News
CBSL urged to extend mandatory conversion period of advance payments related to exports
By Sanath Nanayakkare
Small and medium exporters want the Central Bank (CBSL) to give them greater leeway on converting advance payments, they receive from their foreign clients, for confirmed export orders, into rupees.
“Under the existing export repatriation guidelines, we are required to convert such advance payments, into Sri Lanka rupees, within a time frame that does not take into consideration the processing time of export orders. When we receive USD advance payments for export orders, the banks, we deal with, say that they can’t hold USD funds, received as advance payments for export orders, beyond one month, without converting it into Sri Lanka rupees. Banks say they can’t do so because of CBSL’s exports repatriation guidelines. But this rule has hardly taken into account the processing time of our export orders and the credit periods available to us,” SME exporters told The Island.
“We generally get advance payments from our foreign buyers in terms of confirmed export orders, such as value-added products, which we ship to them in 30-45 days. The USD advance payments are credited to our companies’ accounts at the relevant banks. But the rules require us to convert the foreign currency, into Sri Lanka rupees, within a month, hence we cannot benefit from the transactional facilities offered to us by our freight forwarders and foreign intermediate goods suppliers,” they pointed out.
“You see, our freight cost is billed in USD after, 45 days from the date of the bill of lading. Our imported intermediate inputs are billed in USD, within a 30-day credit period. But the banks, we deal with, convert the USD advance payments, into Sri Lanka rupees, before we can settle these bills, under the rules stipulated by the CBSL. This means that the advance payments are converted into Sri Lanka rupees, before the export orders are shipped, and total export proceeds are remitted to Sri Lanka,” they said.
According to them, the Director, Department of Foreign Exchange, at CBSL, has informed them that advance payments, received in respect of exports, are also considered export proceeds and the requirements stipulated, in existing rules, shall be applicable for such export proceeds.
‘In this context, we seek the assistance of the CBSL to allow the above-mentioned requisite payments to be paid on due dates, after the advance is received. We request the CBSL to give a directive to the banks to hold these funds, without converting them, because it is vital for us to benefit from the available transactional facilities to keep our SME export businesses viable in the long term. The Central Bank and the commercial banks are on the same page as per the rules, but SME exporters are left at a disadvantage due to this. So we urge the CBSL to extend the time frame on the mandatory conversion of advance payments received in USD for SME export orders,” they said.
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Fuel crunch looms
Govt. tells fuel distributors to maintain stocks to ensure uninterrupted supplies
by Saman Indrajith and Norman Palihawadane
The government had instructed private fuel distributors to maintain minimum stocks and ensure uninterrupted supplies to the market, Energy Minister Anura Karunathilaka told Parliament yesterday (06).
Karunathilaka said the Ministry of Energy Secretary had notified the relevant companies of the requirement, following a reduction in supplies by some private distributors, amid higher international fuel prices.
The Minister said private companies had informed the government that they were facing losses because international prices had risen while fuel was being sold, locally, at prevailing prices. As a result, some companies had reduced the volumes released to the market.
The reduced supplies had increased the burden on the Ceylon Petroleum Corporation (CPC), whose share of the diesel market had risen from about 54% to 82%, the Minister said.
“The CPC currently holds an 82% share of the market,” he said, adding that it had increased its supplies, compared with February, to compensate for the reduction by private distributors.
Karunathilaka said the government could not, under the existing agreements with private companies, specify the quantities they should supply to individual filling stations. However, it could require them to maintain minimum stocks in the country.
The Minister said the Energy Ministry had already instructed companies that had failed to maintain the required stocks to take steps to prevent supply disruptions.
The Minister attributed the queues reported at some filling stations to reduced supplies from private distributors, as well as normal variations in fuel distribution. He also said demand for CPC fuel had increased because private companies generally did not provide fuel to dealers on credit, while the CPC offered a three-day credit facility.
“We expect that, as the Ceylon Petroleum Corporation takes on this additional burden, the problem will ease to some extent by Wednesday or Thursday,” Karunathilaka said.
He said instructions had also been issued to increase supplies to CPC filling stations. A special discussion on the issue is scheduled for today (07), with officials of the Energy Ministry and CPC expected to participate,
along with President Anura Kumara Dissanayake.
Meanwhile, Petroleum Dealers’ Association officials have called for an early solution to the supply issue. Association Chairman D.V. Shantha Silva said queues had been reported at many filling stations, mainly those operated by private distributors.
He said the situation was not due to an overall shortage of fuel, but was linked to reduced orders by Lanka IOC, Sinopec and R.M. Parks amid concerns over losses incurred on fuel sales.
The Ceylon Petroleum Private Tanker Owners Association has urged motorists to refrain from panic buying, saying there was no nationwide disruption to fuel supplies.
The government earlier increased fuel prices and introduced a per-litre diesel subsidy following concerns raised by distributors over rising international prices.
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