- Import ban could result in production cut - Local ethanol no match for imports By Madhusha Thavapalakumar The ban on the importation of ethanol, one of the main ingredients used in the manufacture of liquor, has caused serious concern amongst the local liquor industry, The Sunday Morning Business learns. The ban came as a New Year shock to the industry as it was neither pre-informed nor was a grace period provided to comply with the ban and this is likely to result in a liquor production cut. Issuing a notice on 1 January, Prime Minister and Minister of Finance Mahinda Rajapaksa banned ethanol imports with immediate effect. Reportedly, this action had been taken considering that ethanol is widely produced within the country. However, the industry claims that the local production of ethanol is hardly sufficient for local liquor manufacturing and in addition to this, the quality of local ethanol is believed to be inferior to imported ethanol. “There are only a few distilleries that produce ethanol in Sri Lanka. Three of them produce sugarcane-based ethanol including Sevanagala and Pelwatte Distilleries, one produces maze-based ethanol, and the other distillery produces rice-based ethanol. The entire production is 24 million litres per year,” reliable sources told The Sunday Morning Business. The Sunday Morning Business reliably learns that the Distilleries Company of Sri Lanka (DCSL), the leading liquor manufacturer of the country, imports one million litres of ethanol per month mainly from South Africa, Pakistan, and Australia, in addition to locally supplied ethanol. The industry is also concerned about the pre-ordered ethanol shipments yet to reach the country as clear directives have not been given about whether the import ban applies to these as well. The industry is expected to have a meeting soon with President Gotabaya Rajapaksa, requesting him to reconsider the ban as it’s impractical for them to follow. However, a senior official from the industry told The Sunday Morning Business that if the Government sticks to the original ban, the liquor industry would cut their production, which would result in a significant loss of revenue to the Government. “Liquor manufacturers will cut their production and manufacture using only local ethanol because there is no alternative option for us,” he added. According to the Ministry of Finance, the excise revenue target in 2019 was Rs. 130 billion, out of which Rs. 68 billion had been achieved as at the end of July last year. During the financial year 2018/2019, DCSL paid Rs. 58 billion in taxes, and Rs. 64 billion in taxes a year ago.