Kantale Sugar Factory to open in August | Daily News


Taking Sri Lanka towards self-sufficiency:

Kantale Sugar Factory to open in August

The Kantale Sugar Factory which was closed for 30 years is set to open in August. With the commencement of production, it will first stop an annual foreign exchange drain of Rs. 20 billion for sugar imports in two years and make Sri Lanka self-sufficient in sugar.

The machinery to commence operation of the Kantale Sugar Factory is now in the process of being imported from Israel.

The project will firstly produce sugar for local consumption and then look at exports adding a new product to Sri Lanka’s export catalogue. The sugar cane waste would be utilised to generate electricity which will be added to the national grid.

In addition ethanol too will be produced at the factory, once again helping to reduce ethanol imports thus saving foreign exchange. The multi-functional project will be funded by a consortium of Israel, London, Singapore and Sri Lankan investors who were ignored by the previous government despite having obtained all the BOI and other approvals.

The total stage one project cost would be around Rs. 400 million. This will be the first post covid-19 FDI to Sri Lanka.

“Two of the other unique features of this investment are that it would create over 4,500 new job opportunities and also help famers to cultivate over 7,500 acres of Sugarcane. The factory will also have a forward buying agreement with the farmers thus ensuring a steady income for them,” an official from the consortium said.

The Kantale Sugar Factory which was received as a Czechoslovakian government aid grant began production on October 2, 1960. The Kantale Sugar Factory, in the 1960’s was considered as the largest sugar production facility in Asia, provided about 10,000 direct and indirect job opportunities.

The factory complex also had luxury housing, sports club, shopping complex and social club which are now abandoned.

It was also running at a profit and from 1980 to 1986, the factory earned a Rs. 70 million profit. However in 1993 the then UNP government handed it over to a private company and which resulted in a closure by the end of 1999.The total annual requirement of sugar in the country is around 550,000 tons and around 8% is produced locally through Pelwatte and Sevenagala factories. The total annual expenditure on sugar imports is around Rs. 20 billion.

The venture would be operated as a Build Own and Transfer (BOT) project on a 30 year lease. There would be a tri party agreement with Government, farmers and the consortium.

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