Korea-Sri Lanka agro tourism project seeks Cabinet nod

Pastem-Gala Sugar and Power Gen 2 Project, a joint venture between Sri Lankan, Korean and US parties, is seeking Cabinet approval to set up a US$ 350 million agro-tourism and waste-to-power public-private partnership project in the country’s poorest region, Uva Province.

“We first got approval from the Uva Provincial Council, and then we got approval from the Cabinet Committee on Economic Management. It will be going to Cabinet next week,” Gala Rural Development (Pvt) Ltd. Chairperson Danthika Seo said.

Gala Rural Development is the local partner, while Korea’s Pastem Co. Ltd and the US-based AG Bank are the other two partners, according to Seo.

She noted that the project had originally expected to cover 20,000 hectares but that after revisiting the project scope, found 10,000-13,000 hectares to now be sufficient.

“The sugarcane will be cultivated through an out-grower model, where we will create nurseries and provide the farmers with plants and buy back the sugar cane. The land will be both government and private land, and the local government has identified the lands,” she said.

The project also aims to import dairy cows from Australia to distribute among the farmers, and the milk will be bought back from the farmers to produce fresh milk, milk powder, butter and cheese, using Korean technology, according to Seo.

A Pastem document indicated that US$ 70 million will be spent for the cows and the dairy production units.

Pastem has allocated US$ 50 million for the cultivation of the sugar cane and US$ 80 million for sugar and jaggery production units, while US$ 20 million will be spent to create organic fertilizer from the project’s agriculture waste.

Other waste from the project, nearby municipal waste, and inputs from a Gliricidia plantation will be used to power a 10MW power generation plant, while biomass from the sugarcane factory will be used as feed stock for a 25MW plant to enhance energy security in the region.

The power plants have been allocated US$ 100 million, according to Pastem.
The project also aims to improve four tanks in the vicinity to enhance irrigation and to create ecotourism potential with an investment of US$ 30 million, the document indicated.

Seo said that the Pastem-Gala Sugar and Power Gen 2 will be set up as a build-operate-transfer public-private partnership, where the JV partners will transfer the entirety of their shares in the project back to the Sri Lankan government after a period of 30 years.

“Gala Rural Development will own 30 percent of the shares, and of that we will give some shares to the government, and if required, to the Uva Provincial Council. How much to give to them is still under discussion. Pastem will own 30 percent of the shares. The remaining shares will be owned by the AG Bank,” Seo said.

AG Bank, based in the US, will provide the US$ 350 million in funding, she added.

The groundbreaking for the project, if cabinet approval is forthcoming, will take place next month, Pastem said.

The Korean partner added that the project is likely to create at least 2,000 direct jobs and 2,500 indirect jobs in the province.