Local cable companies face discrimination on govt. tenders

Local manufacturers and suppliers of copper cables and aluminum conductors are facing difficulties in competing for government tenders on large scale infrastructure projects, according to Chairman, ACL Cables PLC, U.G. Madanayake.

“Despite repeated attempts by ACL to convince the government to extend a level playing field with regard to participation and supply of cables and conductors to large scale projects of the government, including the Ceylon Electricity Board projects, we have had only limited success to date.

Continued discrimination against the local cable manufacturer at every stage of tendering and supply continues to frustrate us,” Madanayake said.

“High interest rates due to increased borrowing by the government and highly restricted granting of credit to deserving customers (particularly in the electrical trade) will have a negative impact on the buying powers of the people. While this reduces the demand for cables, it increases our borrowing costs significantly, thereby affecting profitability,” he added.

He however noted that with electricity sales growing at approximately 8% per annum for the past few years, demand for copper cables would only increase as the government infrastructure development drive continues to spread across the country. Further difficulties as a result of depreciation of the rupee have also been anticipated. However, a declining trend in copper and aluminum prices subsequent to economic instability in developed countries, has somewhat mitigated its effect according to Managing Director, ACL Cables PLC,SurenMadanayake.

“Increased cost of borrowing and the credit squeeze have impeded investment in many industries and reduced demand for cables, directly in the house construction sector. Further, the high cost of borrowing and devaluation of the Sri Lankan rupee will have a negative effect on cost of production and the bottom line. However, this could be mitigated somewhat if present low prices of copper and aluminum continue to prevail for another year.”

“This year we shall concentrate more on Australia and New Zealand as the key export markets in addition to the Maldives and African markets. We shall continue to explore export markets for revenue generation as well as acquaint ourselves with international competition, since we believe that if customs import duties continue to decline, such international competition could arrive here in Sri Lanka,” Madanayake said.