An enterprise worth its salt

[TamilNet, Saturday, 12 April 2003, 00:10 GMT]
Before the Eelam Wars began, the salterns in the northeast produced enough salt to meet the all the needs of Sri Lanka and a surplus for export. Elephant Pass and Kurinchathivu were the largest of these. The other salt production facilities were in Chemmani, near Jaffna town, in Mannar town, in Nilaveli and Kumburupiddy in Trincomalee.

There was a large salt pan west of Batticaloa town during the Dutch and early British periods. Colonial records indicate that this saltern was the main source of salt supply to the Kandyan kingdom then.




The northern salterns produced the best quality salt in the island, with a sodium chloride content of 98 percent. Until the Sri Lanka army took over the large area containing the salt pans of Elephant Pass and Kurinchathivu in 1990, more than 85,000 metric tons of salt were produced there annually.

To get the two facilities back on their former footing, 800 to 1000 million rupees would be required, officials say.

The Paranthan Chemical factory produced export quality sodium chloride thanks to the inexhaustible supply of salt from the pans of Elephant Pass and Kurinchathivu which were nearby. (The Paranthan Chemical Factory was totally destroyed in the war)

The only saltern in the northeast to survive the war was the one in Mannar town now called Mathai Salt Ltd. On paper all the salterns in the northeast today come under the administration of Manthai Salt.

The British monopolized all salt production in Sri Lanka under their control in 1938 with the establishment of the Salt Department in the wake of the ‘Salt Satyagraha’ by Mahatma Gandhi in India.

The Salt Department was made the National Salt Corporation in 1966. All salterns in Sri Lanka were under the corporation before 1990. That year under World Bank, IMF steered deregulation of the island’s economy, the Sri Lankan government formed the Lanka Salt Company under the supervision of the Public Enterprises Reform Commission (PERC).

Under this program, the Mannar saltern was divested and reconstituted as Manthai Salt Ltd. As the PERC could not supervise the privatisation of all the salterns in the northeast, these were brought under Manthai Salt Ltd in 1990.

Despite deprivations caused by the war, the deregulation under the PERC has increased pressure on the privatised salt companies to become self sustaining and profit making.


Gathering the salt

But for the Manthai Salt Ltd, located in Mannar town, it is an uphill task. In 1991 and 92 the ‘company’ had to cease production completely as a consequence of the war. It limped on with minimal output until 1997 when it was able to get its act together with a loan of four hundred thousand rupees from the Government Agent for Mannar. In 2000 February, the GA handed over the company’s administration to the Federation of Fishermen’s Societies in Mannar.

The Ministry for Rehabilitation and Reconstruction in the Northeast took over Manthai Salt Ltd in October 2001, barely two months before the general elections. The United National Front government brought the company under the Ministry of Industries. (Technically all the slatterns in the northeast are under the purview of Prof. G. L Pieris)

“We cannot run profitably as in the past unless we increase our production. To expand it’s out capacity, ‘Manthai Salt’ needs capital investment”, says Mr. K. Arumugaswamy, the regional manager in charge of the Mannar saltern.

Manthai Salt Ltd now depends for its survival on handouts from the treasury and limited sales in a highly competitive market. Privately owned smaller salterns in Puttalam produce and market salt at a much lower prices. Some of these brands which are marketed as iodised salt contain no iodine content at all.


Manthai Salt manager Arumugaswamy

“If you do not add iodine, you save money and can afford to sell at a lower price”, observes Arumugaswamy.

A person requires 150 micrograms of iodine per day to remain healthy.

Unit coast of production is high at Manthai Salt Ltd because the company, being a semi government concern, has to maintain the wage structure and work force according to standards inherited from the public enterprise system.

The regional manager says that if production is doubled with adequate capital input then the cost of production would come down.

“To achieve this we need 30-40 million rupees capital investment. Then we can run at profit”, Arumugaswamy says.

Currently the Mannar saltern produces 2500-3500 metric tonnes of salt annually depending on the extent of rainfall. (Production ceases during the rains)

The annual consumption of salt in Mannar is around 800 metric tonnes only, most of it used for making dried fish. “We can market the rest competitively even amid the current salt imports from Tuticorin in India if we have the capital to expand” Arumugaswamy argues.

‘Salt is a valuable resource that is available in plenty in the northeast. A development and rehabilitation plan to get the salt industry back on its feet is a must today’, he said.