State plantations get Rs. 377 m bailout ahead of restructuring

Friday, 12 August 2016 00:00 - - {{hitsCtrl.values.hits}}

Cabinet approves five months of salaries to 13,000 employees as committee considers private investor proposals to be implemented before year-end

State-run plantation companies earmarked for restructuring will be given Rs. 377 million in Treasury funds to pay the salaries of 13,000 workers for the rest of the year as the Government considers proposals for private investors to take over the loss-making enterprises. (UJ)

Under a Cabinet paper submitted by Public Enterprise Development Minister Kabir Hashim that was approved last week, the Treasury will undertake payment of salaries for three State plantation corporations.

The Janatha Estate Development Board oversees 20 estates covering nearly 13,000 hectares and by 2014 accumulated losses of Rs. 168.8 billion. Its workforce of 5,312 will be paid salaries till December under the Treasury funds but will be restructured by the Government, which is seeking a private investment partner to turnaround the loss-making public enterprise. The largest chunk of Rs. 282 million will be allocated to the Janatha Estate Development Board from the Treasury funds.

Thirteen estates with nearly 4,000 employees under the State Plantations Corporation, which made losses of Rs. 747 million over the past five years and the Elkaduwa Plantations Company are the other two to be restructured by the ministry. The latter oversees 10 estates and provides jobs for 3,623 people but has incurred losses except for 2008 and 2014, according to the Cabinet paper.

The proposed restructuring plans are to be submitted to Cabinet over the next few months, the Minister said as ordered by the Cabinet Committee on Economic Management headed by Prime Minister Ranil Wickremesinghe. Plans for privatisation are expected to make their way for Cabinet approval before the end of the year.

“As an initial step towards restructuring, an operations committee comprised of the Foreign Employment Secretary, Tourism Development Secretary and Public Enterprise Reform Ministry was appointed by the Cabinet Committee on Economic Management. This committee has decided that it would be appropriate to establish restructuring committees under the Public Enterprise Ministry,” the Cabinet paper said.

Plantation companies have been hit by sharply decreasing commodity prices in the international market compounded by low productivity and mismanagement that has increased losses over the past few years, industry stakeholders have pointed out. (UJ)