Valaichchenai Paper Mills signs MoU with foreign investor

by Ranil Wijayapala

Valaichchenai Paper Mills, which was urgently in need of financial assistance to meet requirement of the country is going to have a brighter future again with a boost from an foreign investor to get the urgently needed renovations and to keep buffer stock of paper, paddy husk and chemical for the factory for continuous operations.

According to Mangala C. Senerath the Competent Authority of the National Paper Company Limited, a Chinese investor who had participated at the CHOGM Business Forum in Colombo has expressed his interest to invest US dollar 5 million to renovate the factory and to keep it operational by having buffer stock of raw material to run the paper mill and boilers.

The National Paper Company Limited sought the investment from a foreign company as the local state banks were not ready to provide the financial assistance despite showcasing its capability to increase its production, Mangala Senerath added.

Valachchenai Paper Mill, considered an asset to the country was making loss for over the last 17 years and once ear marked to be closed. It was in 2011 the then Management of the National Paper Company Limited sought a sum of Rs.1800 million for the renovation of the Valaichcenai Paper Mills which was installed in 1955 to continue as a Government owned entity.

However with the State Resources & Enterprise Development Minister Dayasritha Thisera's and Secretary, CEO, State Resources Management Corporation to the Ministry and Competent Authority of the National Paper Company Limited Mangala C Senarath's intervention, production recommenced with the available resources but could not attain profits without doing the necessary repairs.

"Since the Government was not in a position to allocate such colossal amount of money, Ministry of State Resources and Enterprise Development was in search for a suitable investor to fulfill the financial requirement to boost its production capacity", Senerath added.

Finally a MoU has been signed with a Foreign Company at the Ministry on November 14 . 2013. Accordingly this Chinese Company has expressed its willingness to invest US $ 05 million to renovate Valaichchenai Paper Mills and carry on the business as a Public - Private Partnership Joint Venture with 51:49 ratio."The representatives from the Company who visited Valaichchenai Paper Mills 03 weeks ago were satisfied with the conditions after the inspection of the Machinery. Again when they were here for the CHOGM held in Colombo arrangements were made to sign the MoU at the Ministry of State Resources and Enterprises on November 14", he added.

The officials of the Ministry of State Resources and Enterprise Development and the Management of the Chinese Company singed the MoU.

"Ministry is making arrangements to get the approval of the Treasury as well as the Cabinet of Ministers to go ahead with the plan. Once these formalities are finalised, agreement will be signed by both parties for which Chinese higher authorities will be visiting Sri Lanka and it is expected that this process most probably will be completed before end of this year", he added.

"If the government can help out with Rs.300 million as per the proposal submitted to the treasury we can definitely run with a 100% profit making entity within 6 months and show the country by giving more strength & power in Batticaloa district and producing the best quality paper", he added.

He said plans are underway to commence the renovation work no sooner the final agreement is signed.

According to Mangala Senerath once both the machines at the paper mill are renovated, Valaichchenai Paper Mills will be able to manufacture not less than 2000 MT of paper and board items per month and emerge as a profit making entity.

Employees who underwent untold hardships at National Paper Company Limited are pleased over such action since they are hopeful of getting their monthly salaries and other payments in time when the Valaichchenai Paper Mills is converted as a Public - Private Partnership joint venture.

This will also pave the way for the settlement of the unpaid dues to them including settlement of the EPF/ETF and Gratuity etc. they said.

Arrangements will be made to have a buffer stock of paddy husk, raw material, chemicals and other spares necessary for the repairs and maintenance to manage for 03 months to ensure uninterrupted operation of the machines. Action will also be taken to improve the infrastructure facilities such as the Quarters and offices which were built more than 55 years ago to benefit the employees.

Employees as well as the Trade Unions at National Paper Company Limited expect the Government and the authorities concerned to take speedy action to accelerate the process so that the matter could be finalized without delay and production could be started within 02 - 03 months.

"After the Investment is made we are sure that this Valachchenai mill will produce 1000MT in 2014 & 2000 in 2015 and 3000 in 2016. In addition we also will upgrade the new technology and install a Dandy Roll and & have our government logo with NPCL water mark in the papers we manufacture like other Countries do as that will help our Government Department to have all MADE IN SRI LANKA paper products in the future from the NPCL as per the vision of His Excellency's "Mahinida Chinthana", he added.

"Once this process in successfully completed, in the second stage Embilipitiya Paper Mills which is defunct now will also be converted as a Public Private Partnership joint venture on the same basis.

When it is done it will be a great relief to the President as well as the Treasury since National Paper Company Limited is in fact a burden to them at present", he added.

Undoubtedly it is because of the CHOGM held in Sri Lanka that facilitated this matter become feasible within a short period of time thanks to His Excellency Mahinda Rajapakse for hosting same in our Country and rendering his blessings and assistance to bring up this Mills as profit making one".

"Like the way President Mahinda Rajapaksa took up the challenges to end the war, constructing highways, giving better health service, education, we too can join hands and turn the nation paper mill to a profit making entity in a very short period of 4-6 months which is the largest mill in the whole island", he added.