Charisma Energy tips ‘severe slowdown’ in Sri Lanka collections amid political turmoil

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Charisma Energy Services cited Thursday expectations its collections would show a “severe slowdown” for its 13 mini-hydroelectric power plants (MHPPs) in Sri Lanka. 

“The country has been facing an economic crisis since the Covid-19 pandemic. In 2021, the country had a foreign currency crisis resulting in tightening of the foreign currency exchange controls. The country has been further impacted by rising inflation costs and is currently going through political turmoil and violent protests over the country’s current economic crisis,” Charisma Energy noted. 

So far, the MHPPs, which have a combined capacity of 43 megawatts, are still operating and generating electricity to a government-owned electricity company, Charisma Energy said. 

But looking ahead, the company said it expected a “severe slowdown” in collections of receivables from electricity sales, with some outstanding receivables dating from electricity sold since August. 

Revenue is expected to drop from March due to the Sri Lankan rupee weakening, while operating costs are expected to rise on higher inflation and the weaker rupee, the company said. 

Charisma Energy said it was also facing issues repatriating U.S. dollars out of Sri Lanka to service its outstanding loan denominated in U.S. dollars. 

The turmoil could also negatively affect the conditional subscription agreement announced in January, and the proposed debt restructuring exercise, as the investor reviews the situation in Sri Lanka and the weaker Sri Lankan rupee, the company said. 

In January, Charisma Energy said it entered a conditional subscription agreement with infrastructure developer Yin Khing Investments, with the subscriber to take up new shares amounting to S$16.08 million, and share options carrying the right to subscribe for one new share to a total S$16.08 million. That announcement also included plans to divest existing assets except the MHPPs in Sri Lanka, and a plan to restructure its debts of US$18.4 million.

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