The Lanka Academic

VOL. 9, NO. 258


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Sri Lanka : Dispute over gas price creates shortage
Associated Press, Fri December 19, 2008 11:39 EST . KRISHAN FRANCIS - Associated Press Writer - COLOMBO, Sri Lanka - (AP) The Sri Lankan government ignored a Supreme Court order to reduce state-set gas prices, declaring Friday that soaring fuel prices would remain unchanged.

The standoff between the court and the government has created an artificial fuel shortage and long lines at the pump.

Many filling stations, unsure what price to charge, did not fill tanks Thursday, fearing they would end up buying gas at the higher price and be forced to sell it at the court-ordered discount. Stations across Colombo ran out of fuel, and lines stretched into the streets for those that had some left.

The government, expecting oil prices to continue climbing, agreed earlier this year to buy all of its fuel at the price of $134 a barrel until next summer. In recent months, however, the price of oil has plummeted to under $50 a barrel.

A recent document submitted in court estimated the deal could cost as much as $775 million, economist Harsha de Silva said.

With oil prices plunging, the Supreme Court ordered the government Wednesday to immediately reduce the state-set price of gas from 122 rupees to 100 rupees (about $1).

But instead, the court's efforts have created a black market that sent the price in some places skyrocketing to 145 rupees a liter.

The government ignored the order, with Trade and Consumer Affairs Minister Bandula Gunawardena saying the Cabinet can't act because it never received an official copy of the court order. The court has said it delivered the ruling to the appropriate government officials.

Chandana Alutge, a university teacher, said he stopped driving his car because of the shortage.

``This is not good for the country,'' he said.

The opposition United National Party claimed the government won't reduce the gas prices so it can use the extra profits to cover the losses from the oil hedge.

The court has made no comment on the dispute.
Published: Fri Dec 19 15:32:21 EST 2008

Govt. says no Xmas ceasefire with LTTE despite bishops appeal, 18 december. Colombo (PTI): A fervent appeal by Catholic and Anglican bishops for a ceasefire with the LTTE during the Christmas and New Year season has failed to evoke a positive response from the Sri Lankan government, which vowed to continue with the offensive against the Tamil Tigers.

The government on Thursday said it would not go in for a truce despite an appeal made by the Catholic and Anglican bishops.

It would declare a ceasefire only if the LTTE laid down its arms and agreed to a political discussion to settle the issue, Media Centre for National Security (MCNS) Director Lakshman Hulugalla told 'Daily Mirror'. More...
Published: Fri Dec 19 08:34:42 EST 2008 Back to the top

Sri Lanka May Start Easing Policy After Keeping Rates Unchanged, Dec 19, 2008. Dec. 19 (Bloomberg) -- Sri Lanka's central bank may start easing borrowing costs after keeping key interest rates unchanged today as it predicted inflation will slow more than earlier expected.

The benchmark interest rate was left unchanged at 10.5 percent for a 22nd straight meeting, as the central bank sought to contain inflation that has stayed at more than 16 percent for over a year. The Colombo-based bank refrained from cutting its money-supply target, after three reductions this year to pare cash in the economy and cool prices.

Having one of the highest inflation rates in Asia had given Governor Nivard Cabraal limited room to ease monetary policy to support economic expansion, which slowed last quarter as a global economic slump hurt exports. Still, easing inflation may give the central bank more room to maneuver in the coming months.

``With inflation coming off given the collapse in commodity prices and softer demand at home on account of tight monetary policy, and at the same time a deteriorating growth outlook, we do think the time is getting ripe to ease the policy stance,'' Prakriti Sofat, an economist at HSBC Holdings Plc in Singapore, said in a note. Consumer-price gains in the capital Colombo eased for a fifth month in November to 16.3 percent as oil and food prices fell. Cabraal wants to bring inflation to a ``single-digit level'' in 2009. The central bank may start easing policy in the first half of 2009 by setting larger targets for reserve-money growth and allowing market interest rates to decline, Sofat said. More...
Published: Fri Dec 19 15:35:08 EST 2008 Back to the top

Sri Lanka: Heavy fighting in battle for Kilinochchi, 18 december. Fierce fighting has continued this week as the Sri Lankan army presses its attack on the northern town of Kilinochchi, the administrative headquarters of the separatist Liberation Tigers of Tamil Eelam (LTTE), in the Wanni region... Back to the top

Sri Lankan air force bombs rebels
Associated Press, Fri December 19, 2008 07:40 EST . RAVI NESSMAN - Associated Press Writer - COLOMBO, Sri Lanka - (AP) Sri Lankan fighter jets and attack helicopters bombed rebel bunkers and a flotilla of boats in the northern war zone Friday as government troops breached another section of the Tamil Tigers defense fortifications, the military said... Back to the top

Sri Lanka to tour Pakistan
Associated Press, Fri December 19, 2008 03:51 EST . RIZWAN ALI - AP Sports Writer - ISLAMABAD, Pakistan (AP) Sri Lanka - has confirmed it will tour Pakistan from next month, filling in after India withdrew from its scheduled tour in the wake of the Mumbai terrorist attacks... Back to the top

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