Five RPCs under the scanner
The Government is keeping a check on at least five regional plantation companies (RPCs) over their performance threatening to cancel their lease agreements if they did not meet expectations, and thereby making way for new investments to enter an already ailing sector.
Plantation Industries Minister Navin Dissanayake told the Business Times that he had had discussions with regional plantation companies about the underperformance observed in some RPCs.
As a result they are being monitored, he said adding that the authorities would adopt certain measures to deal with the RPCs “who are neglecting their duties” and “if they continue to underperform then we will have to ask them to go.”
Moreover, authorities are looking at working out a new model for the RPCs by breaking down the large estates and fragmenting them while calling for bids to lease out the properties to smaller businesses on the second and third tiers.
It is learnt, that Prime Minister Ranil Wickremesinghe had queried from the relevant authorities in the sector how they propose to find large companies to invest in these properties today. This is the reason for coming up with this new model.
Meanwhile, ministry sources said that there were Indian and British investors already engaged in the agriculture sector in other countries that had made enquiries regarding investing in the RPCs in Sri Lanka.
It was found that those companies identified as underperforming required capital infusion that was lacking and were struggling to bring in the required yields onto the estates.
It is learnt that these companies at one time or other had brought in investors through joint ventures and other partnerships to run the plantations but even then the plantations had performed badly.
Some plantation companies had not sought out investors and were struggling to even pay workers their wages and but would somehow pull through, it is believed.
However, sources noted that some of the RPCs that were under the scanner had even pulled out of their joint ventures and others were trying to continue on the road they had started out on without backing off.
One of the concerned RPC companies contacted by the Business Times said that while they had problems in plantations like rubber, their tea sector had now picked up.
Previously they were faced with some financial issues but pointed out that they were now on the “road to recovery”. They were also working on increasing their business in the oil palm crop as well, it was noted.
Meanwhile, the authorities will put forward the proposed Governance Act under which the plantations would be handled in future. At present the proposal law has been sent to the Legal Draftsman following cabinet approval.
Moreover, the World Bank funding of US$50 million to restructure the plantations although delayed is now expected to be submitted to the Prime Minister. The restructuring plan is in the pipeline for 2019/2020 and there would be a separate model for disbursement.