BCC yet to be funded

The agreement between the ASSAR SDS Corporation (Pty) Ltd and BCC Lanka Limited to fund the latter is yet to be signed.

Director, ASSAR SDS Sampath Liyanage told The Sunday Times FT that the company is awaiting the final cabinet approval for the project to go through. ASSAR SDS is a joint venture company between ASSAR Senari Holdings Sdn Bhd, which is a Malaysian government linked company and SDS Corporation Pty Ltd of Sri Lanka. ASSAR Senari Holdings functions under the Sarawak State Investments arm and specialises in projects related to infrastructure development.

Liyanage said he is unsure of when cabinet approval will be given but said that it will take at least a month or so for the cabinet paper to be studied. "It also depends on how fast the government thinks that it should go forward on this." Liyanage added that BCC has been making losses for the state since 1982 and in 2002, approximately 245 perches of their land were sold by the Public Enterprises Reform Commission (PERC) to recover some funds. "Even in 2001, they sold an oil refinery and blending plants. They're in debt about Rs.1 billion," Liyanage said. Certain aspects of the proposed agreement between BCC and ASSAR SDS have raised several concerns about its legality and effectiveness to promote the coconut industry in Sri Lanka. The development of the coconut industry was not mentioned although a specific reference was made by Salinda Dissanayake, Minister of Coconut Development in his budget speech in Parliament.

The agreement mentions the import of palm oil in bulk to be sold in the local market which is in contradiction to the objectives set forth by the Minister. Under the proposed agreement, the foreign party will also take control of the pipeline from the port to the BCC complex and oil storage tankers at the port and the BCC complex. The agreement goes on to allow for sub-leasing of BCC land to other companies on terms and conditions entirely determined by the foreign party. The foreign party is also assured of an income by way of 3% on turnover while BCC have to depend on profits earned over which BCC has no control since the management rights are with the foreign party. This will result in the government of Sri Lanka having to fund the payment of the management fee and will nullify the main objective of relieving the government of the current financial burden.

Under the terms of the current agreement, the lease, which is for 30 years, may be extended for another period of 30 years on the same terms and condition if the foreign party gives notice. The government will have no say in the extension of the lease and is also contrary to what was said in the budget speech by the Minister where it states the BCC will be handed back to the government. There is also no mention in the agreement of the US$ 1.9 billion investment which was mentioned in the offer letter. Furthermore, the offer letter, a copy of which was submitted to Parliament as well as the Minister contained two different variations. The copy attached to the cabinet paper does not mention the importation of palm oil or the taking over of the pipe lines and oil storage tankers at the port nor does it mention the sub-lease of BCC property for other purposes.

Secretary to the Ministry of Coconut Development, Karaliyadda told the Sunday Times FT that Minister Dissanayake is keen to resolve the issue and is expected to call a press conference sometime next week to explain to the public the salient features of this agreement. Minister Dissanayake confirmed that a meeting was held on Wednesday with all relevant parties to discuss the matter.

The Coconut Growers Association of Sri Lanka, speaking to the Sunday Times FT expressed serious concerns over the future of the BCC and the coconut oil industry. "We welcome the investment, but not if it is to bring down the coconut oil industry" a spokesperson said.