NLA Committee for re-starting Wazeho cement plant

Morung Express News
Dimapur | March 4

The Nagaland Legislative Assembly’s (NLA) Committee on Public Undertakings (COPU), 2020-21 has recommended that the Mini Cement Plant (MCP) in Wazeho, Phek be ‘operated/run’ by the State Government instead of being privatized.

The government has the “manpower and caliber” to operate the MCP and the COPU felt that it is one of the Public Sectors Undertakings (PSUs) with “great potential to generate revenue for the State,” noted the Committee headed by the MLA & Advisor, Horticulture and Border Affairs Mathung Yanthan.

The COPU’s 87th, 88th, 89th and 90th Reports adopted on September 10, 2020 were presented at the 7th Session of the 13th Nagaland Legislative Assembly on February 15.

The deliberation on Wazeho MCP is contained in the 87th and 88th reports which examined the audit report of the Comptroller & Auditor General of India for the year 2013-2014 pertaining to the Nagaland State Mineral Development Corporation (NSDMC) Ltd under the Geology and Mining Department.

When contacted on March 4, Advisor Yanthan told The Morung Express that the Committee’s role is to examine and give recommendations but their implementation depend on the concerned department.

The recommendation seems to have resulted from ‘unfruitful’ bids by the State Government to privatise the plant after its upgradation in 2003.

During the evidence meeting held from July 10-12, 2019, it was brought to the knowledge of the COPU that the Government had decided to privatise the MCP despite its successful up-gradation, but it was “not materalising as private companies and parties” could not enter into an MOA (Memorandum of Agreement) with the State Government, COPU said.

As a result the MCP could not generate any revenue “despite being one potential unit to draw in resources,” it added.

During deliberation of the status of the Wazeho MCP, it was informed the plant was operated by the NSDMC Ltd till 2003 and was producing quality cement of Ordinary Portland Cement (OPC) 53 grade, “equivalent to the highest grade” available in the market.

However, the plant remained inoperative from 2003 after the State Government upgraded the plant from 50 TDP (Tonne Per Day) to 150 TDP successfully at the cost of Rs 2022.00 lakh and commissioned it in 2006.

After the decision to privatise, it remains inoperative for the want of MOA with private entities prompting the Committee to conclude that, “the investment by the Government in the up-gradation and modernization of the Wazeho Mini Cement Plant cannot be called an investment well spent because the investment was unfruitful.”

“The NSDMC Ltd should be in the charge of a person/member with sound background and knowledge and having the sincerity and outlook to manage the affairs of the corporation with positive and productive output,” the COPU further stated.

Privatisation’s failure
Meanwhile, the Committee said that during the meeting, it was highlighted that while some private companies/parties have shown interest in the MCP, after lapse of 6 months (3 months preparatory and 3 months trail period), the investors tend to back out.

Ultimately the State Government could not sign an MOA with any private investors and no revenue could be generated in terms of rent, royalty, cess etc, it noted.

“The MCP will not remain a cement plant or become profitable until and unless it is operative and productive,” it added.

The probable reasons for private investors backing out could be attributed to high cost of transportation and the deplorable road conditions from the plant to distribution point or market as the Government of India has already withdrawn the transport subsidy which was initially provided, it added.

These issues have curtailed to some extent the implementation of the infrastructural development undertaken by the department, the Committee further observed.

Alternatives measures
To this end, the Committee, taking note of the high transportation cost raised by the Department, stated that the costs should not be always compared to Dimapur as there are many consumers in nearer areas like Phek, Zunheboto, Tuensang, and Kiphire districts.

These consumers can procure the products from the plant instead of bringing all the way from Dimapur and vice-versa, it observed.

In this regard, the Committee called upon the department to identify potential markets and also strategise “viable ways and means so that the State Government can penetrate into potential markets to generate revenue.”

The Committee further recommended that the concerned department consult the Food and Civil Supplies Department on reviving transport subsidy system and pursue the matter with the Central Government.

As per the report, the NSDMC Ltd during the meeting expressed its willingness to “re-operate” the MCP by putting forward an appeal to the State Government to sanction a working capital of Rs 7.5 crore on installment basis.

The Committee, accordingly, suggested the corporation to assess the probable productivity and sale proceeds after chalking out the working capital estimates and cost analysis and submit a Detailed Project Report (DPR) to the State government at the earliest.

Other projects
Meanwhile, regarding two Decorative and Dimensional Stone Plants located in Chümoukedima and Wazeho, set up as pilot plants to train local entrepreneurs, the COPU called for expanding the two plants and making them operate as full-fledged commercial scale units.

It further directed the department to intimate the Committee on the status of up-gradation with supporting documents.

Regarding two common facility centres in Khonoma and Longsa in Kohima and Wokha districts respectively, the COPU recommended that the department be the facilitator and keep tracks of their functioning.

It also directed the department to “submit a written statement with supporting documents of all the entrepreneurs under self employment generation scheme stating the amount advanced and total amount recovered till date with interest/profit amount year wise.”

On arrears in finalisation of accounts, the COPU called upon the department and the management “to work out practical strategy for timely finalisation of statutory accounts so that arrear counts are not accumulated in the future.”

Source: https://morungexpress.com/nla-committee-for-re-starting-wazeho-cement-plant