Business Times

SL's Expropriation Bill: A thorn in US funding

By Sunimalee Dias

The Expropriation Bill presented in Parliament has become the "biggest issue" in providing loans to US enterprises for projects in Sri Lanka. This was stated when loan originator, the International Executive Service Corps (IESC) for the Enterprise Development Network, a programme sponsored by the Overseas Private Investment Corporation (OPIC) signed an agreement with the American Chamber of Commerce (AmCham) on Wednesday in Colombo.

IESC Vice President Charles Conconi speaking on the occasion said that the Expropriation Bill passed in Parliament has become the "biggest issue" when it comes to considering the premium on the political risk insurance. Under this programme, OPIC provides financing with the Political Risk Insurance for currency inconvertibility, expropriation, and political violence for assets and business income.
In this regard, speaking with the Business Times, he pointed out that while they would consider the premium level from 2-5%, currently, Pakistan's political risk insurance premium is at 3.5%. Mr. Conconi said it is likely that OPIC would consider if the project is profitable and then "hope to charge a large premium on it." The premium is based on how much work is carried out in the project and the loan amount, he said.

OPIC is the US government's development finance institution that mobilizes private capital to help solve critical development challenges and in doing so, advances US foreign policy.

The organization works with the US private sector in a bid to ensure that they make gains in emerging markets. Commenting on their interest in Sri Lanka, Mr. Conconi said that it was mainly because the Return on Investment (ROI) in the US is bad but that in Sri Lanka it was looking "really good".

He said that with Sri Lanka considered to be one of the fasted growing economies in the world their interests have increased. Priority is given to projects in clean energy, financial services, education, water, housing, infrastructure and tourism.

Under this programme, OPIC provides investors with financing, guarantees, political risk insurance, and support for private equity investment funds. OPIC is capable of financing upto US$250 million for projects in Sri Lanka.

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