Three cement firms with foreign interests operating in Colombo are blocking another foreign player from striking a deal with partly, state-owned Lanka Cement (LC), according to sources close to the company.
"Iranian based Sterling Investments and Development Ltd. (SIDL) has offered to set up three cement bagging plants with LC but three powerful firms in order to preserve their current monopolies are said to be arm-twisting some state officials to stop them from going ahead with this project," a source told The Sunday Times FT.
He said SIDL has offered to set up three cement bagging plants in Trincomalee, Galle and in the new harbour in Hambantota. LC had wanted them to set up a cement ready-mix plant as well, in addition to the three cement bagging plants and they had agreed, he added, saying that the total investment for this is US$ 100 million. Sisira Paranagama, LC Chairman was unavailable for comment.
The source said the Ministry of Industrial Development which LC comes under is still looking at this proposal by SIDL, but it is just a ruse to take long enough to disinterest the investor.
Ramco India, the Birla Group India, Shanghi Cement India and Cement Italia had expressed interest for a strategic deal with Kankasanthurai (KKS) plant which is a subsidiary of LC a few months ago but the source said the same has happened to these as well. In June last year, Holcim Lanka, said it made an investment proposal to the company to restart production at KKS or build a new one. An LC official at the time told The Sunday Times FT that Holcim had quoted Rs 100 million for repairs in the plant. “This proposal was submitted to the Ministry of Industrial Development and is still being reviewed,” Mr. Paranagama added at the time.
Over the past few months, the LC has been trading heavily in the stock market, being popular amongst retailers. At Wednesday's closing (the last trading day for this short week) it generated the highest turnover at Rs. 12.5 million, closing 75 cents up to Rs. 13.50.
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