Six top global companies in power sector to invest:

New agency to woo foreign investment

By Lalin Fernandopulle

The slow down in foreign direct investments (FDIs) may have a crippling effect on economic growth.In an interview with the Sunday Observer, Upul Jayasuriya the Chairman, Board of Investment of Sri Lanka (BOI), the official investment promotion body in the country, said that with the setting up of the Agency for Development more investors will be lured into the country to stave off the financial doldrums at present.

Excerpts of the interview :

BOI Chairman Upul Jayasuriya

Q: What steps have you taken to attract investments which have dwindled drastically?

A: A vibrant investment policy is essential to attract investors. Such a policy had not been spelt out so far. An investment policy is being worked out by the Agency for Development which will be set up soon and on the basis of the policy laid down by the Agency, the BOI will invite potential investors to invest in Sri Lanka. Until the Agency is set up with policy guidelines, no overseas investment promotions will be carried out.

Q: What have you initiated to infuse transparency to the BOI with regard to the allocation of lands to investors in zones ?

A: The allocation of land was done in an ad hoc manner before I assumed duties. Investors made their requests to the BOI. They were individually considered on availability. However, there was no rationale and transparency in the allocations. I decided that there should be sanity brought in with equal opportunity to all investors. We have published advertisements in newspapers and websites and our missions abroad on the availability of land in zones.

We have called for bids on the basis of two envelops such as project proposals and the price. A committee comprising senior BOI officials has now been set up in this regard and its recommendations will be carried out by the BOI.

We have attracted good market prices and not give-away prices. This is on the basis of competition among investors. A company recently paid US$ 110,000 per acre in Sithawaka whereas the price under the previous circumstance was in the region of US$ 60,000 an acre.

In another instance, we received a bid for a land in Katunayake for Rs. 450,000 a perch whereas under the former procedure, the BOI valuation was Rs. 43,000 a perch.

On the earlier basis the BOI price per acre was US$ 60,000 an acre whereas the price we have now obtained is US$ 490,000 per acre. Certain companies that have obtained large blocs of land which were far in excess of their requirement have not made use of them. Such land allocations were cancelled and agreements terminated.

Q: What are the investments currently being processed?

A: We have received proposals from six top global companies in the power sector for an investment of US$ 4,500 million to generate around 2000 MW of power. Sri Lanka's current power generation requirement is around 1200MW.

The power generation in the country will double in three years when the projects are implemented.

President Maithripala Sirisena is keen to facilitate power projects and called for a meeting with all stakeholders and investors. According to the proposals that were made, power generation projects will be Liquid Natural Gas (LNG) which is accepted world over as a cheap source of funding rather than coal. What is more important is that investors are able to supply power at Rs. 10 a unit which is much less than the current purchasing price.

The thermal power plant at Kelanitissa is much more costly as far as consumers are concerned. The President has instructed Ceylon Electricity Board (CEB) officials to consider the proposals and take a policy decision as to whether they would like to go for wind or solar power which would cost the consumer more or to buy power through the use LNG at a much cheaper rate.

There are other investors who are willing to make investments to convert thermal power which is costly for the CEB than power generation through LNG.

This again is a policy decision to be taken by the CEB which needs to be done fast as there are substantial investors willing to invest to conver thermal power plants into LNG.

A US$ 700 million investment is in the pipeline for a fully integrated and automated factory to manufacture composite boards, ending with high quality furniture and internal doors and windows.

Q: What steps have you taken to attend to investor-issues on a fast track basis?

A: A one-stop-shop has been created in the 27th floor of the BoI manned by Vidharshana Fernando, a senior director and nearly 24 government agencies are represented in the office on a rotational basis which include the Central Environmental Authority, the Inland Revenue Department, the Customs Department, the Registrar of Companies and the Department of Immigration and Emigration.

Investors are encouraged to raise issues here and attend to problems at the newly-created apparatus. We have also set up a call centre, with an official to respond to calls of investors between 6.00 a.m. to 10.00 p.m. local time.

We are in the process of setting up a facilitation centre at the Bandaranaike International Airport. Discussions in this regard have been initiated with the SriLankan Airlines to carry a BOI magazine for first class passengers and upon request for economy class passengers as well.

This will be done no sooner the overall investment strategy plan has been finalized by the government. The BOI has negotiated with the OBG to create a new profile for Sri Lanka which will be launched by the end of this month.

The Report will be published as a soft copy among two million clientele across the world and around 150,000 hard copies will be distributed among fund raisers, bankers, high net-worth investors who are the clientele of the Oxford Business Group(OBG).

The report will be upgraded every year with current news. Six foreign consultants were working on the report for one year. This effort has cost nothing to the BOI.

Q:What made you take up the appointment as Chairman of BOI?

A: The BOI has always been after my heart. I associated with the first Director General Upali Wijewardene who was a class by himself where attracting investors was concerned.

This was my early experience and thereafter I held many positions in the public sector as Chairman of the State Trading Tractor Corporation and Oils and Fats Corporation.

I was then invited by Dr. Seevali Ratwatte who succeeded Upali Wijewardene to be the Managing Director of Ceylon Chocolates Limited which was a sinking company at that time.

All three institutions were making huge losses at the time I joined. However, I take pride that I turned these companies around to be profit making entities before I parted.

This is what made me to accept the challenge to head the BOI.