• Unavoidable crisis or a case of negligence and mismanagement?

Despite being an island surrounded by seawater, Sri Lanka has been forced to import salt from India for the first time in over a decade, exposing yet another crisis in the country’s fragile supply chain. 

The severe shortage, which has left supermarket shelves empty for weeks, has pushed the Government to import 30,000 MT of salt in a desperate attempt to stabilise the market. But the real question remains: was this crisis truly unavoidable or was it a result of sheer negligence and mismanagement?

Failure to implement suggestions

Salt, a basic necessity in every Sri Lankan kitchen, has vanished from major supermarket chains in Colombo. For weeks, consumers have struggled to find even a single packet, and when they do, they are met with low-quality alternatives – some allegedly mixed with sand and other impurities.

Adding to the burden, the salt shortage has come at a time when Sri Lankans are already grappling with rising prices and shortages of other essential commodities, such as rice and coconuts.

Authorities have largely blamed the crisis on adverse weather conditions, pointing to excessive rainfall in 2023 and 2024 that disrupted traditional salt production. Lanka Salt Ltd. (LSL), which supplies 70% of the country’s salt, reported a sharp decline in production from 94,000 MT in 2023 to just 40,000 MT in 2024.

However, a source from LSL, speaking on the condition of anonymity, revealed to The Sunday Morning that the real cause of the crisis was not just the weather but a failure in implementing experts’ suggestions.

According to the source, LSL experts had anticipated the crisis as early as 2022 and had submitted reports urging the implementation of a plant vapour deposition system, which would have allowed salt production even during periods of heavy rainfall. Yet these recommendations had been ignored by the LSL Board of Directors.

LSL operates as an independent entity under the Employees’ Trust Fund Board (ETFB), with 90% of its investment coming from the ETFB and 10% from employees. Despite the LSL Board having financial decision-making power, any major project requires ETFB approval, a bureaucratic hurdle that has repeatedly delayed critical decisions.

Disrupted by adverse weather

Salt production in Sri Lanka dates back thousands of years, with commercial production in Hambantota beginning in 1938 under Government Agent Leonard Woolf. The Salt Department was later transformed into the Salt Corporation in 1970 and LSL was established in 1996 to manage the salterns. 

LSL produces high-quality iodised and table salt, playing a crucial role in preventing iodine deficiency disorders.

Speaking to The Sunday Morning, LSL Chief Executive Officer (CEO) Dr. Ajith Shanmuganathan said: “Under normal circumstances, we carry forward 30,000-40,000 MT for the following year. However, continuous rainfall over the past two years has significantly impacted both production and stock levels.”

The salt production process relies on solar evaporation and wind flow, requiring an uninterrupted 45-day cycle for seawater density to increase from 3 degrees to 27 degrees Baumé, leading to salt crystallisation. However, frequent rainfall has repeatedly disrupted this process.

“If it rains during these 45 days, the density drops, affecting the entire cycle. Unfortunately, this has occurred multiple times over the past two years,” he explained.

Enabling continuous production

When The Sunday Morning questioned the steps taken by LSL, Dr. Shanmuganathan said that he had submitted reports and proposals as early as 2022 recommending the establishment of a Pure Vacuum Dried Salt (PVD Salt) system. 

This system, powered by Heavy Fuel Oil (HFO), would enable continuous salt production even under adverse weather conditions. However, the proposal remains pending.

“We had foreseen this challenge and submitted detailed reports to the LSL Chairman with copies to the Ministry of Finance, ETFB, Department of Public Enterprises, and Auditor General (AG) in mid-2024. 

“We addressed production and managerial constraints and recommended necessary actions, but long-term solutions are still on the way. Our Board of Directors holds financial decision-making authority, with its only concern being the ETFB’s approval,” he stated.

Looking ahead, the company anticipates an improvement in production if weather conditions stabilise in the coming months.

“If rainfall decreases as expected in February and March, we should be able to resume production at the required levels by the end of March,” Dr. Shanmuganathan noted. 

However, he highlighted that in the absence of decisive strategic investments and comprehensive diversification, the recurrence of such shortages remained inevitable.

Significant inefficiencies

Financial records indicate that LSL has experienced steady revenue growth over the past decade. The company generated Rs. 893.58 million in 2014 and exceeded Rs. 1 billion in earnings in 2015. Revenue continued to rise, reaching Rs. 1.9 billion in 2016. Between 2017 and 2019, LSL’s revenue fluctuated between Rs. 1.35 billion and Rs. 1.52 billion before declining to Rs. 1.28 billion in 2020. 

However, LSL rebounded with Rs. 1.44 billion in 2021 followed by a sharp increase to Rs. 2.65 billion in 2022. In 2023, the company recorded a revenue of Rs. 4.02 billion, its highest to date. Despite this financial growth, the AG’s report for the year ending 31 December 2023 highlighted significant inefficiencies. 

A total of 16.24 MT of salt, valued at Rs. 520,640, has deteriorated due to prolonged storage since 2020. Additionally, 569.25 MT of super-grade salt, worth Rs. 27.32 million were contaminated due to decomposed covering materials. 

Furthermore, 73.98 MT of salt produced between 2016 and 2021, valued at Rs. 2.34 million, remained unsold. The failure to supply proper covering materials led to the damage of 1,816.19 MT of salt, resulting in losses of Rs. 65.42 million.

Procurement inefficiencies were also noted. Two unsuitable pusher plates, costing Rs. 2.84 million, remained idle for 17 months. Delays in procuring covering materials affected the salt harvest, exacerbated by heavy rainfall in September 2023. 

Additionally, non-compliance with Government procurement guidelines led to unauthorised purchases of 1.5 million 1 kg packs of Lak Lunu and 1 million 400g packs of table salt, worth Rs. 31.32 million. The company also suffered a Rs. 16.23 million loss by purchasing salt packs at inflated prices instead of following the tender process.

Warehouse mismanagement was another issue, with unused stock accumulating over the years. This included 15 items worth Rs. 2.23 million since 2010, 22 motors worth Rs. 3.47 million since 2015, five gearboxes, and 422 storage items worth Rs. 2.15 million since 2008.

Nevertheless, to address the crisis, Sri Lanka imported 1,485 MT of salt from India on Monday (27 January), marking the first such import in 15 years. The Cabinet of Ministers has approved the importation of 30,000 MT of salt to stabilise supply, with imports continuing until 28 February. 

CAA stance

When The Sunday Morning inquired about the quality of salt brands available in the market, particularly following the importation of foreign brands, Consumer Affairs Authority (CAA) Chairman Hemantha Weerakoon said that if the CAA received any consumer complaints regarding a specific food item, the authority would inspect it and take necessary actions. 

“Currently, our primary focus is on issues related to rice. As for imported salt, the relevant quality control authorities should ensure the quality of these products,” he explained.

Attempts made by The Sunday Morning to contact Finance Ministry Secretary Mahinda Siriwardana were futile.