Sri Lanka govt ready to extend estate leases if more investments made
ECONOMYNEXT – Sri Lanka’s government is willing to consider extending leases of plantations to private management companies provided they make the necessary investments needed for their long term sustenance, Plantation Industries Minister Navin Dissanayake said.
The government was concerned by lack of investments by regional plantations corporations (RPCs) in state-owned estates whose management was privatised, he told a news conference.
One particular concern was inadequate replanting of tea as many estates had aging bushes and soils were also depleted of their nutrition.
“The annual target for replanting tea estates is two percent,” Dissanayake said. “But only about 0.5-1 percent happens.”
The government is trying to encourage RPCs to improve the replanting rate as it is important for the long term survival and growth of estates they had leased, he said.
The state-owned plantations, growing mainly tea, rubber and coconut, were given on 53-year leases to RPCs to manage in a privatisation exercise in 1992 meant to ease the burden on the government of financing their losses.
But RPCs had maintained the leases were not long enough for them to make investments whose returns would be felt only in the long term.
The leases are set to expire in 2045.
“If the RPCs want to increase the leasehold we are willing to give longer leases,” Dissanayake said.
“But they must commit to making the required investments. Some companies have abrogated their responsibilities and are not doing well – about 3-4 firms.”
Dissanayake said Sri Lanka needed to ensure its tea production levels did not decrease to prevent loss of tea market share.
“We have to somehow maintain it around the 300 million kilo level. That’s why replanting is so important.”