• Only Katunayake EPZ gets exempted from power cuts whilst 14 others zones are in the dark
• Free Trade Zone Manufacturers Association opines failure to supply power and energy will impact exports the only stable forex earner
• FTZMA Secretary Dhammika Fernando says the economy coming to a standstill will be inevitable if Govt. remains deaf and blind
• Firms begin partial shutdown of operations during power cut hours
• Says power outage hampers manufacturing processes, timely delivery, putting future orders at stake
• Employees income impacted with no overtime and other incentives
• Written requests to Power and Energy Ministries, CEB, PUCSL go unacknowledged 
• FTZMA says Govt. failed to ensure integral part of infrastructure committed to FDIs signed with BOI

By Charumini de Silva

The Free Trade Zone Manufacturers› Association (FTZMA) yesterday warned country losing $ 4 billion in much needed foreign exchange inflows if the Government fails to ensure uninterrupted power supply in an operating environment already impacted by currency and fuel shortage.

It claimed that the economy is on the verge of losing $ 4 billion or 30% from the country›s total merchandise exports for the year, hampering the only sector which generates a steady inflow of foreign exchange since the outbreak of the COVID pandemic in 2020.

Despite writing to highest authorities on the worsening fuel and power shortage, the FTZMA said it had not got any positive response other than from the Board of Investment (BOI), which had been dealing with all issues on behalf of its members during the past two months.

“Unavailability of fuel for backup power generation, scarcity of fuel hampers supply chain resulting in the container transport operations getting impeded and our employee transport operators find it difficult to refuel which in turn weakens the employee attendance badly. It also adversely impacts the entire economy, our operations and income levels of employees,” FTZMA Secretary Dhammika Fernando told the Daily FT.

He pointed out that some of the firms have already commenced a partial shutdown of their operations during power cut hours, which has adversely impacted the manufacturing processes, credibility of timely delivery, placements for future orders as well as the overtime income and other incentives given for employees.

“If the Government continues to be deaf and blind to the pleas of the export manufacturing companies, then the economy coming to a standstill will be inevitable,” he added.

The seven and a half hour power cut announced on Tuesday and for today, was the longest blackout announced for Sri Lanka in 26-years.

With the interventions made by the BOI, Katunayake Export Processing Zone (EPZ) remains as the only zone which is exempted from power cuts, while all other 14 zones are daily experiencing the load shedding, despite requests made to the Power and Energy Ministries, the Ceylon Electricity Board (CEB) and the Public Utilities Commission of Sri Lanka (PUCSL). The most recent written plea was to the President Gotabaya Rajapaksa.

“Those who can afford to use standby generators will have to take an extraordinary cost on production with their export products becoming more expensive, thus being uncompetitive in the international arena. Given the current situation, even to operate with a cost — there is no fuel to run the generators,” Fernando lamented, noting that they have received complaints on a daily basis for the past two months.

Sri Lanka’s annual merchandise exports last year were $ 12.5 billion and of that nearly 45% is generated from the apparel sector. The FTZMA member companies earn around $ 3 billion or 30% of the total export income, whilst the balance 70% is generated by factories outside the EPZs. This includes both apparel and non-apparel industrial exports.

“Many have been promised to us during discussions, but on practical grounds nothing is extended to the export companies,” he charged.

Fernando also highlighted that the Government failed in its primary duties of ensuring uninterrupted power supply which is an integral part of infrastructure committed to the foreign investors in the country as per the agreement signed with the BOI.

“With the Government failing to ensure uninterrupted power and fuel to the existing foreign investors, which is a very basic requirement in attracting Foreign Direct Investments (FDIs), how are we even going to lure new investments?” he argued.

At present Sri Lanka has 15 EPZs operating in Katunayake, Biyagama, Koggala, Kandy, Mirigama, Malwatta, Seethawaka, Mirijjawila, Wathupitiwala, Horana, Polgahawela, Mawathagama, Wagawatta I, Wagawatta II and Bingiriya. There are 273 factories operating in these EPZs with nearly 140,000 employees, whilst 1,615 factories under the BOI purview which are situated outside the EPZs where 580,000 are directly employed and around one million are indirectly employed via these factories. Over 70% of the export income is provided by this workforce.

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