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

Ceylon Chamber partners with members and relief agencies to deliver Cyclone Ditwah relief

Published

16 hours ago

2025/12/12

Thilina Walpola

In response to the devastating impact of Cyclone Ditwah, The Ceylon Chamber of Commerce has been actively supporting national relief and recovery operations in collaboration with the Government of Sri Lanka, key partners, and its members.

As a co-chair of the Sri Lanka Preparedness Partnership (SLPP) alongside the Disaster Management Centre (DMC), the Ceylon Chamber together with Janathakshan, played a central role in coordinating emergency response efforts, ensuring rapid and efficient assistance to affected communities. From 28 November to 6 December 2025, the Chamber mobilised volunteers across the Chamber Secretariat, member companies MAS Capital Pvt. Ltd – Intimates Division, Aitken Spence PLC, and university student groups, contributing more than 190 hours of service and answering over 40,000 emergency assistance requests to support the DMC’s 24-hour Emergency Operations Center.

The Chamber also provided support to the DMC for the Rapid Disaster Needs Assessment (RDNA), assisting with data analysis of calls received and the development of the direct community needs component of the RDNA, which informed government planning and coordination of relief distribution.

With the generous support of its member companies, the Ceylon Chamber facilitated the collection and handing over of financial aid and essential relief items to affected areas. The Chamber is deeply appreciative of Aitken Spence PLC, BASF Lanka (Pvt) Ltd.. CDK Philip Hospital, Central Finance Company PLC, Cinnamon Hotels & Resorts, Devi Trading Company, Eastern Merchants PLC, Emar Pharma Pvt. Ltd., Finagle Lanka Pvt.Ltd., H Connect International Pvt. Ltd., Hemas Manufacturing (Pvt) Ltd., John Keells-Cinnamon Life, John Keells Holdings, John Keells Properties, Lakdhanavi, Lauke Shipping, Oxford College of Business, Perera & Sons, Shanthi Textile, Union Assurance PLC, Union Bank of Colombo PLC, Walkers Tours, Wealthtrust Securities Ltd., and a large number of private donors, both individuals and companies, for heeding the nation’s call, supporting communities and industries hardest hit by Cyclone Ditwah, and contributing to ongoing recovery and rebuilding efforts across the country.

Beyond immediate relief, the Chamber continues to support preparedness initiatives ahead of the North East Monsoon Season 2025, reinforcing resilience and readiness across the country.

“We are deeply grateful to our member companies and volunteers for stepping up in this critical time – demonstrating once again that the private sector has and will continue to play a strong and supportive role in ensuring stability and sustainability for Sri Lanka at all times’, said Krishan Balendra, Chairperson of the Ceylon Chamber.

Business

Fluctuating fortunes for bourse in the wake of selling pressure

Published

17 hours ago

2025/12/12

Thilina Walpola

The CSE kicked off yesterday on a bullish sentiment, but by the middle of the session it turned negative due to heavy selling pressure. Later, though, it returned to positive territory, market analysts said.

There was satisfactory buying pressure latterly, both in retail and institutional entities, following the return to normalcy of economic activities driven by international support for rebuilding the country.

Amid those developments both indices moved upwards. The All Share Price Index went up by 60.33 points while S and P SL20 was up by 11.67 points. Turnover stood at Rs 5.55 billion with nine crossings.

Top seven crossings were: Sunshine Holdings 13.6 million shares crossed to the tune of Rs 462 million and its shares traded at Rs 35, JKH 9.5 million shares crossed for Rs 198 million; its shares traded at Rs 21, Laugfs Gas (Non-Voting) 1.2 million shares crossed for Rs 73.2 million; its shares traded at Rs 61 Tokyo Cement (Non-Voting) 730,000 shares crossed tfor Rs 66.1 million; its shares traded at Rs 87, Commercial Bank 185,000 shares crossed for Rs 37 million and its shares sold at Rs 200, Access Engineering 300,000 shares crossed for Rs 23.1 million; its shares sold at Rs 77 and Laugfs Gas 300,000 shares crossed to the tune of Rs 22.4 million; its shares sold at Rs 73.90.

In the retail market top seven companies that mainly contributed to the turnover were; Colombo Dockyard Rs 485 million (two million shares traded), JKH Rs 468 million (22.4 million shares traded), Dialog Axiata Rs 245 million (8.4 million shares traded), Sunshine Holdings Rs 198 million (5.7 million shares traded), ACL Cables Rs 122 million (481,000 shares traded) and Lanka Credit Business and Finance Rs 108.5 million (11.4 million shares traded). During the day 171 million shares volumes changed hands in 34388 transactions.

It is said that manufacturing sector counters, especially JKH and Sunshine Holdings, led the market while the banking sector also fared reasonably well, especially Commercial Bank. The telecommunication sector, mainly Dialog Axiata, also performed well.

Meanwhile, Cargills Bank is looking to raise Rs 2.5 billion through a rights issue of shares at Rs 8.50 each to support lending activities.

It also will issue 294,200,000 ordinary voting shares at a ratio of 14 new ordinary shares for every 45 existing ordinary shares. The issue is expected to raise Rs 2,500,700,000 in capital, CSE sources said.

Yesterday, the rupee was quoted at Rs 308.95/309/05 to the US dollar in the spot market, weaker from Rs 308.80/90 the previous day, dealers said, while bond yields dropped significantly.

A bond maturing on 15.02.2028 was quoted at 9.05/15 percent, down from 9.15/20 percent.

A bond maturing on 15.09.2029 was quoted at 9.50/52 percent.

A bond maturing on 01.07.2030 was quoted at 9.55/65 percent.

A bond maturing on 15.12.2032 was quoted at 10.20/30 percent, down from 10.25/30 percent.

A bond maturing on 15.06.2035 closed at 10.63/70 percent.

By Hiran H Senewiratne

Business

HNB tops TAB Global Ranking as “Sri Lanka’s Strongest Bank”

Published

17 hours ago

2025/12/12

Thilina Walpola

HNB PLC, the leading private bank in Sri Lanka, has been awarded the title of Strongest Bank in Sri Lanka for 2025 by TAB Global. The recognition was confirmed following the release of the TAB Global World’s 1000 Largest and Strongest Banks Rankings, with the announcement made recently

HNB’s Managing Director / CEO, Damith Pallewatte, stated that the accolade underscores the bank’s unwavering commitment to sustained financial strength and strategic resilience. “This honour shows the resilience and clarity of purpose that guide our institution. Our teams advanced through demanding cycles with discipline and accountability. The recognition confirms the trust placed in us by customers, investors and partners and it reinforces the duty we carry as a leading private bank. We remain fully committed to safeguarding long-term strength while contributing to Sri Lanka’s economic advancement with integrity and resolve.”

HNB achieves a landmark distinction in the 2025 rankings, establishing itself as Sri Lanka’s strongest bank. The assessment highlights HNB’s balance sheet quality, prudent risk discipline and the bank’s consistent ability to maintain stability through varied economic conditions. The ranking places HNB alongside leading global financial institutions acknowledged for sustained strength, institutional reliability and capacity to absorb external shocks.

Foo Boon Ping, President and Managing Editor at TAB Global, stated: “HNB demonstrated strong fundamentals and consistent delivery across multiple stress indicators. The bank’s performance placed it ahead of its domestic peers and aligned it with institutions recognised for structural strength. The ranking reflects measurable outcomes drawn from transparent criteria.”