The challenges to the revival of the Nagaland Paper and Pulp Co. Ltd (NPPCL) Tuli

T N Mannen IAS (Rtd)

The commissioning of the Paper Mill at Tuli in 1982 as a commercial venture unit was a sound decision based on the logic of converting the abundantly available local raw materials into economic assets on a long term sustainable manner e.g. the bamboos and the reeds into the finished paper products, and the raw human resource of the areas into industrially cultured-skilled workforce by gainfully engaging them in the Mill which otherwise could not have been possible for lack of opportunities in such an industrially backward areas. Unfortunately the initial promised expectations are yet to become a reality in spite of the potentiality, for number of reasons; some of which could have been avoided if critically evaluated and corrected at the time of establishing the plant. Among the obstacles, the most critical one was non-availability of adequate power for running the Mill at the sustainable level. Added to that, there were serious law and order situation, harassment by demands of money from the anti social as well as from the UG elements on the workers. Lack of discipline and non-observance of industrial culture among the workers and unreasonable interference mostly from the public leaders, politicians and so forth. With the ramification of all those factors, obviously the Mill had failed without a fair opportunity of converting the tremendous economic potentials of the area. Available records had shown that, the Mill could hardly utilised on an average around 15% of its capacity of both men and machines when the Mill was functioning after it was commissioned in 1982 till 1992, before it was closed down. However, the acute shortage of power supply was mainly responsible for the low production and under utilization of its capacity at that time. Therefore, it was compelled to shut down indefinitely till an alternative arrangement is made rectifying those obstacles.That being the case, the rehabilitation package announced after a prolong waiting has come as a real MANA (divine gifts) to the NPPC and to the Naga people to reconstruct and revive the only Public Sector Undertaking in Nagaland which will provide gainful employment to many young people of both educated and trained skill workers in the Mill. Besides, much more employments and business opportunities in ancillary units and tertiary sector employments will be generated. Once again bamboo growing will become very profitable occupation for many villagers as there will be huge demand for the raw material/ bamboos that are mostly wasted at present.
Imagining all these pleasant economic developmental prospects for the people that can come by opening the Mill, as an ex-Chairman of the NPPC Ltd, on 11th Sept 2015, I visited the premises of the Mill wanting to know the latest position of the revival activities on the ground. To my surprise I saw a row of loaded trucks parked within the premises without any sign of unloading the materials. On my enquiry it was found that NPPC has no money at hand to clear the bills of the Vendors for supply of material and machineries brought in connection with the revival works. They were insisting on payment before unloading /delivery of the materials. Naturally I enquired how the Rs 100 Cr released earlier toward the revival package has been exhausted without much visible sign of activities. Any delay in implementation or any misuse of fund will jeopardise the whole scheme leading to cost overrun.
The fact of the matter is that the Central Government has approved the NPPC revival package in 2013 after nearly 2 decades of negotiation and waiting. Subsequently on 2nd July 2013 an amount of Rs 100 Cr was sanctioned and released as a part of 1st instalment stipulating certain directives to HPC. The money was released to HPC office Kolkata, with direction to operate the fund by opening an Escrow Account in the name of NPPC. The CMD of HPC was made personally responsible to ensure timely disbursement of fund for the NPPCL revival activities without diversion to any other work so that the implementation are carried on unhampered and completed it as per scheduled.
In the main time, the NPPC had awarded various works of supplies of machineries and materials components and constructions to 12 firms on the basis of open bidding. It is said that till August 2015 only Rs 40 Cr has been utilised by NPPC on various supplies and on sites construction works. The unspent balance of Rs 60 Cr is in HPC corporate Office, Kolkata. But in spite of requisitioning fund required by the NPPCL for the next three months (August to October 2015) out of the remaining amount with HPC, the CMD who is designated as MD, NPPC has informed that there is no more money available for NPPC which is most surprising and unexpected.
The project cost was finalised on 29th January 2015 fixing at Rs 489 Crores in total taking into account of all the different items /components in the package. The implementation was to complete in 27 months (Nov.2016) starting from January 2015. This was assured by the Union Minister Anant G Geet during his visit to NPPCL in February 2015. It has now been reframed and extended by another 1(one) more year and will commission in November 2017 only. But, judging from the casual, unsupportive responses of the HPC management specially the CMD (HPC) – cum- MD, NPPCL; it is not likely that the revival scheme will be completed and commission on time. Such a time and cost overrun will create further complication with disastrous consequences. HPC is the main partner in HPPCL and the custodian of the fund earmarked for the rehabilitation scheme. The CMD contrary to the responsibility given has indulged in financial mismanagement by not complying with the directives contained in the sanctioned order of the GOI. Thus, HPC has become the stumbling block rather than facilitating the smooth, timely implementation of the revival scheme. There are other glaring failures on the part of HPC. Such as:-
(a). Non-compliance of the directives of the Nodal Ministry, in not operating the escrow account mechanism thereby diverting the unspent fund kept in the HPC account as evidenced in the instance case, affecting the timely implementation of the scheme. This is precisely the situation the Ministry has intended to avoid in stipulating the directives which the CMD of HPC is flouting with impunity for reason best known to him.
(b) In the final approved project report HPC is to contribute Rs 10 Cr as their share which is part of the total cost of Rs 489 Cr. But instead of making that contribution, HPC is arbitrarily charging 1% of the total project amount every year during the implementation period out of the NPPCL project fund, which means Rs15 CRs in three years. This has been objected to and reflected in their audit report of 2014.
(c) Both the Nagaland State and the HPC must release their committed share without fail to the project fund for NPPCL revival scheme. It is heartening to note that Nagaland state has budgetted its share in the current year (2015-16) which shows the seriousness of the state government in successful implementation of the revival scheme.
(d). The interest accrued by keeping the entire Rs 100 Cr in HPC account since its sectioned in 2013 to 2015 and further interest earned on Rs 60 Cr unspent balance should rightfully be credited into the NPPCL account which will further augment funding of the revival scheme.
(e). The financial transaction of earmarked fund for the revival activities under the control of CMD of HPC is going on unmonitored creating doubt of financial mismanagement. Unless it is corrected before it is late, it may kill even the whole rehabilitation scheme. Both the state as well as the central government is jointly responsible for an active and regular monitoring and taking timely corrective measures. There should be a mechanism to do so if not already in existence.
(f). Another important issue which needs the urgent attention of the Ministry of Heavy Industries as the Nodal department is for appointment of an independent MD exclusively for the NPPCL, Tuli. The present arrangement of duel charge given to CMD, HPC who is also designated as MD, NPPCL is not producing the expected result of prompt, effective and coordinated supervision on the implementation activities of the revival scheme. Instead it has given a convenient conduit to manipulate the fund without a proper check which is adversely affecting the overall implementation. The nodal ministry should be sensitive enough to the demand of the stakeholders of the Mill to initiate requisitioning the Public Enterprises Selection Board (PESB) at the earliest for appointment of an MD exclusively for the NPPCL so as to provide constant undivided attention for timely implementation of the revival scheme round the clock at this crucial moment of revival struggle of the Mill.
If the revival package fails to take off this time, there will never be another chance, except closure without availing the last opportunity to revive and prove to all the critiques and cynics that a profit making industrial unit can successfully run in Nagaland. Failure, after coming this far will be an unfortunate end of a very potential industrial venture due to human failure. On the other hand, its success will have a tremendous positive impact changing the whole industrial development scenario in the state, besides bringing huge employment generation opportunities along with economic prosperity to the people. Every effort should be made to give the last chance for revival of the Nagaland Pulp & Paper Mill at Tuli.