State-owned sugar companies in Sri Lanka are facing a significant surplus of unsold ethanol due to a sharp decline in legally sold alcohol, a situation exacerbated by the country’s economic crisis and recent tax increases, according to State Minister for Investment Promotion Dilum Amunugama, as reported by Economynext.
Lanka Sugar, which manages the Sevenagala and Pelwatte companies, has accumulated 1.3 million litres of unsold ethanol. Minister Amunugama revealed that some legal alcohol producers have seen sales drop by as much as 70% due to the crisis.
In addition to Sevenagala and Pelwatte, two other sugar companies, Ethimale and Gal-Oya, are also engaged in ethanol production. To address the surplus, Minister Amunugama mentioned that a verbal agreement with the Excise Department has been made to issue licenses for ethanol purchases. This agreement ensures that demand is evenly distributed among the four companies to help manage the stock.
Import taxes are designed to support the domestic sugar and ethanol industries by keeping local production costs competitive. However, the high cost of production makes ethanol export unfeasible. “We cannot export due to high production costs,” Minister Amunugama said. The government is exploring alternative uses for ethanol, including biodiesel, although bio-fuel projects remain on hold for now. The Sugar Research Institute has completed the necessary testing for these alternatives.
Minister Amunugama also raised concerns about the rise in illegal liquor sales, which he attributes to high taxes. “We have requested the Treasury to reduce the tax,” he noted, though the outcome remains uncertain.
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