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Lanka IOC: Ceaselessly depreciating LKR and Russia-Ukraine war behind gasoline price hike

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‘Licensed commercial banks are not able to provide USD even at the LKR rate of 300’

‘Suppliers quote high premium for supply of gas-oil and gasoline due to uncertainty in global market and Sri Lanka country risk’

‘Even after the increase, there would still be losses on gasoline’

Impacted heavily by unwanted conditions due to currency depreciation and high global prices, Lanka IOC was forced to increase its retail selling prices of gasoline by Rs 49/ltr, but diesel prices remain unchanged, Lanka IOC says.

“Consequent to floating of Sri Lankan rupee by the Central Bank since 7th March 2022, rupee is ceaselessly depreciating against the dollar, from initial level of 203 to more than Rs 290 per USD during last 15 days making fuel import more costlier. Despite this exorbitant upward revision in exchange rate by more than 40%, the banks are still struggling to sense the liquidity in the foreign exchange inflow in the banking channels even over and above the official rate,” the Company says.

“Besides the domestic economic crisis, the global tension amidst the Ukraine-Russia war neared to one month with no conclusion in sight, causing concern over supply scarcity of oil, leading to intense unforeseen rise in the international fuel prices setting a new high record in the last 14 years,” it further says.

Manoj Gupta, Managing Director LIOC informs that ” Oil companies are severely affected due to these unprecedented situations from all the corners, and they were compelled to increase the prices of gasoline for sustainable business operations. However, regardless of huge losses in selling of gas-oil, LIOC has not revised the gas-oil prices this time as a concern of the impact on the public. Even after this increase there would still be losses on gasoline at the prevailing international prices and exchange rates. The last fuel price revision by LIOC was done on 11th March when the exchange rate was prevailing at 260 against USD. The currency has depreciated further and while the CBSL TT selling rate is 285, licenced commercial banks are not able to provide USD even at the LKR rate of 300.”

“Unstable currency rates and steep depreciation against USD has had direct impact on the landed cost of gas-oil & gasoline making them costlier by an equivalent amount per litre. The global oil prices has also been pitched into turmoil by Russia’s invasion of Ukraine, with the US and Europe imposing penalties on Moscow and crude buyers shunning the country’s cargo. In view of uncertainty in the global market coupled with Sri Lanka country risk, the suppliers are quoting high premium for supply of gas-oil and gasoline.”

Gupta further says, “We are very much optimistic that the situation will improve, and we shall be more than happy to pass on the benefits of reduced prices to give relief to our valuable customers under this economic hardship.”

He emphasised that LIOC does not receive any subsidy from the government of Sri Lanka and its losses are calculated based on landed cost of the product after considering payment of applicable duties, taxes and other statutory levies including handling charges.

“Being the only public limited energy company and accountable to its more than 10,500 local shareholders, Lanka IOC has always remained committed towards the economic and social upliftment of Sri Lanka even under these adverse circumstances,” Lanka IOC says.



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Business

Dialog Smart Home Enables Seamless Home Automation via Range of Intuitive Solutions 

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Dialog Axiata PLC, Sri Lanka’s premier connectivity provider, introduced a range of convenient and integrated solutions via ‘Dialog Smart Home’ to enable intelligent automation and intuitive control of homes.

The newly introduced range of future-fit smart home solutions by Dialog Smart Home ranges from Home Automation, Home Security & Surveillance and Home Connectivity, and are designed to enable any home to work as one harmonious system where all elements work in tandem together to create a truly intelligent home.

The Home Automation solutions offer homeowners seamless and convenient control of their electronic appliances through their smartphones anytime, anywhere. With the Smart Touch Wall Switches, Smart Power Strips and Smart Fan Controllers, homeowners can take control of existing light bulbs, table fans, rice cookers, chargers, ceiling fans and more appliances. Additionally, the Artificial Intelligence (AI) powered TeDi Alexa Solution enables users to control connected smart devices including TVs, air conditioners, home security systems and more through voice commands.

Home Security & Surveillance solutions transform basic cameras into high-powered CCTV solutions. Baby and house monitoring smart cameras can be placed inside homes to keep a 360-degree eye on children and pets. The Indoor Security Camera has the ability to sound a siren and notify users if a stranger enters their home. Dialog Smart Home has also partnered with Singer to offer customers world-renowned Dahua CCTV solutions.

The Home Connectivity solutions offers consumers Wi-Fi extenders to facilitate uninterrupted internet connectivity across the house to fit the homeowner’s lifestyle and requirements.

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CBSL implements extraordinary measures to support banking sector

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The Central Bank of Sri Lanka, considering the prevailing macroeconomic conditions and its impact on the banking sector, has decided to implement the following regulatory measures to support the banking sector to facilitate effective financial intermediation and the flow of credit to the economy, whilst ensuring the soundness of the banking sector.

• Sri Lankan banking sector maintains a Capital Conservation Buffer (CCB) of 2.5% to ensure that banks have an additional layer of usable capital that can be drawn down during stress times. An industry wide flexibility is granted for banks to drawdown the CCB (up to 2.5%), if needed, subject to restrictions on distribution to shareholders/ repatriation of profits and submission of a capital augmentation plan to rebuild CCB during a period up to three years.

• The current deadline for licensed banks to meet the enhanced minimum capital requirement (31.12.2022) is extended up to 31.12.2023. Licensed banks which are unable to meet the minimum capital requirement by 31.12.2022, need to submit their capital augmentation plan, including plans to consolidate or merge with suitable financial institutions, by 31.12.2022 and these licensed banks too shall refrain from distribution of dividends/ repatriation of profits until the minimum capital requirement is met.

• Licensed banks are encouraged to move to approaches such as The Standardised Approach (TSA) or alternative TSA for computation of risk weighted assets for operational risk for the purposes of computing the Capital Adequacy Ratio, subject to supervisory review.

• Licensed banks are given the flexibility to stagger the unrealised mark to market loss on Government Securities denominated in LKR on account of the recent interest rate hike for Capital Adequacy purposes until Q2 of 2024, subject to conditions.

• Licensed banks are granted flexibility on the treatment for Other Comprehensive Income (OCI) for Capital Adequacy purpose in line with the International Standards.

• The deadline for licensed banks to submit the document on Internal Capital Adequacy Assessment Process (ICAAP) for 2022, to the Central Bank of Sri Lanka is extended by one month, until 30.06.2022.

• As a short-term measure to support licensed banks to adjust their liquidity profiles, licensed banks are provided with the flexibility to operate maintaining the Liquidity Coverage Ratio (LCR) and Net Stable Funding Ratio (NSFR) not lower than 90% up to 30.09.2022. Furthermore, the Central Bank of Sri Lanka, on 06 May 2022 decided to restrict certain discretionary payments of licensed banks, such as declaring cash dividends and repatriation of profits, until the financial statements for the year 2022 are audited by its External Auditor, engaging in share buy backs, increasing management allowances and payments to the Board of Directors until 31 December 2022 with a view to strengthening the liquidity and capital positions of licensed banks under these exceptional circumstances.

The above measures were introduced with the aim of providing the licensed banks with more flexibility and opportunities to operate in these challenging conditions and support economic recovery, while taking measures to improve their safety and soundness. The Central Bank of Sri Lanka will periodically review the implementation of these policy measures and expects licensed banks to avail these measures in the best interest of the customers and the economy at large, while supporting the banking sector to remain resilient.

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CEAT official tyre supplier for locally assembled Tata Ace HT 

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CEAT Kelani Holdings has been appointed as the official tyre supplier for Tata Ace HT series compact trucks which are assembled in Sri Lanka by DIMO in collaboration with India’s largest automobile manufacturer TATA Motors.

 CEAT RHINO PLUS TL tyres in the size of 155R12 8PR, manufactured at the CEAT Kelani plant in Kelaniya are used for the TATA Ace HT series vehicles, popularly known in Sri Lanka as “DIMO Batta” under this project. The locally manufactured CEAT RHINO PLUS TL tyre features a zig zag pattern on its circumference and ribs with lateral notches that contribute towards uniformity and better wear and tear on local roads.

 Commenting on this latest OEM agreement of the company, CEAT Kelani Holdings Managing Director Mr. Ravi Dadlani said: “As a brand that has been at the forefront of local value addition in Sri Lanka, CEAT is excited to contribute further to the process through its association with this assembly operation. This is particularly relevant in the prevailing situation in the domestic market. We are able to provide high-quality tyres engineered for local conditions at competitive prices and ensure uninterrupted supply, while at the same time helping to conserve foreign exchange.”

In January this year, CEAT was appointed as an OEM for a range of heavy-duty trucks, tippers and light commercial vehicles assembled in Sri Lanka by Lanka Ashok Leyland PLC (LAL), a joint venture company of Ashok Leyland India. In November 2021 the brand was chosen as the OEM for Bolero City Pik-up vehicles assembled in Sri Lanka by Mahindra & Mahindra India in collaboration with Ideal Motors.

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