Business

Gal Oya Plantations seen as role model for profitable public-private partnerships

Published

3 years ago

2022/11/23

At a time when enhancing profitability of public enterprises is an urgent need to boost the national economy of Sri Lanka, the revival and turnaround of Gal Oya Plantations (formerly known as Hingurana Sugar factory) by LOLC is an embodiment of how the nation’s assets can be enhanced through professionalism and expertise by the private sector. Underperforming state enterprises are a drain on state coffers as has been seen only once too often, an LOLC press release said.

The release adds: ‘However a profit making state enterprise on the other hand can be a vibrant source of revenue, employment and a critical pillar of food security. Public-Private Partnerships (PPPs) of this nature demonstrate how having professionals from the private sector turning state enterprises profitable, can generate valuable income for the government while allowing the government to retain its majority stake. As Sri Lanka’s first PPP initiated to revive non-operational government entities in 2007, the revolution brought about by the Gal Oya plantations today is empowering the local sugarcane farmers and bringing prosperity to their lives and leading to social upliftment, all the while generating massive profits for state coffers.

‘The Hingurana Sugar Factory was Sri Lanka’s first set up in 1959 as a fully-owned subsidiary under the Sri Lankan Government till 1991, when it was fully privatized. However, by 1994 the project was abandoned and the government closed down the factory in 1997. The lack of required funding and technical expertise in the sugar industry led to the unfortunate shutdown of a fully functional plant. Even though the factory had been abandoned for over a decade, the Browns Group evinced an interest in reviving the project. Thus, Gal Oya Plantations was formed 15 years ago in 2007 as a joint venture between the Government and a consortium of private sector investors comprising Brown and Company PLC and LOLC Holdings PLC. Even today, 51 per cent of the ownership is with the Government and 49 per cent of the shares are owned by the consortium that was formed to revive the sugar factory.

‘Resuscitating an abandoned factory that has lain idle for 15 years and reviving a degraded plantation was no mean task, but LOLC was fully prepared. In addition to refurbishing the plant, supporting infrastructure was urgently required, including converting irrigation, roads, drainage and restarting sugarcane plantations. The company had to earn the trust of the local farmers who had been left high and dry the last time around when the government closed down the factory, forcing them to turn to paddy cultivation and odd jobs to make a living. Today, the thriving sugar plantation employs about 1,300 direct employees across 8,500 Ha of agri lands. About 8000 farmers are engaged in sugarcane cultivation and over 20,000 people gain indirect employment from this project. Gal Oya Plantations not only revived the plantation and generated employment for thousands but it also made it a profitable entity.

‘It was only LOLC’s passion to revive a national asset that kept them committed to this mammoth task. Since the factory is over 60 years old, its equipment needed improvement to drive higher efficiency and productivity and for extending the life of the plant. Moreover, skilled labour was a scarce commodity and had to be sourced from across the country. Overcoming all these seemingly insurmountable obstacles, Gal Oya has gained the reputation of being a giant in sugar production in the country, and a role-model of a successful PPP and professionally managed entity.

‘Sourcing the funding for the project itself was an epic undertaking as the government did not channel any investment in the factory revival project, except for its equity asset of LKR 516 million, which could not be given as security. Hence, funds could not be borrowed against it. Notwithstanding this road block, LOLC invested Private Equity amounting to LKR 495 million into the project, along with taking commercial loans.’

‘Productivity has skyrocketed as a result of improved machinery and agricultural practices. Some 374,000 metric tons of sugarcane was used for production last year and the quantity of sugar produced was 24,000 metric tons. The target for 2022/23 was to produce 30,000 metric tons. Besides sugar, the Gal Oya factory also produces 6.7 million litres of ENA (Extra Neutral Alcohol) from molasses, a byproduct of sugar production. This is the highest in the history of Hingurana since 1960. The distillery complex at Hingurana is designed to produce 21,500 litres of ENA/day.

‘Committed to making this project a role-model for PPPs in Sri Lanka, Gal Oya embedded sustainable systems and processes. The factory is currently in the process of expanding its power generation capacity up to 10 MW by investing in a modernized power plant with improvements to the existing sugar factory. Moreover, the required organic fertilizer for sugar cane cultivation is manufactured by utilizing 100% of factory waste of the Company. Achieving an annual production of 7500 MT organic fertilizer, the company is now engaged in producing liquid organic fertilizer and bio fertilizer.

‘The significance of a professionally managed, high returns project such as Gal Oya is boosting the grassroots and firing up the engine of the economy. In fact, in the next five-year plan for Gal Oya, the development of an area of 10,500 Ha is earmarked for sugarcane cultivation, which should result in a 1 Mn MT worth of cane supply. A further investment in factory expansion to 4000TCD is scheduled with an investment of US$25 to US$30 million.

‘It is pertinent to note that the economic benefits that emanate from the profit making status of Gal Oya. Producing 75,000 MT of sugar results in import substitution of US$ 35 million per annum and contributes 12% -15% of country’s requirement ONLY from Gal Oya. This foreign exchange saving in turn helps to enhance foreign exchange reserves in the country during the current economic crisis. In addition, production of 14 million liters of ENA results in import substitution of US$ 14 million per annum and further assists self-sufficiency in ENA.

‘The benefits flowing to the people in the community from Gal Oya are undeniable and it is imperative that the sugar factory continue smooth operations to enhance food security whilst also providing direct and indirect employment to keep home fires burning. At a time when the government is being asked to reverse the years of losses made by state enterprises in order to meet the requirements to be eligible for global funding, a profitable project like Gal Oya should be a shining example for more such PPPs – bringing the best of Sri Lanka together to serve the nation.’

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Related Topics:Gal Oya Plantations Hingurana Sugar factory

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Business

Shipping giant Maersk to take over Panama Canal ports after court ruling

Published

4 hours ago

2026/01/31

Priyan

A cargo ship transports containers of the Danish company Maersk in front of the port of Balboa in Panama City, Panama, on Friday [Aljazeera]

Danish firm Maersk will temporarily operate two ports on the Panama Canal after a court ruled that contracts given to a Hong Kong firm were unconstitutional.

The Panama Maritime Authority (AMP) announced the changes on Friday, a day after the Central American country’s Supreme Court invalidated port contracts held by Hong Kong-based firm CK Hutchison.

The court ruling followed repeated threats from the United States President Donald Trump that his country would seek to take over the waterway he claimed was effectively being controlled by China.

According to the court ruling that annulled the deal, CK Hutchison’s contract to operate the ports had “disproportionate bias” towards the Hong Kong-based company.

On Friday, the AMP said port operator APM Terminals, part of the Maersk Group, would take over as the “temporary administrator” of the Balboa and Cristobal ports on either end of the canal.

Maersk takes over from the Panama Ports Company (PPC) – a subsidiary of CK Hutchison Holdings – which has managed the ports since 1997 under a concession renewed in 2021 for 25 years.

The canal, an artificial waterway, handles about 40 percent of US container shipping traffic and 5 percent of world trade. It has been controlled by Panama since 1999, when the US, which funded the building of the canal between 1904 and 1914, ceded control.

Washington on Friday welcomed the decision, but China’s Foreign Ministry spokesman Guo Jiakun said Beijing “will take all measures necessary to firmly protect the legitimate and lawful rights and interests of Chinese companies”.

For its part, PPC said the ruling “lacks legal basis and endangers … the welfare and stability of thousands of Panamanian families” who depend on its operations.

Tens of thousands of workers dug the 82km- (51-mile-) passageway that became the Panama Canal, allowing ships to pass from the Pacific Ocean to the Atlantic without having to travel around the northernmost or southernmost ends of the Americas.

Panama has always denied Chinese control of the canal, which is used mainly by the US and China.

[Aljazeera]

Business

India’s rise in manufacturing sector seen as holding out possibilities for SL

Published

20 hours ago

2026/01/31

Thilina Walpola

India’s rise in manufacturing sector seen as holding out possibilities for SL

India’s rapid rise as a global manufacturing hub and consumer market is reshaping South Asia’s apparel landscape, creating both urgency and opportunity for Sri Lanka to reposition itself through deeper regional integration, Acting Indian High Commissioner to Sri Lanka Dr. Satyanjal Pandey said recently at the Sri Lanka Apparel Exporters Association (SLAEA) Annual General Meeting in Colombo.

Addressing industry leaders at Cinnamon Life, Dr. Pandey said the next phase of growth in South Asian apparel will be driven not by competition within the region, but by collaboration across it, particularly between India and Sri Lanka.

“India and Sri Lanka bring very different but highly complementary strengths, he said. “India offers scale, raw materials, a vast labour pool and a rapidly expanding domestic market. Sri Lanka brings world-class manufacturing standards, compliance, speed, flexibility and trusted relationships with premium global brands. Together, these strengths can create globally competitive regional value chains.”

Dr. Pandey revealed that India had concluded a major trade agreement with the European Union earlier in the day, granting tariff-free access across more than 9,000 product lines, including apparel, with tariffs reduced from 12 percent to zero.

The agreement, he noted, reinforces India’s growing centrality in global trade and underscores the need for Sri Lanka to move swiftly in aligning its trade and investment strategies with regional developments.

He stressed that India’s objective is not to displace Sri Lankan apparel producers, but to grow together in an increasingly complex global market where buyers are demanding resilience, sustainability and regional diversification.

India today is one of the world’s fastest-growing major economies, with a large and youthful population, expanding middle class and rising apparel consumption. For Sri Lankan manufacturers, this presents opportunities not only as a sourcing partner, but also as an export destination for value-added apparel, technical textiles and sustainable fashion.

Against this evolving landscape, Sri Lankan industry leaders highlighted the urgency of aligning domestic policy and regulatory frameworks with India’s accelerating trade momentum.

Sri Lanka Exporters Association chairperson Ms. Rajitha Jayasuriya said global regulatory compliance has become a prerequisite for market access, particularly in Europe.

She pointed to the EU’s Corporate Sustainability Due Diligence Directive (CSDDD), enhanced traceability requirements and Digital Product Passports (DPPs) as measures that will increasingly shape trade flows.

“These are no longer optional standards. They are a licence to operate, she said, adding that Sri Lanka must urgently build national support systems to help SMEs and supply chain compliance through transparency, sustainable materials and robust data systems.

Jayasuriya warned that failure to secure the renewal of Sri Lanka’s GSP Plus facility would further weaken competitiveness, especially as India strengthens its trade position with the EU.

“With India moving ahead rapidly, Sri Lanka must mobilise faster to protect preferential access and avoid erosion of market share, she said.

India also featured prominently in the industry’s forward-looking trade agenda.

Jayasuriya said priorities for 2026 include securing quota-free access to the Indian market, ensuring predictable trade flows and deepening Sri Lanka’s integration into India-centric regional value chains.

“A stronger India–Sri Lanka apparel corridor is not just an economic opportunity; it is a strategic imperative, she said.

Policy reform at home was identified as a critical enabler of regional integration.

Jayasuriya called for accelerated digital reforms, including the introduction of a fully fiscalised e-invoicing system for exporters, to improve liquidity, compliance and transparency.

She noted that countries such as India have already moved ahead in this area, strengthening their competitiveness.

The apparel industry’s performance in 2025, she said, demonstrated what is possible when factory-level resilience is matched by responsive policymaking. However, she cautioned that regional competitors such as Cambodia, Vietnam and Bangladesh continue to move aggressively on scale, automation and trade agreements.

By Ifham Nizam

Business

Arpico NextGen Mattress gains recognition for innovation

Published

20 hours ago

2026/01/31

Thilina Walpola

(From Left – Right) Arpitech (Pvt) Ltd, Richard Pieris & Company PLC, represented by Lalith Wijeyesinghe, Managing Director, and Jayanatha Alwis, Deputy General Manager - Manufacturing, accept the award and certificate for the Innovative Product of the Year Award

Arpico, the longstanding frontrunner in Sri Lanka’s mattress industry, recently received the award for 2nd Runner-Up in the category of Innovative Product of the Year at the 2025 PRISL Industry Awards. Hosted by the Plastic and Rubber Institute of Sri Lanka (PRISL), the awards honour outstanding industry contributions to the plastics, rubber, latex, and recycling sectors.

Awarded for Arpico’s NextGen mattress, the recognition reaffirmed the company’s commitment to crafting state-of-the-art sleep solutions and providing its customers with seamless retail experiences.

The Arpico NextGen mattress stands as a distinctive example of Arpico’s vision. With its inclusion of profile-cut air-cooling pocket technology, the NextGen mattress is the product of intensive research and development, designed to align with Arpico’s mission to innovate products that enrich everyday living. Built using cutting-edge German Computer Numerical Control (CNC) foam-cutting technology, the NextGen’s design aims to amplify cooling, essentially enhancing sleep quality through its superior comfort, adaptive support, and long-lasting performance, allowing sleepers to wake rejuvenated.

Discussing the award, Lalith Wijeyesinghe, Managing Director of Arpitech (Pvt) Ltd, Richard Pieris & Company PLC, said, “The award is a testament to the efforts and ingenuity of our team, led under the visionary guidance of our Group Chairman, CEO, and Managing Director of Richard Pieris & Company PLC, Dr Sena Yaddehige. It reaffirms our endeavours to design products that integrate emerging technologies for the benefit of our customers. Furthermore, we recognise the award as an incentive to continue pushing the boundaries of our achievements and pursue ever greater heights of success.”

Arpitech (Pvt) Ltd is a leading trailblazer in polyurethane foam and spring mattresses, sheets, cushions, and siliconised fibre pillows, backed by a corporate legacy spanning over four decades of manufacturing excellence. The company upholds the highest quality standards, having secured the prestigious ISO 9001:2015 certification. Furthermore, Arpico adheres to the SLS standard for its acclaimed Arpifoam. Renowned as a trusted brand, Arpitech (Pvt) Ltd draws from the 90-year legacy of its parent company, the Richard Pieris & Company PLC. From a modest beginning as a filling station in 1932, Richard Pieris & Company has grown into one of Sri Lanka’s most diversified business conglomerates with interests in retail, plantations, rubber, furniture, tyres, plastics, insurance, stockbroking, financial services, and logistics. It is one of the largest listed entities on the Colombo Stock Exchange, with a remarkable annual turnover.