The Sri Lankan government has launched an investigation into companies accused of evading taxes exceeding Rs. 5.8 billion on coconut oil imports. This was confirmed by Prime Minister Dr. Harini Amarasuriya in response to a parliamentary question raised by Samagi Jana Balawegaya (SJB) MP S.M. Marikkar. He alleged that a fraudulent tax evasion scheme had been operating since January 1, 2024, affecting the coconut oil import sector.

According to Marikkar, between January and October 2024, over 38.8 million kilograms of unrefined coconut oil were imported. However, it remains unclear whether these stocks were refined and released to the market. He pointed out that taxes on these imports had not yet been paid. Additionally, he highlighted imports of 1.7 million kilograms in November and 1.48 million kilograms in December, questioning the government’s policies on taxation and regulation of coconut oil imports.

He further accused the previous administration, under former President Ranil Wickremesinghe, of enabling tax exemptions. He cited a request from a company for tax relief, which Wickremesinghe, in his capacity as Finance Minister, forwarded to the Department of State Fiscal Policy (DSFP) and the Inland Revenue Department (IRD) in July 2024. Marikkar called for urgent action to recover the Rs. 5.8 billion owed in taxes.

Allegations of Market Manipulation and Tax Evasion

The issue has sparked widespread controversy, with many comparing it to previous large-scale tax scams, such as the infamous ‘sugar tax fraud.’ The All Ceylon Traditional Coconut Oil Manufacturers Association accused several major importers of hoarding up to 50,000 tonnes of coconut oil before a tax increase, allegedly manipulating prices and hurting smaller refiners and consumers.

Health and Regulatory Concerns

Under Sri Lanka’s revised VAT law, effective January 1, 2024, unrefined coconut oil that is locally refined and sold is subject to an 18% VAT and a 2.5% Social Security Tax. However, investigations revealed that three major companies, operating under six different names, imported 38.8 million kilograms of crude coconut oil between January and October 2024. While some importers complied with regulations, others bypassed refining processes entirely, releasing unsafe, unprocessed crude coconut oil into the market.

This not only led to significant tax losses but also posed health risks to consumers, as unrefined coconut oil is unsuitable for direct consumption. The Inland Revenue Department raided several companies, but reports suggest that at least one company sought intervention from the Finance Ministry through former President Wickremesinghe’s office. Correspondence indicated that the tax liabilities of these companies were under ‘special consideration,’ raising concerns about possible collusion between officials and importers.

Impact on the Coconut Oil Industry and Economy

The ambiguity surrounding VAT enforcement has disrupted the domestic coconut oil industry. Approximately 40 small-scale coconut oil refiners were forced to shut down operations due to unfair competition, while tax-evading importers continued to dominate the market.

Additionally, global coconut oil prices surged from $1,320 to $1,880 per tonne due to geopolitical factors like the Russia-Ukraine war. In Sri Lanka, wholesale prices rose to Rs. 700 per kilogram, with retail prices climbing to Rs. 1,350 per liter. The country imports around 6,000 tonnes of coconut oil monthly, costing $3.5 million in foreign exchange reserves. If left unchecked, this could amount to a $25 million drain in just six months, worsening Sri Lanka’s economic crisis.

Policy Recommendations for Stability

Experts have proposed several measures to mitigate these financial and economic risks:

Easing Crude Palm Oil Imports: Temporarily lifting restrictions on crude palm oil imports could reduce costs and stabilize coconut oil prices, potentially saving up to $50 million annually.

Reviving Domestic Palm Oil Cultivation: Restarting palm oil cultivation, which was halted under former President Gotabaya Rajapaksa, could improve long-term self-sufficiency.

Strict Tax Compliance: The Inland Revenue Department must ensure that all companies pay VAT and Social Security Taxes without exemptions to recover lost revenue and restore market fairness.

Hayleys Fentons Ltd has been awarded the contract for developing a 50 MW wind power facility in Mannar through a transparent and competitive appeal process, overseen by the Procurement Appeal Board (PAB) and approved by the Cabinet of Ministers. The company confirmed that the contract was secured following due process, ensuring fairness and accountability.

Initially, Hayleys Fentons’ bid faced rejection due to additional content in the bid security. However, upon appeal, the PAB reviewed the bid on August 6, 2024, and determined that the additional content provided further assurance of bid security. Consequently, the PAB recommended that the Cabinet consider and evaluate the bid, leading to its approval.

The project was awarded to Hayleys Fentons at the lowest bid price of 4.65 US cents per unit of electricity (kWh), a competitive rate that will result in a substantial saving of over Rs. 3 billion for Sri Lanka compared to the previous lowest bid of 4.88 US cents per unit. This cost reduction underscores the government’s commitment to securing the best value for the country while advancing its renewable energy goals.

Under the previous government, the Ceylon Electricity Board (CEB) had initially planned to award the contract to Windforce Plc. at a higher rate of 4.88 cents per unit. However, following the appeal process, Hayleys Fentons revised its original bid downward to 4.65 cents per unit, ultimately winning the contract. Other bidders included Vidullanka, Universal Energy, and Square Mech at 4.98 cents per unit, and Lakdhanavi Ltd. at 5.90 cents per unit.

Mannar, known for its strong wind currents, is an optimal site for wind energy production. This project is expected to contribute approximately 150 gigawatt-hours annually to the national grid, reinforcing Sri Lanka’s commitment to renewable energy. Furthermore, the initiative marks a significant step in involving local companies in sustainable infrastructure projects, enhancing both national energy security and economic growth.

Officials from the Power and Energy Ministry confirmed that the Power Purchase Agreement (PPA) between Hayleys Fentons and the CEB is expected to be signed within a month. Once finalized, the project is set to commence as per the planned schedule, supporting job creation and boosting regional economies.

The high wind potential in Mannar enables a plant factor exceeding 40%, as demonstrated by the existing 103.5 MW wind power facility operated by the CEB. Additionally, the use of advanced bird radar technology minimizes environmental impact by automatically halting turbine operations upon detecting bird movements.

 Hayleys Fentons, a leading entity in Sri Lanka’s engineering and renewable energy sectors since 1919, has strengthened its financial position and growth potential following its integration into the Hayleys Group in 2016. Securing this project reinforces the company’s role as a key player in Sri Lanka’s clean energy transition.

The government and relevant authorities reaffirm that the tendering process adhered strictly to procurement regulations, ensuring fair competition. Any claims of underhand dealings in the awarding of this contract are entirely unfounded, as the project was secured through a transparent and merit-based process.

The Sri Lanka Foreign Service Association (SLFSA) donated Rs. 3 million to the Colombo North Centre for Liver Diseases (CNCLD) at an event held at the Foreign Affairs Ministry on Thursday (13). The event was attended by Foreign Affairs, Foreign Employment and Tourism Minister Vijitha Herath, CNCLD Clinical Lead Prof. Rohan Siriwardana, Foreign Secretary Aruni Ranaraja, SLFSA President K. K. Yoganaadan, and members of the SLFSA Executive Committee.

The funds were raised through the International Bazaar and Cultural Extravaganza 2024, jointly organized by the Foreign Affairs Ministry and SLFSA, with support from diplomatic missions and international organizations based in Colombo. The event generated Rs. 2.8 million to support liver transplant surgeries at the Colombo North Teaching Hospital, Ragama.

SLFSA extended gratitude to Colombo Good Market for providing the venue, sponsors for financial support, and diplomatic missions for their generous contributions. The Office of the Chief of Defence Staff and the Tri-Forces also played a vital role in coordinating the event.

Recognizing CNCLD’s exceptional service in providing free treatment for complex liver diseases, SLFSA reaffirmed its commitment to future initiatives that align with its mission of social responsibility and international collaboration.

Colombo, February 12, 2025 – Vietnam’s Deputy Prime Minister and Foreign Affairs Minister Bui Thanh Son has reaffirmed Vietnam’s commitment to deepening cooperation and friendship with Sri Lanka while offering to share Vietnam’s economic development expertise.

He made these remarks during a meeting with President Anura Kumara Dissanayake at the World Governments Summit 2025 in the United Arab Emirates (UAE).

The discussions focused on strengthening political trust and economic collaboration between the two nations, building on 55 years of diplomatic relations. President Dissanayake highlighted key investment opportunities in Sri Lanka, inviting Vietnamese investors to explore sectors such as agriculture, education, religion, culture, tourism, and air services.

Both leaders expressed optimism about expanding long-term economic cooperation and fostering bilateral growth.

President Anura Kumara Dissanayake, in his capacity as Minister of Finance, is set to present the Second Reading of the Appropriation Bill for 2025 (Budget Speech) in Parliament on Monday, February 17, at 10:30 a.m.

The Budget Debate will follow from February 18 to March 21. The Second Reading debate will be held for seven days from February 18 to 25, with the vote scheduled for February 25 at 6 p.m.

The Committee Stage Debate will span 19 days, including four Saturdays, from February 27 to March 21, concluding with the Third Reading vote on March 21 at 6 p.m.

The Appropriation Bill for 2025 was initially presented for its First Reading in Parliament on January 9, marking the beginning of the annual budgetary process.

President Anura Kumara Dissanayake met with Sheikh Mohammed bin Rashid Al-Maktoum, Vice President, Prime Minister of the UAE, and Ruler of Dubai, during his participation in the World Governments Summit 2025.

The discussions, also attended by Sheikh Hamdan bin Mohammed bin Rashid Al-Maktoum, Crown Prince of Dubai, Deputy Prime Minister, and Defence Minister of the UAE, focused on strengthening global coordination and fostering collaboration to address economic and developmental challenges.

Sheikh Mohammed praised Sri Lanka’s commitment to enhancing international partnerships and sharing expertise in governance and strategic sectors. He reiterated the UAE’s support for further strengthening bilateral ties, building on the remarkable progress achieved in recent years.

President Dissanayake expressed gratitude for the UAE’s continued support in developing key sectors in Sri Lanka, highlighting the advancements in investment, trade, and tourism. He also commended the World Governments Summit for its role in equipping global leaders with strategic insights to enhance governance, explore new opportunities, and address emerging challenges.

Mainly dry weather will prevail over most parts of the island.

A cold weather can be expected in the Northern, North-central, Eastern, North-western and Central provinces during the early morning.

Misty conditions can be expected at some places in North-central, Sabaragamuwa, Central, North-western and Uva provinces during the morning.