Sri Lankan government is to undertake a comprehensive assessment of under- performing plantation companies managed by the private sector to enable the authorities to take it over after cancelling the long-term leases, official sources said. The Finance Ministry in collaboration with Plantation Industries Ministry will be taking appropriate decisions by assessing the performances of private [...]

The Sunday Times Sri Lanka

Under-performing plantation companies come under the Treasury microscope

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Sri Lankan government is to undertake a comprehensive assessment of under- performing plantation companies managed by the private sector to enable the authorities to take it over after cancelling the long-term leases, official sources said.

The Finance Ministry in collaboration with Plantation Industries Ministry will be taking appropriate decisions by assessing the performances of private plantation companies case by case and evaluating the productivity and progress and development of plantations, a senior official of the Finance Ministry told Business Times.

File picture of a tea plucker on a Sri Lankan plantation.

The final assessment will be made by considering the profit and loss of the company, annual yield of crop, the progress of replanting, best ethical management practices, maximum utilization of land, etc. Some regional plantation companies came under fire recently for sub-leasing their lands to third parties without the consent of the golden shareholder, according to a study conducted by the Plantation Ministry.

Some privately managed regional plantation companies have failed to pay Treasury lease rentals and the outstanding amount was running up to millions of rupees, the official disclosed. This was violation of the lease agreement that could have resulted in the cancellation of the agreement plus a penalty.

The government had attempted to acquire 25,000 acres of unused estate land and distribute it among youths for ‘productive agricultural purposes’ under the 2013 budget proposal. A decision was taken to distribute two acre blocks of land each in plantations among 12,500 unemployed youth but the government was unable to implement the plan due to protests of plantation companies last year.

However under the 2015 budget proposal, the government is to take firm action including the cancelation of licences and the acquisition of companies which have failed to respond to the government directive.

Secretary General of the Planters Association, Malin Goonetileke told the Business Times, that plantation companies have not, as yet, been informed about any assessment procedure and the modalities of the 2015 budget proposals were not known.

The implementation of the budget proposal will take place once the necessary regulations are in place, he revealed. He noted that plantation companies will be seeking clarification from the Ministry of Plantation Industries on modalities of the acquisition of estate land and the cancelation of licences.

23 Regional Plantation Companies (RPCs) were set up in 1992, of which 20 RPCs were leased out to 12 management companies during the period 1992/1993, resulting in the conversion of 461 estates managed by the Jantha Estate Development Board (JEDB) and Sri Lanka State Plantation Corporation (SLSPC) to 20 RPCs under the Companies Act No. 17 of 1982.

While the Government fully owned the estates the RPCs were initially assigned lease-hold rights for between 12-29 estates for a period of 99 years for a nominal lease rental and thereafter adjusted the same to 53 years.

The government has still not identified the under-performing plantation companies although a similar budget proposal was made for 2013, he disclosed.

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