Guwahati: The Union at the Cachar Paper Mill has alleged that the volume and valuation of the natural oil reserves beneath the defunct mill are not disclosed in the auction document.
The paper mill, owned by Hindustan Paper Corporation in Barak valley, along with Nagaon Paper Mill in the Morigaon district, was scheduled to be auctioned on June 30. However, the auction was cancelled due to no bidders.
The mill township sits on three large natural oil reserves, of which one is still active. The Oil and Natural Gas Corporation (ONGC) was operating the oil reserves under a lease rent agreement with HPC. Reportedly, the ONGC was getting profits from those oil reserves and was paying royalties to the HPC.
Former employees of the paper mill have raised the point that the liquidator did not disclose all assets of the paper mill.
The Cachar Paper Project Workers’ Union in a letter to the Kolkata-based liquidator Kuldeep Verma demanded to disclose the volume and value of the land having oil reserves inside the paper mill campus before the mill is auctioned off at a “throwaway price”.
The letter, also sent to the Secretary, Ministry of Heavy Industries and Public Enterprises, said, “As land having oil reserves is precious and inclined with the national interest, being the national property, we request you to disclose all the details before selling the land to any third party.”
In the letter, the union said, “More than three oil well points exist in the Cachar Paper Mill township area. The land area enriched with underground oil reserves is reportedly having a lease rent agreement with ONGC.”
“The valuation of Oil reserve, termed as Liquid Gold, has not been disclosed anywhere in auction notification. Only the land area has been detailed in Auction notice without earmarking it as Oil Reserved Land,” the letter added.
“The issues raised [by the union] invite immediate intervention before the sale of assets in question…,” added the letter.
“It was the liquidator’s duty to ascertain the volume of natural oil available under the ground. No one knows much oil is lying under. He should have added the basic price, considering the international and national market value. This value would have been added to the asset which would have reflected on the valuation of the paper mill,” Manobendra Chakraborty, President, Cachar Paper Project Workers’ Union told EastMojo.
“It is a criminal offence under Insolvency and Bankruptcy Code, 2016 for concealing the details of the asset on the ground,” he added.
The auction document doesn’t mention the ONGC and the HPC agreement. It neither mentions how much profit ONGC was making nor did it address the question of how much royalty HPC was drawing from the oil reserves.
The union asked the liquidator to disclose the quantum of valuation for the land having a natural oil reserve and the criterion adopted to fix the price of the same piece of land.
The former employees believe that if the paper mill is sold off without adding the asset value of the oil reserves, it will be a big loss. “Oil is a national property. We are asking them to add its value too as oil is a national resource. It comes with job opportunities and so will create jobs for the young generation,” said a former employee.
The union brought forth irregularities in the auction document as the reserve price of the two paper mills was reduced to Rs 969 crore, from the reserve price of Rs 1,139 crore set on June 1.
“Within 22 days, the asset value was reduced by 170 crores. This has brought a suspicion as to how the asset value was reduced. We have written to the Central Bureau of Investigation and the Central Vigilance Commission as we feel there is some irregularity in the valuation of the total asset,” Chakraborty said.
“The decreased total value of the asset will impact everyone as it is a national property. These assets give the state revenue. This is not just about us, it is about the nation,” he added.
The Cachar Paper Mill at Panchgram and Nagaon Paper Mill in Jagiroad are shut since October 2015 and March 2017, respectively. Over 1,200 employees of the two paper mills are yet to be paid their remaining salaries, pensions, and other monetary dues. A total of 91 employees have died ever since the two mills suspended their operation.