46,000 Tons of Cane Delivered, Millions Still Unpaid

COLOMBO (News 1st); A crisis has emerged surrounding the Sevanagala Sugar Factory, with accusations being raised that payments for sugarcane harvests purchased from farmers have been delayed.

What is the Sevanagala crisis?

The Sevanagala Factory produces sugar and ethanol using sugarcane harvested by local farmers.

Although the factory recorded profits for several years after being handed over to the government under the Underutilized Assets Act, it has suffered losses in recent years due to not receiving prices that match production costs.

Contributing factors include the previous government's imposition of an 18% VAT on local sugar production, and the availability of ethanol produced from molasses at lower prices compared to Sevanagala ethanol.

Meanwhile, investigations by Newsfirst revealed that although Sevanangala sugar sales are conducted through a tender process, only six bidders are currently involved.

Despite the factory operating at a loss, it has been compelled to sell its products at prices determined by these six bidders.

The price of sugar has risen to Rs. 236 per kilogram, and ethanol prices have increased from Rs. 485 to Rs. 800 per liter, creating complications in the sale of Sevanagala products.

Currently, the factory holds 2,000 metric tons of sugar and 350,000 liters of ethanol in stock.

The delay in payments to farmers for their harvests has occurred against this backdrop.

What are the sugarcane farmers saying?

A group of farmers from Siyambalanduwa, who supply sugarcane to the Pelwatte, Hingurana, Sevanagala, and Ethimale sugar factories, staged a protest, highlighting that they have still not received payment for their harvests.

“We just want our money. We didn’t steal anything. We didn’t cheat anyone. The truth is—we need our money.”

A group of Sevanagala sugarcane farmers and tractor union representatives have been protesting in front of the Sevanagala Sugar Factory for several days, highlighting the ongoing crisis.

Amid growing unrest among sugarcane farmers and tractor operators, Lanka Sugar Company has responded to concerns over delayed payments, assuring that efforts are underway to resolve the issue within the next two weeks.

Speaking to media, Deepika Gunaratne, Chief Executive Officer of Lanka Sugar Company, revealed that since January this year, the Sevanagala Sugar Factory has received 45,919 metric tons of sugarcane from 531 farmers.

“We have already paid Rs. 243.9 million to the farmers,” Gunaratne stated. “While some payments are still pending, our standard practice is to pay an advance upon receiving the sugarcane and settle the full amount within about a month.”

She acknowledged that minor delays have occurred but emphasized that the company has consistently followed its two-part payment system—an initial advance followed by the remaining balance.

In addition to farmer payments, Gunaratne addressed concerns raised by the tractor owners’ union, which handles transportation to the factory.

“We’ve paid Rs. 73.2 million to the tractor operators so far. We are actively working to complete all payments,” she said.

Currently, Rs. 205 million remains unpaid to both farmers and transporters. Gunaratne expressed confidence that the company will resolve the issue within the next two weeks, allowing operations to continue smoothly.