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Kantale sugar factory, Embilipitiya paper mill and Ceylon Ceramic Corporation first to be developed under PPPs

(By Uditha Jayasinghe)

Local and foreign investors have been requested to present their Expressions of Interest (EOI) to revive the Embilipitiya paper mill, the Kantale sugar factory and the Ceylon Ceramic Corporation.

The Cabinet gave approval on Wednesday for private public partnerships as part of the government’s programme to revive loss making state owned enterprises, according to Media Minister Keheliya Rambukwella. Ceylon Ceramics Corporation, National Paper Company, Kantale Sugar Industries, Higurana Sugar Industries, Sri Lanka Rubber Manufacturing and Exporting Corporation, B.C.C. Lanka, Lanka Salusala and Lanka Fabrics are the other companies being considered for private investment by the government.

The Cabinet paper submitted by the official committee appointed to study loss making state owned enterprises sought approval to call for EOI, direct the Treasury for funds to pay salaries of Kantale sugar factory employees from August 2010 until handing over of the company assets to the investor and terminate the services of temporary employees immediately.

A Project Steering Committee with the Chairmanship of the State Resources Enterprise Development Ministry Secretary will be appointed to formulate an action plan to monitor and facilitate till the completion of the handing over of the mill and start operations with the private investor.

Following deliberations it was revealed that the Kantale sugar factory has liabilities amounting to Rs.65 million. The recommendations mainly include revitalisation of Kantale Sugar Industries following correct procurement procedures. The main option recommended is to revitalise the industry as a Public Private Partnership (PPP) with 51% public and 49% private shares.

“It is also proposed that if the equity capital could not meet the required capital for investment the proposed State Resources Management Company to intervene and go for a share issue. The other option is to implement the PPP proposal with Build, Operate and Transfer (BOT) model with a foreign investor.

The other options suggested are to lease out the factory and lands to an investor or to offer the lands to a joint venture with a private investor for other purposes. The other recommendations are to enrol the present employees to the new company or terminate their services and pay the salaries to the existing staff of the Kantale factory until handed over to the new investor,” the Cabinet paper noted.