits. We are an import economy, and we cover it by taking loans. Out of the importers, about 30 percent do not pay taxes because they work with cash and not through banks,” she said.

These importers send most of the money through the black market and manage to clear the imported goods through their connections, she said.They also control the supply of goods, she added.

She said that all countries had achieved development by promoting SMEs, and that the Asian Tigers, and even China, had promoted SMEs to ensure that their economies could provide jobs to people.



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SLPP MP Namal Rajapaksa arrested by CIABOC

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(File pic)

Sri Lanka Podujana Peramuna (SLPP)  Member of Parliament Namal Rajapaksa has been arrested by the Commission to Investigate Allegations of Bribery or Corruption (CIABOC).

Namal Rajapaksa had been  summoned by CIABOC  to provide a statement in connection with investigations into the controversial Airbus deal. He was subsequently arrested by CIABOC after recording his statement for over 5 hours.

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Sun directly overhead Nittambuwa, Algama, Malwana, Aranayake, Meegahakiula and Panamkadu about 12.09 noon today (04)

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The sun is going to be directly over the latitudes of Sri Lanka from 28th of August to 07th of September due to its apparent southward relative motion.

The nearest places of Sri Lanka over which the sun is overhead today (04) are Nittambuwa, Algama, Malwana, Aranayake, Meegahakiula and Panamkadu about 12.09 noon.

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Norochcholai digs into dwindling coal stocks, two units slash generation

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Plant’s output cut from 270 MW to 140 MW amidst dwindling stocks; energy analysts warn system remains “at a razor’s edge”

By Ifham Nizam

The Norochcholai coal-fired power plant is now digging into the last dredges of its coal stock, with two operational units forced to slash generation from around 270 MW to just 140 MW on Sunday as the plant ran critically short of fuel, according to independent energy analysts and sources familiar with the National System Operator (NSO).

The sudden reduction of approximately 130 MW in coal generation has once again exposed the fragile state of the country’s power supply arrangements, with the plant understood to have coal stocks sufficient only until Friday night.

“This is not how a coal plant is expected to operate. They are digging up the last dredges of coal from the plant,” an independent energy analyst told The Island.

The analyst questioned why the units had been allowed to reach this stage without earlier intervention, arguing that at least one unit should have been deloaded around 10 days ago to conserve the remaining coal.

Had that been done, the analyst said, the country could also have reduced its dependence on more expensive diesel-fired generation during the period when

coal stocks were being conserved.

The latest NSO generation figures highlight the continuing pressure on the system.

Around 7 p.m. on Sunday, when the night peak was reached, total demand stood at 2,552.7 MW. Coal contributed only 282 MW, while major hydro accounted for 1,215.8 MW and thermal-oil generation for 791.9 MW.

The night peak of 2,552.7 MW was substantially higher than the daytime peak of 2,246 MW, according to the NSO Generation Summary for August 30.

The most immediate concern is the remaining coal stock at Norochcholai.

Sources said the plant has coal only to Friday night, making the timing of the next shipment critical.

The first shipment under the emergency arrangement is expected to arrive on Friday, September 4, but the coal unloading will have to begin on the same day if

the power plant is to continue operating without further significant deloading.

That creates another potential vulnerability, with rough sea conditions posing an additional challenge to unloading operations.

Energy sector sources said that even the arrival of the September 4 shipment would not completely eliminate the danger.

The next shipment under the new coal tender would need to commence unloading around September 15. Any significant delay beyond that could again force the Norochcholai units to operate at reduced output.

“We are still at a razor’s edge”

The independent energy analyst said the situation should not be viewed merely as a question of whether a particular vessel arrives on time.

The situation also means that any further reduction in coal generation could have a direct impact on the use of oil-fired power generation, potentially increasing the cost of electricity generation.

The latest NSO figures already show the important role being played by thermal-oil generation during the evening peak, when demand rises sharply.

The analyst questioned the rationale behind allowing the coal units to continue operating at higher loading until stocks reached critically low levels instead of taking measures earlier to stretch the available inventory.

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