Volkswagen car plant building starts next month

Volkswagen AG’s local joint venture partner Senok Automobile (Pvt) Ltd will next month start to build the Volkswagen car plant in Kuliyapitiya in the Kurunegala District, government sources revealed.

Fresh doubts emerged last week on the implementation of Sri Lankan government’s much publicised project following a statement made by Deputy Minister of Public Enterprises Development Eran Wickramaratne in an interview with Ada Derana TV on August 29.

Answering a question raised by the Ada Derana TV presenter, he stated that parent company Volkswagen AG has taken a decision not to invest in Sri Lanka at the moment due to their international issues hinting that project would be suspended.

In a 360 degree turn, he made another statement to newspapers the following day (August 30) announcing that the construction of the Volkswagen car plant will begin in a few months and the delay of the project was due to some land acquisition issue.

The acquisition of land and entering into a land lease agreement and other relevant matters have now been completed, a top Board of Investment (BoI) official said adding that it has secured land for the setting up of a Volkswagen assembly plant.

There was no impediment now for the Senok Automobile to begin the construction work of the Volkswagen factory in Kuliyapitiya, he disclosed.

The agreement to assemble cars was signed by BoI Chairman Upul Jayasuriya and Noel Selvanayagam, Chairman of Senok Automombiles on April 2015. A BoI Section 17 agreement, the investor will assemble vehicles in the 1000 cc to 2000 cc category and these vehicles will be diesel powered and include passenger cars, Sport Utility Vehicles (SUV), Multi Utility Vehicles (MUV) or commercial vehicles.

The total value of this project is an investment of 26.5 million dollars of which 21.5 million will be invested in fixed assets within a period of 24 months, the BoI said earlier in a media release but there was no indication as to whether this investment has already been made or not.

The Volkswagen plant was one of Deputy Foreign Minister Harsha de Silva’s pet projects when he was deputy minister handling Policy Planning and Economic Affairs last year.

Volkswagen has been facing several problems over an ‘emissions cheating’ scandal. According to international news media reports, the Germany company has negotiated a “broad settlement agreement, expected to exceed $10 billion, involving Volkswagen, the federal government and a half-million car owners.