Govt. says automobile plant in Kuliyapitiya not by Volkswagen; Harsha explains

Kurunegala District Parliamentarian and Education Minister Akila Viraj Kariyawasam told the Colombo Gazette that the Government never said the vehicle assembly plant in Kuliyapitiya is by Volkswagen.

Some Government statements had previously claimed yesterday that the Kuliyapitiya vehicle assembly plant is by Volkswagen.

A spokesperson at Volkswagen had, however, told a private television channel that Volkswagen does not have any direct investments in Sri Lanka at the moment.

President Maithripala Sirisena and Prime Minister Ranil Wickremesinghe placed the foundation stone yesterday for the construction of the vehicle assembly plant in Kuliyapitiya.

Meanwhile, in a post on his Facebook, Deputy Foreign Minister Dr. Harsha de Silva said that he was responsible for the initiation of the Kuliyapitiya project and that the project was to involve Volkswagen.

 “In my new job as the Deputy Minister of Policy Planning and Economic Affairs, I met with the then Ambassador of Germany HE Dr. Jurgen Morhard in Early January, 2015. At this meeting the Ambassador indicated that Volkswagen had attempted to set up a plant in Sri Lanka since 2008 but failed due to ‘various’ reasons. I indicated to him that we would be delighted to have VW set up a plant in Sri Lanka and we initiated discussions between the Government and the company. Having initiated the possible investment, HE the Ambassador and I moved out. In that, handed over the responsibility to the implementing parties and the Policy Ministry at the time was not an implementation office, rather a planning office. We were told the discussions continued among the various stakeholders locally. We were informed that Volkswagen’s local agent Senok Automobiles representing the car maker negotiated terms with several government authorities to get necessary clearances (sic),” he said.

In mid-August 2015, the Board of Investment and Senok Automobiles signed an agreement to establish an assembly plant for Volkswagen in Kuliyapitiya.

However, in just a matter of weeks after signing the agreement, on 3 September 2015, Volkswagen, after months of denial, had admitted to the EPA in the US that they had cheated on emissions tests on some of their diesel models in the US. On 18 September 2015, the EPA went public with this admission of guilt.

Soon thereafter the VW stock crashed and the senior management was fired. Later some 30,000 jobs were cut and it has thus far cost the carmaker some US$ 18 billion in losses.

 “This scandal that rocked VW was a complete shock to everyone, obviously including us in Sri Lanka. Apparently Senok Automobiles who had signed for VW had attempted to save the agreement and continue with the investment as planned. However, at one point, I believe after much negotiation, the Government had decided it would be better not to go with a dedicated VW assembly plant due to possible legal issues that could crop up due to the massive fallout from their emissions scam. This we knew today when the PM explained the sequence of events to us,” the Deputy Minister said.

He said that given the BOI agreement had still been in place with Senok Automobiles for the original VW assembly, they had rescued the project by agreeing with the BOI to go ahead to establish the plant to assemble various makes of European automobiles.

 “At this point the BOI should have announced to the press the change. It’s unfortunate it was not done as all of us were caught by surprise and now have to face this allegation of attempting to hide facts,” he added.

The Deputy Minister said that the vehicle assembly plant was then renamed Western Automobile and the foundation stone was laid for an automobile assembly.

 “At no point at the foundation laying ceremony (which I could not attend) had there been any mention of the plant being for VW. In fact since I moved out of my earlier portfolio of Deputy Minister of Policy Planning and Economic Affairs to the new one in the Foreign Ministry in August 2015, I had no dealings with the project and was sincerely unaware of the various changes until it was explained today. I would appreciate that fact be respected before plunging in to accusation of hoodwinking. However, if the BOI explained the changes when they happened it would have been a lot better (sic),” he said.

The Deputy Minister noted that as a country Sri Lanka can be satisfied that the assembly plant is being established and many jobs will be created besides thousands of training opportunities for young people. (Colombo Gazette)