• Retailers retain plastic bag levy as Govt. delays mechanism

Environmentalists are preparing to initiate fresh legal action against the Government over what they describe as a failure to operationalise a conservation fund to receive revenue collected from plastic shopping bag charges, despite a Supreme Court settlement requiring such a mechanism.

They alleged that, as a result, private retailers were retaining substantial profits, roughly estimated at up to Rs. 50 million per day, without those funds being directed towards plastic reduction initiatives and waste management, which was the original purpose of the levy.

Meanwhile, the Government said discussions had commenced with stakeholders including the Ministry of Trade, Commerce, Food Security, and Co-operative Development to establish a formal fund and that it expected to introduce the necessary legal framework under a new National Environmental Act within the next few months.

Speaking to The Sunday Morning, environmental lawyer and Centre for Environmental Justice (CEJ) Senior Adviser Dr. Ravindranath Dabare said a court application had already been drafted and was likely to be filed within the week.

The issue stems from proceedings before the Supreme Court in relation to Fundamental Rights petition SCFR 220/21 filed by the CEJ. As part of the settlement, a mandatory charge on single-use polythene bags was implemented with effect from 1 November 2025.

Under the arrangement communicated to court by the Attorney General, supermarkets and large retailers were prohibited from issuing ‘sili-sili’ (LDPE and LLDPE) bags free of charge. Retailers were required to clearly display the price of plastic bags within their premises and reflect the charge on customers’ bills.

However, the CEJ maintains that while consumers are now being charged between Rs. 3 and Rs. 5 per bag, the conservation levy component agreed in court has not been channelled to the State due to the absence of a formally established fund.

CEJ Chairman Hemantha Withanage told The Sunday Morning that the core issue was not the imposition of a charge but the destination of the revenue.

“The issue is not whether bags are being charged. They are. The issue is that the conservation levy agreed upon in court is not being credited to the Government,” he said.

The CEJ’s original legal action sought to end the free distribution of plastic shopping bags, which it estimated had resulted in nearly 20 million bags being discarded daily prior to regulatory intervention.

While Withanage described the reported 60–70% reduction in plastic bag usage as a significant environmental victory, he argued that the financial benefits arising from the shift were flowing almost entirely to private retailers.

“Companies are now benefiting from both reduced procurement costs and bag sale revenue. But the agreed conservation levy has not been incorporated into the national Budget or directed towards environmental protection,” he said.

He stressed that the term ‘levy’ in the court settlement referred to a Government-imposed charge intended to fund waste management initiatives, promote alternatives to polythene, and raise public awareness. Allowing retailers to retain the revenue, he said, reflected a failure of implementation rather than a flaw in the agreement.

Withanage estimated that, even after reductions in usage, companies could be retaining more than Rs. 50 million per day in combined savings and bag sale revenue. He suggested that at least Rs. 1 per bag should be allocated as a conservation levy payable to the State.

“With no dedicated conservation fund and no extended producer responsibility framework, the burden of environmental cost is being transferred to consumers instead of shared by producers,” he said.

Responding to these concerns, Deputy Minister of Environment Anton Jayakody acknowledged that although customers were paying for plastic bags, the absence of a dedicated conservation fund had resulted in retailers retaining the proceeds.

He said the Government was preparing to introduce a formal legal framework within the next two to three months to regulate the levy and establish a State-managed conservation fund under the National Environmental Act. The Ministry of Environment is to oversee the fund and ensure that revenue collected from plastic bag charges is directed towards initiatives aimed at reducing plastic use nationwide.

The Deputy Minister added that while the initial charges had led to an almost 50% reduction in plastic bag usage, recent data indicated a gradual increase in consumption. “As a result, we are also considering the need for a structured and enforceable regulatory mechanism,” Jayakody said.