Self sufficiency in five years:

Rs 90 bn boost for sugar industry

Shirajiv Sirimane

A mammoth sum of Rs. 90 billion would be pumped by the private sector to help make Sri Lanka self sufficient in sugar in five years.

Lakshman Seneviratne

This includes setting up and resurrecting the abandoned Kantale Sugar Factory. In addtion plans are on to set up 15 new sugar cane factories. In addition, the investment also includes growing 100,000 hectare of sugar cane.

According to the Minister of Sugar Industries, Lakshman Seneviratne, these investments would be on a build own and transfer basis with the investor given a five year period. The return on investment on a project of this nature is three and half years.

He said that what they plan to do was to encourage private sector investors to build 15 new factories for which the government would provide all assistance.

In this year's budget, President Mahinda Rajapaksa allocated 135,000 hectares for the growing of sugarcane (for out growers) and the proposed factories would have enough raw material.

It is estimated that a farmer could cultivate an acre with Rs. 113,000 and income in one and a half years would be Rs. 280,000 giving a profitability of Rs. 167,000 per year. The life span of a sugarcane plant is around five years.

The annual sugar import bill to the country is Rs. 55 billion which makes it the second biggest after the import of crude oil. In addition a further Rs. 4 billion is spent to import spirits.

Currently Sri Lanka has two sugar factories and the total local production is just 33,000 Mt. or 4.7% of the total requirement.

With a per capita sugar consumption of 35 kilograms, annual requirement is 700,000 Mt.

The sugar cane industry is a major dormant financial giant of foreign exchange to the country and the government's aim is to firstly make Sri Lanka self sufficient in sugar and then look at exports. “We plan to bring in Rs.70 billion as profit to Sri Lanka from the sugar industry by 2019.”

In addition, the sugar cane industry would also produce electricity, thus helping the country to reduce its fuel bill. Currently 3 mv is being generated and this would be increased to 24 mv by the end of the year.

“By producing green energy from sugarcane, Sri Lanka would also be able to get foreign exchange for carbon emissions from the United Nations,” he added.

He also disclosed that there was also an imminent sugar crisis looming with most of the exporting countries such as Thailand and Brazil deciding to produce ethanol rather than exporting raw sugar as it was more profitable for them.

He said that in the last ten months the two sugar cane factories in Sevenagala and Pelawtte were able to show profits of Rs, 790 million and RS. 40 million respectively.