In the wake of rising paper prices in the world market and current scarcity of paper due to dollar crisis, the Sri Lankan government is – at last – set to revive a defunct state paper mill at Embilipitiya after all the previous attempts made during the previous regime failed due to change of government.
Embilipitiya Paper Mill, belonging to National Paper Company Limited has been closed up to date since the year 2012.
Although the land in which the factory was situated and the buildings of the factory had been approved to be given to a local investment company named Korean Spa Packaging (Pvt.) Limited for 30 years followed by a decision of the Cabinet of Ministers in 2018,
The same decision could not be implemented since no actions had been taken to.release the said land to National Paper Company Limited properly, Information department revealed.
Actions are being in process now to hand over the said land in extent of 111 acres 02 roods and 33 perches to National Paper Company Limited on a long time lease basis.
The Cabinet of Ministers granted approval to the proposal furnished by the Minister of Trade for re – initiate the production work of Embilipitiya Paper Mill under Public – Private Partnership (PPP) methodology subsequent totering into an agreement comprised of conditions agreed in between National PaperCompany Limited and Korean Spa Packaging (Pvt.) Limited.
In 2018 The Ministry of Industries and Commerce has taken measures tol lease the mill to Korean SPA Packaging (Pvt) Ltd (KSPA) with Rs. 1.2 billion investment to produce paper and packaging material by upgrading machinery and infrastructure on a cabinet approval received during the previous regime a senior Ministry official disclosed.
KSPA is a multibillion rupee turnover company engaged in the corrugated and flexible packaging industry catering to the packaging needs of various industries including tea and garment industries in the country since 1993.
KSPA is a multibillion rupee turnover company engaged in the corrugated and flexible packaging industry catering to the packaging needs of various industries including tea and garment industries in the country since 1993.
Embilipitiya Paper which was first set up in 1978, closed in 2003 and resumed in 2011 under an Australian firm in a deal tainted with corruption allegations in 2011.
Auslanka Paper Company (Pvt) Ltd was the local entity incorporated with Perth Engineering and Maintenance (WA) (Pvt) Ltd, an Australia based firm, to revive the paper mill at Embilipitiya on a 30 year lease period at a price of Rs.600 million.
The company however abandoned the business in 2012 without repaying a bank loan facility of over Rs.400 million.
At that time the Finance Ministry received a complaint of a Rs.100 million commission paid by Auslanka to a top official of the State Resources and Enterprise Development Ministry. A probe into this corrupt deal had been terminated inconclusively in 2013.
The Embilipitiya paper mill was first set up in 1978. The mill was closed in 2003 and factory assets worth millions of rupees were sold to settle the workers’ dues.
The Paper Mill resumed operations in 2008 with a capital investment of Rs.35 million as envisioned in the Mahinda Chintana to make state resources productive.
However, due to the poor quality of the machinery and the high cost of re-investing in machinery the plant was compelled to close again in 2010.
Despite its closure, the Government continued to pay staff salaries amounting to Rs.4.3 million monthly until November 2013.
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Over Rs.350 million was paid as compensation to 171 former employees at a ceremony at the Sri Lanka Foundation Institute at that time. .
