Agonies of Sri Lankan sugar industry

By S.P.U.S. Wickramasinghe 

The newspapers have been carrying a series of articles connected to the sugar industry, in particular connected to the Sevenagala and Pelwatte industries in 2024; the grouse was over the inability to dispose of alcohol distilled at the distilleries. In 2025, the complaints are connected to the disposal of produced sugar.

Each article focused on the pricing structure, in turn requesting the Government to re-price commodities downwards. There may be substance behind these suggestions, but it is not the whole story.

To my mind the pricing structure may be the immediate cause but not the only cause. Such excuses had been the main cause for this continuing economic problems this country faced and on new policies to be implemented. 

Starting from President Premadasa all presidents have held the post of the Finance Minister. The Finance Minister defines the economic policies of the country. In defining economic policies, the politicians – Finance Ministers – are groomed by professionals. Till mid-1990s, this country had a group of officials whose function was to determine the economic policies for the future. That group of executives grouped under a unit called the Planning Ministry. The Planning Ministry was staffed by members of the public service with long exposure to the various subjects they represented. This unit will advise the Government on the pros and cons and the outcome of implementing such policies.

This unit was disposed of in the 1990s.

In the articles referred the writers pinpoint the problem with the disposition of sugar, on a tax imposed on locally manufactured sugar – brown sugar viz a viz white sugar which is imported. They also blamed the problem of alcohol, on the sale price of alcohol. They may be the immediate cause, but are not the whole truth.

All four sugar factories manufacture brown sugar which is an intermediate state in the production of white sugar also called refined white sugar.

Prior to the change of the Government in 1977 what was available was brown sugar. Post-1977, one Minister organised to supply brown sugar in 25 kg bags. His explanation was that the sugar was for the small scale industrialist. They were packed in a 25 kg bag for the sugar to be carried on his cycle’s handlebar. Even today there are many small scale industries that would benefit from such marketing – not necessarily the home distillation trade.

The country – the tax paying citizens had invested in these factories and selling them to buyers who will convert them to scrap steel is a crime. They can be converted to profitable ventures – profitable not only to the State-owned holding company (SOEs) but also to the country.

Except for water based, sun based and wind based energy bulk of the energy is imported – liquid petroleum, gas, coal, and even nuclear, is imported (30% of the imports).

A paper of 4.06.2025 carries a news item to the effect “Renewable energy projects are facing deliberate sabotage”. One solution to this problem is to introduce fuel cells to homes like the LPG gas cylinders. With hydrogen and fuel cells they can generate their own electricity.

The process is known as the ABE reaction – Acetone Butyl alcohol and Ethanol reaction.

Butyl alcohol can replace Petrol, Ethyl alcohol replace Diesel, and Hydrogen is used in small units designed for the purpose to generate electricity. These units are used to energise cars and even railway engines – Hydrogen. The sugar factories Kantale Hingurana, Pelwatte and Sevenagala can be converted to produce these products. The fermentation tanks can be converted to stockpile the two alcohols. The distillation columns could be modified for the purpose.

Production of brown sugar can continue using technologies that were implemented at Haldummulla Corporation in the 1960-1970s. It could be the private sector’s investment.

Since we do not have people experienced with the technology it is best to seek assistance from the Chinese Government (it is reported that they target 100 million tons of ABE by the end of 2025), University of Illinois for assistance. Prof. Buddhi Marambe, former Prof. Athula Perera of the Faculty of Agriculture and the Research student Priyantha Jayawardena are reported to have worked on this.

 

(The writer has had exposure to Hingurana, Kantale distilleries, distillery at Baddegama, two column still in the Western Province, wooden pot still at Enmore distillery, two and four column distillation, and single pot, pot still, two pot still at Uitvlught distillery, Coffey still at Georgetown, Gin Distillation at Harlow and Brandy distillation at Bordeaux.)