Broken Promises by BJP Government and the Tale of Two Dying Assam Paper Mills

While BJP’s flagship ‘Act East’ policy to boost the regional economy of North East India helped it  garner a stellar performance in the recently held Tripura, Nagaland and Meghalaya polls, the party’s pledge to create one crore jobs a year before the 2014 Lok Sabha elections seems to have utterly failed, at least in Assam, as the plight of two paper mill workers of Assam illustrates. Employees of these mills — Cachar Paper Mill (CPM) at Panchgram in Assam’s Barak valley and Nagaon Paper Mill (NPM) near Guwahati — have been awaiting their salaries for more than one and a half years now. On Independence Day (August 15) this year, the workers had to resort to a hunger strike, demanding their salaries, as well as resumption of production and revival of the mills owned by a public sector unit Hindustan Paper Corporation Limited (HPCL). 

The Dying Indian Paper Industry

Beaming big boilers and the tangles of gleaming pipelines reflected by fluorescent lights of an industrial town radiating from the hills of Panchgram were once the hallmark of a magnificent night view of the now dying CPM, which has been closed for almost three years now since October 20, 2015. The mill workers’ salary is pending for 19 months. Production of another HPCL unit, NPM, at Jagiroad near Assam’s capital Dispur has been suspended since March 13, 2017. Employees of  NPM have not been paid for 17 months. The saga of these plants reflects the plight of the entire paper industry in India, thanks to the government policy to import paper from abroad instead of helping grow the country’s own industries, and bulk export of bamboo, a major raw material used for making paper.

Since 2014, there has been reportedly no import duty on paper and paperboard from ASEAN nations, while one of the major raw materials for paper production, bamboo, has seen 4,046.79 percent export growth between the fiscal 2016-2017 and 2017-2018, according to the Department of Commerce data.

BJP's Broken Promises 

On March 27, 2016, Prime Minister Narendra Modi, during a poll campaign at Panchgram in Assam, assured the people that the two HPCL paper mills "would be revived and the central and the state government would extend all sorts of support for the resumption of normal production". In another event in September 2016, the BJP-run state government reportedly said in a public statement that the Central government had prepared a Rs 800-crore proposal "for revamping the Nagaon Paper Mill and reviving Cachar Paper Mill." 

Assam Chief Minister Sarbananda Sonowal reportedly also said that the "state government would relax VAT (value added tax) on bamboo and coal for the paper mills." In August 2017, Sonowal again said he had sought Rs 1,800 crore from the Centre for the revival of the two HPCL units.

After Sonowal’s request, in October 2017, the HPCL workers saw some ray of hope as the Centre reportedly "firmed up a Rs 1,000 crore plan to revive Hindustan Paper Corporation through involvement of private sector in certain activities and settlement of dues." Apart from the government-assured doles, the HPCL management also chalked out a Modernization and Technological Upgradation Project (MTUP) worth Rs 659 crore "for strengthening and reinforcing the competitiveness of its units and subsidiary in keeping with the strategic and structural changes taking place in the industry" in 2005.

It’s August 2018 now, and none of these promises or plans have materialised. In the meantime, 36 HPCL employees have died, said Manabendra Chakraborty, president of the Cachar Paper Project Worker’s Union (CPPWU), an Indian National Trade Union Congress (INTUC)-affiliated union. Recently, a delegation of HPCL employees went to meet the Union Heavy Industries Minister Anant Geete demanding revival of the two paper mills.  However, they returned with utter disappointment. 

Chakraborty said, "We have understood that to give some unethical benefits to some private parties, the government is neglecting the issue, besides their repeated commitment to the people of Assam. We have gone to Delhi to understand what is the cause for such a long delay, why are the PMO and the Ministry of Heavy Industries delaying acceptance of the proposal to revive HPCL, which was committed by both the Chief Minister and the Prime Minister? The honourable Minister clearly said, 'I have no objection for revival. I have sent this proposal to the Prime Minister’s Office, and it is under consideration of PMO and the Union Cabinet. If the Cabinet accepts or approves the proposal under the leadership of Prime Minister, who is the chairman of the Cabinet Committee on Economic Affairs, the mill will be revived without any doubt.”

Interestingly, the Nagaon Paper Mill is situated at Jagiroad, from where Assam’s Urban Development Minister Pijush Hazarika won as a BJP candidate, while Rajen Gohain, the Union Minister of State for Railways, who was booked for rape charges by the Assam police on August 11, represents the Nagaon Lok Sabha constituency since 1999 where NPM workers are struggling for survival. 

Coal, corruption and flowering bamboos

Once one of Asia’s largest paper mills with the capacity to produce one lakh tonne of paper annually with more than 3,000 (2009 figure) regular-plus varying numbers of contractual workers,  CPM and NPM had been shut down “without serving any prior notice to the workers,” said Azizur Rahman Mazumder, general secretary of the Cachar Paper Project Workers and Employees Union-Independent. Incidentally, the CPM is the only heavy industry in Assam’s marooned Barak valley region, on which the livelihood of about two lakh people depend, according to Chakraborty. 

“Our mill had been running until October 19, 2015 and was closed the next day. We were running at loss due to a shortage of coal and bamboo flowering. Primarily, the mill had been shut down as the National Green Tribunal banned mining and transportation of coal in Meghalaya, which used to be our main source of coal,” said Mazumder. 

Apart from coal, price hike of bamboo, which is the key raw material for the paper industry, is another root cause cited by the workers of HPCL. “Bamboo flowering began during the 2006–07 season, and since then, the prices of this primary raw material used for producing the paper fibre has been on the surge. The heavy industry bloomed here initially because our valley has abundant supply of bamboos,” said Mazumder. 

Bamboo flowering hits an area once in 50–60 years. All species bloom flowers simultaneously across miles and die after flowering, leaving their roots to disable any more growth. Interestingly, however, “during the year 2006–07, the mill recorded the highest annual production of 1,03,155 metric tons (MT) registering over 103% capacity utilization, which was 100% during the previous year.”

While for CPM, the Barak valley unit of HPCL, bamboo flowering had been the main cause of losses, there had been no dearth of bamboos in the case of NPM. For the Guwahati-adjacent mill, coal ban in Meghalaya was the main reason, said Dhiren Bora, working president of INTUC-affiliated Kagaz Nigam Karmi Union of the NPM, adding that the NPM production had been suspended at a time when there were enough raw materials available to run the mill for at least two more months. 

About the CPM plant at Panchgram, Mazumder said, "It is our apprehension that despite having available all basic raw materials in the mill premises, the suspension of production is not a normal one. It was planned by the higher authority…. If we had competent authority, overcoming the scarcity of raw materials could have been possible." He said almost 50,000 tonnes of bamboo and 1,200 tonnes of coal was still available in the mill, among other raw materials required for paper production. On a visit, this reporter also found huge stacks of bamboo lying in the mill in  a dilapidated condition since October 20, 2015 — almost three years since the suspension of production.

While there have been multiple allegations of corruption against the HPCL management, interestingly, an ex-Finance Director of the HPCL, Palash Goswami, submitted a petition in 2017 to the PMO, alleging "various irregularities in entire operation and management of the organization” leading to "operations in both mills ultimately stopped” and the company “not in a position to release salary of its employees." The PMO, however, closed the case, and Goswami was sacked after a couple of months, as told to Newsclick.in by Dhiren Bora of the NPM. A reply to Goswami by the HPCL authorities mentioned that a CBI inquiry also was in process, the outcome of which is unknown to any HPCL employee so far.

IRP, VRS and the Fear of Total Closure

On February 27, 2018, the HPCL management invited applications of voluntary retirement scheme (VRS) from its employees through a notice, giving them time till March 20, 2018. The last date for application was later extended till  April 10, said Manabendra Chakraborty of INTUC. The employees are, however, still awaiting their VRS-related claims to materialise. By the time, Alloys & Metals, a firm that supplied grey board to the HPCL in 2014, filed a case against the PSU for non-payment of its dues worth more than Rs 98 lakh with the National Company Law Tribunal (NCLT) sometime in the early 2018. The NCLT ruling went in favour of Alloys & Metals, which appointed an Interim Resolution Professional, Kuldeep Verma, as per the request of the petitioner. Verma was formally appointed on June 26, the day HPCL employees came to know about the process. Through the public announcement, Verma asked all creditors of HPCL — including employees, vendors, ex-employees, pensioners, suppliers and contractors — to submit their claims for dues until July 10, 2018. 

According to Dhiren Bora of INTUC, the total claim so far has been Rs 2,600 crore. Azir Uddin, general secretary of CITU-affiliated Cachar Paper Project Mazdoor Union, also confirmed the figure, albeit both union leaders said they only 'heard' about this figure. Azir Uddin, however, drawing a connection between the VRS offer by the HPCL management and the IRP process, alleged, "We think this government is not going to give any money to anyone during this period; it will let people suffer. It is delaying this (revival of the plants). It’s delaying intentionally. The process is getting delayed by degrees. Otherwise, why has the NCLT case surfaced amid talks about sanctioning all VRS by July 31?" 

On the question what might happen if the HPCL or the government does not clear all dues by the IRP-specified estimated date of the closure of insolvency resolution process, Azir Uddin said, "By December 9, the NCLT will decide whether the mills are in a condition to be revived. If the mills are not in a position to be revived, the NCLT can request the government to revive them." He, however, said the government was not duty-bound to respond the NCLT request. This again brings forth the big question of how much chance is there for the two HPCL units to resume production or revive? "So far we have  been getting only negative messages. The government is only fooling us," alleged the CITU-affiliated union leader.

Interestingly, Azir Uddin’s allegations gain some ground when viewed along the string of broken promises made by the BJP government. With three polls ahead — the panchayat elections due sometime soon in Assam, the 2019 Lok Sabha polls and the 2021 Assam Assembly Elections — it will be  tough for the BJP, which is  ruling both at the Centre and the state, to completely close down the HPCL plants, on which lakhs of people’s survival is directly or indirectly linked. 

There is widespread apprehension among union leaders that the only way of  averting the liability probably lies in letting HPCL  declare itself bankrupt in the event of not being able to pay a huge amount of Rs 2,600 crore, especially as the revival of these mills is reportedly under the direct supervision of a cabinet committee led by the PM himself, who has repeatedly broken  promises of doles as well as revival of the dying paper industry. Meanwhile, the fate of the HPCL employees hangs in balance along with their salaries and other dues.