26 May, 2022


Ecologically-Damaging Steel Plant: BOI Responds To Allegations But Pussyfoots Around Grave Risks And Lokuwithana’s Involvement

In response to our story titled “Alleged Money Launderer Lokuwithana Back: This Time With Plans For Ecologically Damaging Steel Plant In Trincomalee”, the Board of Investments (BOI) has sent the following explanation.

Response CT Article: Steel Plant In Trincomalee

Nandana Jayadewa Lokuwithana

The proposed steel manufacturing and export plant in Trincomalee was approved by the BOI in December 2018, pursuant to diligent scrutiny and review.

This project envisages strict adherence to European environmental standards, and final implementation will take place following a comprehensive impact assessment and mitigation. The BOI is firmly committed to ensuring that such compliance meets with the stringent standards set out by all relevant local regulatory agencies.

While at present, similar factories remain in operation even in urban areas, this particular project will be located in a declared BOI Licensed Zone (gazetted circa 2006), which is within the Industrial Area demarcated by Surbana Jurong Private Limited, the Singaporean government- owned consultancy company tasked by the government of Sri Lanka with developing the Master Plan for Trincomalee.

With respect to the allocation of land for the Tyre Factory in Horana, it is pertinent to observe that the land in question was not within a gazetted BOI zone, and therefore had no value fixed by the BOI. The fact that it was undeveloped and enjoyed limited access to basic infrastructure during the time of handover is reflected in the valuation of same given by the Government Chief Valuer. It is on this basis as well as consideration of the total investment and projected export value of the project that motivated the BOI to allocate the said land at a price which exceeded the government valuation by Rs. 40 million. As such, this land was not provided on a concessionary basis.

The BOI further wishes to state that all inward remittances related to BOI projects are made via legitimate banking channels to dedicated Inward Investment Accounts that are regulated by the relevant local and international authorities. Hence the question of money laundering through BOI projects does not arise.

As a final observation, the BOI wishes to state that while it remains true to its purpose of facilitating economic growth through FDI, especially at this crucial time when the economy is in dire need of FDI, it remains equally firm in ensuring that all BOI projects adhere to strict compliance with the laws of Sri Lanka, be it in terms of monetary, environmental or any other applicable regulation.

Editor’s Note:

Although the BOIs ambitiously claims that strict environmental standards will be adopted in relation to the proposed steel plant in Trincomalee, it goes without saying that the proposed steel manufacturing plant is not a ‘clean industry’ that facilitates sustainable development.

As Colombo Telegraph pointed out in its story, the plant will inevitably result in toxic waste products, acid rain-causing Sulfur Dioxide, heavy metal residues and gaseous outflows, altering the ecosystem of the Trincomalee area, home to Sri Lanka’s largest natural port.

In addition to its monumental impact on the environment, the proposed steel plant also poses a grave public health risk, not only to the workers of the facility, but also to the people in the area. It does not require a lot of wisdom to understand that the environmental and public health impact of the plant significantly outweigh its potential economic benefits.

Having said that, it is also important to understand that the ill-planned project will also have far-reaching economic implications. A steel plant adjacent to the Trincomalee Port will prevent the Sri Lankan government from attracting clean, high-value industries that drive sustainable and inclusive development in the area. This will turn the Special Economic Zone (SEZ) in Trincomalee into a white elephant project burdening the economy.

What remains clear is that the BOI is set to launch a self-destructive, self-sabotaging project pursuing short-term gains, without approaching the subject in a holistic manner. This brings the bona fides of the institution into serious question.

The BOI’s clarification conveniently ignores the involvement of Nandana Lokuwithana, a Dubai based Sri Lankan businessman and a man with a dubious track record. The businessman, who is popularly known as ‘Mariott Lokuwithana’, has come under serious money laundering allegations.

The mere fact that Lokuwithana is involved in this project casts serious doubts over the ‘integrity’ on the part of the BOI, which comes under the purview of Minister Malik Samarawickrama, a close friend of the controversial businessman. While this is not the first time the BOI’s association with Lokuwithana came under question, it is now becoming increasingly clear that the BOI’s hopes for promoting FDIs in Sri Lanka continue to hinge on the likes of Lokuwithana.

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Latest comments

  • 14

    The BOI is like the Lake House -they just don’t have any professionalism or self respect.

    Whatever the ministers/government want them to say, will be said by the BOI

    • 2

      I challenge the CT view on the pending steel pant. As I argued in the original, if the environment is the biggest issue, why not suggest a better place for the plant? If the steel plants are in general bad for the environment anywhere in the world, how can the world ever find steel needed for various human use?
      The US example of losing jobs & thereby economic devastation to number of communities b’cos of the closure of factories due to competition from cheaper steel coming from Canada, Mexico, India, China, etc is a good case against TC argument against Steel industry. This case of public demand for the return of steel factories became a hot-button issue during the last US presidential election. Therefore, rather than shutting down, what SL should do is to take the full advantage of the trade war between US & China by accommodating investors who are looking for places to avoid heavy tariff. India has already done it; and why not SL as well?
      I strongly believe that the TC protest is pushed by someone for personal reason and chosen two hot issues such as environment & money laundering as a cover. It is well known fact that environment & money laundering in development is like race & religion in politics

      • 2

        ” how can the world ever find steel needed for various human use?”
        What an idiotic reasoning is that?. At present, more than 50% of the steel is used for manufacturing ‘WEAPONS’ by the warmongers from around the world. Trump bypasses the congress to sell some billions of worth arms to the ‘Saudis’ to slaughter the innocent civilians in ‘Yemen’ . At the same time, our fraudsters from the previous ‘Jarapaksa’ regime are bringing in and investing the stolen money back in ‘Sri Lanka’. The people of the country aren’t idiots to believe your stupid explanations any more.

        • 0

          Pittsburgh, “THE” major steel inventor and producer of the world, removed its steel industry by the 1990’s because of its pollution and toxicity, and instead, built up on their medical and educational industries. They found steel to be inessential for everyday use, and as anonymous says , it is mostly used for the military machine. They also needed to show good face to the rest of the world precisely because of its military use. Hence they outsourced it overseas to places like China and India, to carry on the pollution, and appease conscience………(anyone seen the rich Indian buying super-expensive artifacts in tourist places to decorate their homes whilst their masses dont have basic sanitation?…and members of Lankan BOI want to rub shoulders during house parties with….Indians. That’s the sole reason for the high-level business talks on balancing out Lankan budgets).

          Pittsburgh also realized that essential items like pots and pans could be made by ceramics. They are slowly building up their organic industries. But now they have to also keep up with places like China’s monetary gain, pollution and all. And so balancing out the dollars with pollution is a never-ending vicious cycle.

          Now why should Sri Lanka want to jump into this game with fraudsters, is the question.

          People like Gnanasara and vigilante group of concerned citizens should be sent forth to make sure that dirty industries like these never takes place on our organic and Buddhistic soil.

      • 6

        My god this must be from the same source at the BOI ! In one breath we are compared with US, China and says we must become a big player taking advantage of a trade war ! To take advantage of such a thing we must have some capacity !

        What happens in most our big BOI projects is that the so called investor gets large government land, loans from local banks based on that and eventually the project becomes something else or is closed down. Meanwhile government officials, including BOI fellows are taken care of.

        This kind of unrealistic big talk is to just put the innocent people to sleep

      • 0

        What a brilliant thought D.P.

        “India has already done it; and why not SL as well?”
        SL is nowhere near ‘State of Tamil Nadu’ in comparison to the economy, governance, infrastructure and many other sectors let alone ‘India’ as a country. Mittels’ are the ‘Steel Kings’ of the world..

        “Nicknames: Detroit of South Asia[1]
        Gateway of South India
        India’s Health Capital, City of Flyovers, Banking Capital of India”

    • 2

      Chairman and CEO look like bums

      • 0

        both are named duminda

  • 3

    There is something uncanny here.
    These ventures are only to hoodwink people.
    The slave government’s newest betrayal is selling valuable lands, citing various ventures.
    A similar thing happened in down south too.
    The value of this land close to Trinco Port is beyond estimation.
    Some foreign countries buy lands using proxy companies with an aim to get them transferred to them once the deal is signed.
    This businessman was not known before 2015. It is possible that someone or some other country injecting money to his business.
    Sri Lanka has no clue about the real owners of its property.

    • 7

      Champa van Winkle,
      “This businessman was not known before 2015. It is possible that someone or some other country injecting money “
      So you were sleeping before 2015 and didn’t read any newspapers or websites? It may be true that someone named MR is injecting money.

      • 4

        MR appears still has billions of looted money at his disposal.

  • 3

    No doubt, the BOI is the face put forward to do cosmetic looks to highly disputable project.

    Sri Lanka has its own specialty in hoodwinking the world as we have witnessed its saga at the UNHCR sessions. Believe it or not, we are the best in this art in the whole world.

  • 5

    So All these Diyawannaoya Buffolos are allowing the tourist trade and hotels to close in trincomalee and people to beg from Steel mill.
    Selfish buggers are going to destroying the Country and the people’s future.

  • 3

    “This project envisage strict adherence to European Environmental Standards…………….” good.
    At what stage would you know that they are adhering to European Standard- is it after commencement of the manufacturing? If it fails what action would you take? Will you dismantle the factory? Who will ascertain the situation? Another friend of the Company?

  • 2

    Apart from leasing the land, what are the incentives offered by the Govt./BOI to investors?

    Hi Tech steel plants in Europe are closing down, unable to compete with cheap steal from China, the biggest steel manufacturer in the world today. Then there is Lakshmi Mittel, the Indian steel baron who has been buying up all steel plants in Europe. In this competitive business monopolised by China & India, I wonder who we are going to sell our steel to. British Steel went bust recently with over 5000 job losses & British steel catered mainly for the domestic market, yet was unable to compete with cheap steel from China. SL has to import iron ore & we won’t have the economies of scale for efficient production either, therefore, we would be unable to compete with giants in India & China. In this scenario, it’s not rocket science to understand that it will be the poor SL tax payer who will bear the cost of failure while the investors would have enjoyed the benefits of the ‘concessions’ offered by the Govt. while it lasted.

    Another VW manufacturing plant in the making?

  • 3

    Ecologically-Damaging Steel Plant:
    BOI has responded to the ecological impact of the Trinco Steel Plant. That is the easy part.
    Pussyfoots around Grave “Risks And Lokuwithana’s Involvement”
    Has BOI done a diligent study of the economic viability of the project?
    The planned Trinco Steel plant cannot and will not succeed. There is a steel and aluminium glut in the world market and plants are closing.
    Lankan building industry will buy their requirement on the world market delivered ‘just in time’.
    Special steel for Army Commander Lt Col Mahes Senanayake’s Avant Garde Armoury?
    Rolling stock and rails? There is a glut.
    Mammoty? The farmer will go for the ‘Crocodile’ brand.
    There is a glut of lots and lots of steel making machinery from closing mills. Second hand dealers will be willing to ship these at inflated prices These can sit and rot.
    What a way to spend the US$ one billion.
    DO NOT DESPAIR. Anytime now, Gnanasara Thero will head the BOI.
    Yes please. Scotch make it double.

    • 2

      gnanasara and zahran as heads will does better job. make it a double too I needs one too

  • 7

    Typical of the UNP chaps to talk of “European standards” while getting into bed with a scoundrel .

    Who wrote this nonsense ? Obviously he thinks that Sri Lankans are fools who can be easily misled by mentioning some jargon like European standards !

    If the producer of this shameless BOI statement is a public servant, he must be exposed for helping his political masters to hoodwink the people.

    • 0

      what does European standard mean? pls define

      • 0

        It means that Sri Lanka is as transparent as Europe. We are the most honest country in the planet.

  • 1

    About few months ago, after inspecting Trinco, some Chinese and Singaporean guys flew away on a secret plane, . Has it anything to do with this investment.

  • 1

    the man is a racketeer .the politicians and civil servants are his lackeys

  • 1

    Of course we have all heard of Lokuvithane steel. Must be a giant steel mill company like Mittal. Trinco is like Pittsburgh with steel plants everywhere.This is a genuine activity.

  • 0

    Recipe to make cheap steel in developing countries…

    1-Import used or refurbished machinery from a closed steel plant in the west.
    2-Import iron ore.
    3-Produce steel by melting iron ore/steel scrap in a furnace.
    4-Import coke or natural gas to use it in the furnace.

    Steel can be recycled. Steel produced from scrap requires less energy than steel produced from iron ore. However, supply of steel scrap is limited and quality is not good due to impurities in the scrap steel.

    Steel industry normally uses 1-2% of a nation’s primary energy consumption.

    Electricity consumed by Steel plants using power from hydroelectric plants would be better than use of fossil fuel due to carbon dioxide emission to the environment.

    Business side:
    Energy expense for steel manufacturing is the second highest component after labour of the total cost of operation in developed countries. Therefore, moving the steel plants to developing countries might help to reduce the labour cost if the investor has cheap supply to fill the fuel tank.

    Another point is the lobbing work to pass the regulatory requirements to run a steel plant as efficient as possible in profitable manner without spoiling the environment is a challenging task in developed countries than developing countries. Therefore, you do the math!

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