Govt.’s ethanol monopoly plan irks liquor industry
A leading alcohol manufacturer in Sri Lanka has been barred from purchasing ethanol from a local private company, owing to the Government’s recent attempts to create a state monopoly in ethanol production, The Sunday Morning Business learns.
After the ban on ethanol imports since 1 January this year, manufacturers were purchasing ethanol from Royal Casks Distilleries (Pvt.) Ltd., the only distillery that produces ethanol closest to the quality of imported ethanol, well-placed industry sources noted.
Nevertheless, last week, in a letter to the aforementioned manufacturer, the Department of Excise had turned down a request from them to purchase over 347,000 litres of ethanol from Royal Casks.
In the letter, Commissioner General of Excise A. Bodaragama has directed the manufacturer to purchase ethanol either from Pelwatte Sugar Distilleries (Pvt.) Ltd. or Lanka Sugar Company Ltd. – Sevanagala, two state-owned ethanol distilleries.
This move by the Department of Excise has baffled the manufacturer as the restriction was neither officially announced nor pre-communicated, and is also being particularly targeted at them. Alcohol manufacturers have been allowed to purchase from any local ethanol distillery, at least until last week.
Furthermore, the manufacturer noted that Royal Casks is a legitimate company with valid licenses to manufacture and sell ethanol locally and that the Department of Excise is well aware of this.
The manufacturer is now forced to buy ethanol from the distilleries the Department of Excise wants them to, which would probably change the taste of their product, thereby depriving their customers.
“These alcohol manufacturing companies are private entities, not state-owned institutions. The palate of the product has to be maintained and for that, respective companies should select quality ethanol. But by forcing manufacturers to buy from state distillers, the Government is going to forcibly reduce their excise revenue,” the manufacturer noted.
According to industry sources, this decision by the Department of Excise interferes with the company’s rights and excise regulations. Nowhere in the excise regulations does is a manufacturer forced to purchase necessary raw materials from distilleries that are suggested or directed by the Department of Excise; it instead gives a manufacturer the freedom to decide.
When inquired about the reason behind his directives, Commissioner General of Excise Bodaragama refused to disclose any information and requested we contact him on Monday (8th June).