Sri Lanka’s sugar industry is grappling with one of its worst-ever financial crises, with several major factories on the brink of closure due to poor sales of sugar and ethanol, reported Daily Mirror.
The Pelwatta and Sevenagala sugar factories, managed by Lanka Sugar Company (Pvt) Ltd, and the privately operated Ethimale Sugar Factory in Siyambalanduwa are facing severe operational challenges. The Hingurana Sugar Factory, run as a semi-government enterprise, is also struggling to stay afloat.
Trade union leaders at Pelwatta Sugar Company say the factory is in its most serious financial crisis to date. They revealed that the company has failed to pay Rs. 3,240 million in Employees’ Provident Fund (EPF) contributions over the past nine months, along with a surcharge of Rs. 23 million.
In August 2024, the company borrowed Rs. 500 million to cover basic operations despite heavy losses. This was followed by a Rs. 1 billion bank overdraft in November 2024, as well as additional loans to pay staff salaries and wages. Banks now consider the company a high-risk borrower and have stopped granting new loans, while the Treasury and Ministry of Finance have also refused further financial support.
The factory currently owes Rs. 300 million in payments to sugarcane farmers, many of whom have staged protests demanding arrears. It also has Rs. 400 million outstanding to goods and service suppliers.
Sevenagala Sugar Factory is facing a similar financial breakdown, with debts including Rs. 205 million to sugarcane farmers, over Rs. 100 million to suppliers, Rs. 15 million in unpaid EPF contributions, Rs. 400 million in unpaid VAT, and Rs. 200 million in overdue loan instalments to the Bank of Ceylon. Union leaders warn that without urgent intervention, both companies may soon collapse.
According to Jeewan Pradeep of the Samagi Employees’ Union at Pelwatta Sugar Factory, these factories are critical to the economy of the Uva Province, providing livelihoods to thousands of families through both direct and indirect employment. The Ethimale Sugar Factory plays a similar role in Uva and Galoya, while Galoya Sugar Company significantly supports the economy in Digamadulla.
Pelwatta Sugar Company employs 3,795 workers and has 5,700 sugarcane suppliers, while Sevenagala Sugar Company employs 1,200 workers and sources cane from more than 3,900 farmers.
However, both companies are struggling to sell their stock, with large quantities of sugar and ethanol remaining unsold in warehouses for extended periods. Employees accuse the management of inaction, saying that senior executives, including the Chairperson, CEO, and COO, have remained in Colombo with little attention to the crisis.
Union leaders warn that delays in cultivation could deepen the crisis. Of the 2,384 hectares of land owned by Pelwatta Sugar Company for sugarcane farming, no preparations have been made for the upcoming planting season, which typically begins in June and continues until August.
The company’s sugarcane nurseries, spread over 327 hectares along the Yalabowa, Menikganga, and Kudaoya rivers, have also been affected. Water supply to the nurseries stopped in June due to a lack of diesel for pumps, according to Roshan Dileep, President of the Pelwatta Sugar Company Inter Employees’ Union.
Union representatives have called on President Anura Kumara Dissanayake to step in immediately to prevent the collapse of Sri Lanka’s sugar industry and safeguard the livelihoods of thousands of workers and farmers.
