Long-delayed Kantale sugar factory revival gets underway
File picture of a field of sugar cane
The long-delayed Kantale sugar factory revival will soon get underway following the release of the 500-acre land to the foreign investor, a senior official said.
The land was handed over to the Board of Investment (BOI) to proceed with the project, Dr. I.H.K. Mahanama, Secretary of the Lands Ministry, told the Business Times this week adding that the ministry will sell the discarded machinery and scrap metal within six months in accordance with the instructions issued by the Cabinet Committee on Economic Management (CCEM).
The valuation report of the Chief Valuer on the sugar factory has been submitted to the Attorney General and the ministry has received his consent to go ahead with the project handing over the land to the investor through BOI, he disclosed.
The BOI will have to sign a supplementary agreement with MG Sugars Lanka Pvt Ltd to revive the defunct Kantale Sugar Factory, he said.
It was nearly two years ago, in July 2015 that the BOI inked an agreement with MG Sugars Lanka Pvt Ltd to revive the Factory.
The company, a partnership between Bangalore-based Shri Prabulingeshwar Sugars Chemicals Ltd and Singapore’s SLI Development Pte Ltd, had agreed to invest US$100 million inclusive of a Swiss Bank guarantee of $10 million.
The company had then conducted a $2 million feasibility study on the project through a German Company Bosh.
It planned to process 500,000 metric tons of sugarcane within 18 months after re-launching the factory providing benefits for 25,000 farmer families in the area. The total number of direct employment generation would be around 1,220.
BOI Chairman Upul Jayasuriya told reporters in Colombo last month that the investor was keen to begin the project soon after factory and the 500-acre land is handed over by the government.
Shri Prabulingeshwar Sugars and Chemicals Ltd, Bangalore, an experienced group of companies engaged in sugar cane cultivation, sugar manufacturing, co-generation of power plants and dairy industry will be the technical partner for the project.
The 30-year lease agreement has to be signed with the investor and the project would run on Built, Operate and Transfer (BOT) basis in the basis of shareholding of 51 per cent held by the Government of Sri Lanka and 49 per cent by the foreign investor.
The new investment agreement will be to revive and restructure Kantale Sugar factory to process 4000 TCD of sugar cane and manufacture 72,000 MT sugar per year, generation of electricity and dairy products, as per the approval granted by the Cabinet of Ministers.
This sugar factory was constructed in 1957 by the government of Czechoslovakia as a grant offered to the country during the tenure of Prime Minister S.W.R.D. Bandaranaike and it was opened in 1960.
It had been smoothly functioning as a profit earning venture until 1986. Thereafter it ceased to be an income earning enterprise and various attempts were made to identify a suitable investor.
Industry sources said it would be highly beneficial to restart Kantale Sugar Factory which was inactive over a long period of time as an accelerated development process.
This would also address loss of direct and indirect job opportunities in the area as well as losses to the local economy due to non-operation of the sugar factory, they added.