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v2025

23 plantation companies default on land lease payments

The government is mulling to cancel the lease agreements of valuable state-owned estates, land and property leased out to plantation companies and private firms over its failure to pay accumulated lease rent running up to millions of rupees.

Some 571 estates belonging to the Janatha Estate Development Board (JEDB) and State Plantation Corporation of Sri Lanka had been given on lease to 23 divisional plantation companies in 1995.

As for three of those plantation companies, the value of net assets had not exceeded Rs. 200 million as at 31 December 1994, and hence, lease rents could not be recovered since 1995 from those companies in terms of the lease rent agreement, a recent government audit inspection revealed.

However, by 2011, it had been identified that the value of net assets of those companies had been over Rs. 200 million.

According to findings of the Auditor General’s Department, no lease rent whatsoever had been recovered by the Government from 45 estates managed by those three companies due to failure in taking action to revise the lease rents indicated in the agreements.

Of the lease rent amounting to Rs. 175.48 million recoverable from Kurunegala Plantation Company as at 31 December 2017, a sum of Rs. 129.76 million had remained due from 2009.

The state audit observed that no action has been taken to recover the money due to inefficiency of the state authorities.

The government is now compelled to cancel or extend the lease agreements on lands given to Regional Plantation Companies in a bid to recover millions of rupees as accumulated dues.

Three committees appointed by the Plantation Industries Ministry have recommended that those lease agreements should be cancelled or extended considering the performance of the leaseholders of state land to make the plantations viable.

The Ministry is considering the option of extending the leasing period from the present 53 years to 99 years, as requested by the companies in accordance with the recommendations of the committees provided private management companies make the necessary investments needed for their long term sustenance.

The Committee on Public Enterprises (COPE) inquiry revealed that land and properties owned by the JEDB have been undervalued at very low rates and given on long-term lease during the previous regime.

The 6,250 sq. ft. building bearing no. 175 at Vauxhall Street has been given to Asoka Glass Company on a 35 year lease at the rate of Rs. 10.42 per sq. ft, or Rs. 65,137.50 per annum.

Also, 4,586 sq. ft. of the same building has been given to Thilona Lanka on a 30 year lease at an annual Rs. 105,000 lease.

Kandy Tyre House has received 5,322 sq. ft. of the building for 30 years for Rs. 159,660, or at Rs. 30 per sq. ft. per year.

Meanwhile, 14,500 sq. ft. of no. 32 at Darley Road has been given to Man Care Centre for Rs. 19.25 per sq. ft. per annum.

In the same building, New Zealand College received 28,921 sq. ft. for Rs. 13.49 per annum, while Higher Technical Institute was given 11,500 sq. ft. for two years at the rate of Rs. 60 per sq. ft.

For Lakeside Property Development, a little over one acre from the same property has been leased out for 53 years at Rs. 93,497 per perch.
The payment due is Rs. 921,693,426, but the JEDB has accepted Rs. 15,520,512 only.

COPE has instructed the immediate suspension of the leasing of the Vauxhall Street property, valuate it anew in accordance with the prevailing market prices to lease it at a suitable rate.

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