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Private sector to get work under ADB’s $56m road loan
The Asian Development Bank (ADB) is helping to rehabilitate provincial roads and improve transport efficiency in Sri Lanka through an approved concessional loan of $56.5 million. In addition, the OPEC Fund will provide cofinancing of $8.5 million equivalent, to be administered by ADB.

The Road Sector Development Project, to be carried out in four provinces, is the first in a series of planned interventions through 2008 to support reforms and improved financing of priority roads, the ADB said in a statement.

In addition, ADB is providing two technical assistance grants totalling $1.35 million to conduct a feasibility study of national highways development and to develop a reform and investment program for better passenger transport services. The grants are from the Japan Special Fund, financed by the Government of Japan.

“On a quantifiable basis, transport costs will be significantly reduced through the project,” said Sri Widowati, an ADB Project Engineer. “More generally, these improvements will provide more access to economic opportunities and essential services and improve the convenience of travelling, especially for the poor.”
The project will promote institutional and policy reforms to create an environment for efficient and sustainable development that includes substantial private sector participation.

Presently, the Road Development Authority (RDA), responsible for maintaining national highways, has limited autonomy under the Ministry of Highways. Further, over-reliance on a company owned by RDA for engineering, construction, and maintenance works has led to inefficiency, lack of capacity, and inadequate maintenance.

To strengthen RDA’s capacity to plan, manage, and fund road maintenance, the project will increase the portion of road works and construction contracted out to the domestic private sector.

In addition, the project will improve 980 km, or 12 percent, of provincial roads in four provinces – the North Central, North Western, Uva, and Western - as well as about 40 km of community access roads.

Bridges, drainage, and culverts will be upgraded or replaced. Currently, at least 75 percent of the provincial roads in the project area are classified as being in poor condition.

The project will also address deficiencies in passenger bus services, the leading form of transport. To improve the low standard, poor coverage, and safety and reliability records, the project will streamline regulations and explore opportunities for private operation.

“Access to improved bus and road freight services from better roads will help boost growth, incomes, and jobs,” notes Ms. Widowati. The total cost of the project is an estimated $92.5 million, of which the government will provide $27.5 million equivalent.

ADB’s loan is from its Asian Development Fund, and carries a 32-year term, including a grace period of eight years. Interest is 1.0 percent per annum during the grace period and 1.5 percent per annum subsequently.

The executing agencies for the project are the Ministry of Transport, Highways and Civil Aviation and Ministry of Home Affairs, Provincial Councils and Local Government. The project is due for completion by end-2007.

Tea prices seen firm in 1Q of 2003
The shortfall in the world tea crop should help keep prices firm in the first quarter of the new year, brokers John Keells has said. “While the world production surplus of 2001 would have been absorbed into the marketing system during 2002, the short fall in the latter year will help a firmer tone during the first quarter of the New Year,” they said.

With the short fall being mainly in the CTC category, small leaf teas would be the beneficiary of the stronger market, they said in a report that gave a forecast for 2003.
“The production of long leaf teas from Sri Lanka has been at the levels of the previous years hence, the market can be expected to behave in the customary fashion which is overall, a steady demand in the first quarter.”

The market for the second quarter will depend to a great extent on how Sri Lanka will cope with her rush crops particularly in May and June. The market for the third and fourth quarters will depend on the cropping pattern of the three big producers/exporters, namely India, Sri Lanka and Kenya.

“However, until New Year’s world crop overtakes the production figure of 2002, the general market should continue bullish,” John Keells said. “These forecasts naturally do not take into consideration any non-market related situations such as tension in the Middle East.”

John Keells said tea producers would view the year 2002 with mixed feelings but warned that input costs have gone up. Production has been satisfactory, and above the previous year. “Tea prices in rupee values have at most times been higher than the levels which existed in the year 2001,” they said.

This was particularly evident in the case of Low Growns. However, on the negative side, input costs have risen very sharply and two key components have been the wage increase and the electricity charge.

“Consequently, profits of tea estates and private factories have eroded quite sharply,” the brokers said. On the buying side, operations have continued smoothly with international buyers focusing on Colombo for their requirement of Ceylon teas, which helped the efficient disposal of all varieties.

Of the world’s major black tea exporting countries, Sri Lanka has been able to show improved harvests whilst India and Kenya in particular have to date recorded crop losses, despite having a satisfactory crop in the month of October.

Consequently, as at end of October, a crop deficit of 25 million kg was evident. “It will be remembered that last year there was a fairly substantial surplus from these countries,” John Keells said.

“It will also be remembered that tea factories harvest a significant portion of the yearly crop during the second quarter. It is therefore important that strategic changes are made in the future to prevent the heavy cropping period of the second quarter from yielding poor results.”

Traditional buyers of Ceylon Tea have continued to lend good support at the Colombo auction. CIS continues to be by far the single largest market, and the brokers said they were pleased to see an increase in their off-take during the period January to October.

The Middle East as a region is the largest for Ceylon tea but fluctuations within each country were quite noticeable. Shipments to Dubai have shown a decline but Iraq increased her purchases quite sharply.

A significant drop is also observed in respect of Libya up to end of October but this drop could be reduced by the end of the year, as strong buying has continued in the last couple of months. Developed country markets such as, the UK, Germany, Holland and Japan continued to bid strongly on the better quality Ceylon teas.

Pramuka – who is responsible?
The closure of Pramuka Bank is a terrible blow to some 15,000 depositors of this bank. Who is responsible for this? Is it the Central Bank or any other organisation?
In Sri Lanka these ‘white collar’ robbers are allowed to flee with their loot.

Why cannot the government immediately confiscate the assets of those who are responsible for this crime? Why did the Central Bank deploy their team to investigate only at the final stage of the malpractice rather than intervening at a stage where they could rectify the malpractices?

What are the measures available in this country to protect the rights of depositors of a bank? Isn’t this type of sudden closure of a bank a violation of basic human rights of innocent depositors?

If not the general public should learn that any deposit, especially in a private bank in Sri Lanka, is liable to disappear suddenly upon “mismanagement” as demonstrated by this example.

S.Sumanaweera,
Pilyandala.

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