Singapore’s Gazelle Ventures and Lanka’s IMS Holdings Ltd. to invest as joint venture
Foreign investor to bring in $ 152.25 million; take up 88% stake
7,500 farmers to grow sugar cane on two hectares each 1,000 direct and 75,000 indirect jobs
80,000 MT of sugar per annum
Generates 28 Mw of electricity and produces animal feed as byproducts
By Chathuri Dissanayake
With a new Singaporean investor on board, the longstanding proposal to launch a sugar development project by Bibile Sugar Industries got the green light from the Government this week.
The project was initially proposed and approved by the Cabinet in 2006, never took off with original Chinese investor backing out. However with the entry of Singapore’s Gazelle Ventures Ltd., with local partner IMS Holdings Ltd., linked to Islandwide Marketing Services Ltd., the project was revived.
With plans of going into production in 2018, the Singaporean partners are investing $ 152.25 million in the venture. The project is to be implemented as a public-private partnership with expectations of producing 80,000 MT of sugar annually.
“The project is based on a total outgrower model where 7,500 farmers will be given two hectares of land each to grow sugar cane to be bought by the factory. We are implementing the project in some of the poorest areas of the country,” Bibile Sugar Industries Director C.W. Jayasekara told Daily FT.
The project has been allocated lands held under the authority of the Rambaken Oya Special Economic Region of the Sri Lanka Mahaweli Authority. The land will be given to farmers on a five-year lease with the condition of growing only sugar cane to be sold to the factory set up on 149 hectares of land granted to Bibile Sugar Industries by the Mahaweli Authority of Sri Lanka (MASL).
According to the project proposal presented to the Cabinet by President Maithripala Sirisena as the Mahaweli Development and Environment Minister, the project will generate 1,000 direct employment opportunities and about 75,000 indirect employment opportunities.
The paper presented to the Cabinet proposes that the implementing company, Bibile Sugar Industries Ltd, be converted into a joint venture company with 88% equity owned by Singaporean partner Gazelle Ventures. The farmer community that enters into a cultivation agreement will hold 1 % of shares with another 1% owned by MASL.
Further, the investor will also pay MASL a facilitation fee of Rs. 0.25 cents for every 1 kg of sugar produced by the factory. This is in addition to the lease rental to be paid for the 149 hectares of land.
The factory will also produce animal feed and organic fertiliser as byproducts and implement a subproject for generating 28 Mw of electricity.
“When the factory is in full capacity, out of the total electricity generation the factory will consume 8 Mw and the national grid will be fed 20 Mw,” Jayasekara said.
The project is expected to start production by the end of 2018, with plans to reach full capacity in another four years’ time. The land to set up the nursery and other primary functions are to be released to investors by May this year.
“It takes about a year to grow sugar cane to come to a usable level, and we have to set up the factory as well so if they release the land on time, our target is to go into production in 2018,” he said.