Prima buying Sri Lankan mill from government

by Emily Wilson
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Coincident with a decision by the government of Sri Lanka to liberalize the wheat and flour trade, an agreement was entered into that provides for Prima Ceylon Limited to purchase the large flour mill and bakery at Trincomalee that it has operated for the past 20 years.

Prima, controlled by the family of Cheng Tsang Man, also operates a large flour mill in Singapore. It built the flour mill in Trincomalee and opened it in 1980 under a 25-year "build-operate-transfer" concession agreement that would have run until 2005.

As part of an ongoing privatization program, the government, prompted by the urging of the International Monetary Fund, decided to liberalize and to promote competition in the milling and distribution of flour, either milled locally or imported.

The new agreement brings to an end the arrangement under which the government of Sri Lanka bought wheat on the world market that it supplied to the Prima mill. Under the original agreement, the government also had responsibility for distribution and sale of wheat flour. It historically has sold flour at subsidized prices that were viewed as draining government resources.

Under the new agreement, effective June 20, 2001, Prima Ceylon Ltd. will import its own wheat for milling and will also distribute and sell the flour.