Land dispute puts Sri Lanka tire plant project ‘on ice’

London – Plans to build a passenger car tire plant in Sri Lanka have become bogged down in a row over the sale of land for the €72-million project, ERJ has learnt.

The proposed plant was unveiled in January by Nandana Jayadewa Lokuwithana, a businessman and head of UAE-based Ceylon Steel Corp.

The facility, it was announced, would be established in Sri Lanka’s Horana district, under the auspices of Rigid Tyre Corp (Pvt) Ltd and employ used equipment from Marangoni,

With the announcement,however, came media charges of a “sweetheart” deal for the 100-acre site, which was owned by the Sri Lankan government.

According to a 14 Jan report by Sri Lankan Sunday Times, for instance, Lokuwithana gained the land under a 99-year lease for “just 100 rupees (60 cents) an acre” per year.

Speaking to ERJ, an industry insider said the deal had been “put on ice”, as Sri Lankan government officials considered their handling of the project.

This, said the source, was particularly true with regards to the land deal “which was practically donated without any return to the owners.”

As ERJ has previously reported, Italian manufacturer Marangoni is to provide the technology for the Sri Lankan tire plant from its now closed PCR production facility in Anagni, Rome.

Speaking to ERJ late last year, a Marangoni official explained that after the suspension of its passenger car tire production in Europe in 2014, the company had begun talks to sell its “production plants” to Ceylon Steel Corp.

Marangoni’s PCR production was mainly based in Anagni. Production there ended in 2013, as part of Marangoni’s pull-out of the passenger car tire segment.

Ceylon Steel Crop and Marangoni have not responded to ERJ queries on this story.