By Imesh Ranasinghe  Sri Lanka not having enough paper to print exam papers reached the global stage, with international media reporting on the country’s decision to postpone final exams of school students in the Western Province due to a shortage of paper. Western Province Education Department on 18 March, said in a statement that school principals could not hold the tests as printing centres were unable to secure foreign exchange to import necessary paper and ink. However, by Monday (21), Western Provincial Education Director Srilal Nonis said the third term examination in schools in the Western Province (WP) would be held according to the scheduled timetable as the matter had been resolved.   Truly resolved?   However it is unlikely that the matter has been resolved, as the paper shortage has impacted many industries and sectors in the country. Earlier this month, The National Lottery Board told The Sunday Morning Business that the printing of certain lotteries had been halted as the required paper could not be imported due to the dollar crisis. Then the Ceylon Electricity Board (CEB) said that the issuance of electricity bills had been hampered due to the shortage of paper in the market and officers had been instructed to write down the details of the relevant bill on plain paper and issue the bills. The National Water Supply and Drainage Board (NWSDB) said that it would introduce a digital payment system due to the shortage of paper to print the utility bills.   Paper importers’ woes   Speaking to The Sunday Morning Business, a Government tender supplier said that although he had provided his invoices to the bank back in November 2021, the Letter of Credit (LC) payment of $35,000 for paper imports had not gone through to his supplier in China yet due to the dollar shortage in the bank. According to him, most of the paper importers are getting down only one container of paper compared to  the previous five containers as the banks can only afford small payments at a time. “This has resulted in a huge price increase in the local market,” he added. Moreover, he said the paper price increase was also fueled by the increase in global paper prices and sea freight charges as well as the depreciation of the rupee due to the free float of the dollar. A bundle of A4 copier paper with 500 sheets has increased beyond Rs. 1,500 from last year’s Rs. 750. According to Central Bank data, Sri Lanka has imported paper, paperboard, and articles of pulp, paper, and board worth $ 374.24 million in 2020 compared to $ 450 million spent in 2019. A large-scale printing paper importer from Kelaniya said that his company had moved on to purchase printing paper from the local market since his bank had no dollars to pay for his imports on time. He said the prices in the local market were really high, which was passed onto the customers, making it expensive to carry out printing works. According to him, many of his printing press customers have closed down operations as they are unable to afford paper in the local market.   Only 15% of paper imports get through to Sri Lanka    Another wholesale paper importer and distributor said that his paper shipments were stuck in ports as the banks had not made the payments. Further, he said due to the credit rating downgrade of Sri Lanka, foreign mills were not giving products on a Document against Payments (DP) basis and were only accepting LCs. The orders placed by him for papers in January have not been paid for uet while some of those orders had been cancelled by the suppliers due to delays in payment. “Only 15% of orders are getting through to the local market now compared to earlier, because of the paper shortage in the market,” he said.  With the current fuel shortage, the importer said that vehicles were also unable to transport the available papers to the customers which had caused further havoc in the supply chain.   Moreover, he said that since the dollar was floating, the Central Bank should either allow outflows now or completely stop outflows instead of being in the middle of the two decisions. “They [CBSL] are not giving clear instructions,”  he added. Since the US Dollar was floated against the Sri Lankan Rupee two weeks back from the pegged amount of Rs. 203, it is expected the inflows will now get to the banking system through the formal channels.   National Paper Company not printing paper    National Paper Company Limited (NPCL) Spokesperson Dinanthi Dahanayake said the company was using waste paper to recycle and manufacture paper bags, medium paper for corrugated markets, and cover paper. Out of the paper products manufactured by the NPCL, she said lunch sheet paper had the highest demand.  Dahanayake said that although Government offices provided them with their waste paper according to regulations, the State Printing Corporation (SPC) was selling its waste paper to exporters. NPCL does not purchase waste paper from third parties as the company is unable to adjust its product prices against the increase in waste paper prices. The company does not manufacture copier paper, as Sri Lanka does not have pure pulp, a clean wood-based raw material used to manufacture copier paper and various paper-based products. The raw material needs to be imported from countries such as Indonesia and China in order to manufacture good quality paper which requires dollars that Sri Lanka does not have at the moment. According to Dahanayake, NPCL does not get allocations from the Treasury as it is a limited company and the company itself bears up all expenses and salary payments through the sale of its paper products: “Loans to the company are only provided by the Government,” she added. There are two paper mills that belong to the NCPL in Embilipitiya and Valaichchenai, which have been closed for many years since the last Mahinda Rajapaksa Government. However, the current Government commenced the operation of the two mills again with new investments to the Valaichchenai mill. An agreement was reached to operate the Embilipitiya paper mill as a Joint Venture back in 2012 with Korean SPA Packaging (Pvt) Ltd. Earlier this month, the Cabinet approved a proposal to commence operations based on a 30-year lease to the said company. Earlier attempts to commence operations failed as the land in which the paper mill was located had not been regulated properly.   State Printer in crisis    SPC Chairman J.M.U.B. Jayasekera said global paper factories were trying to catch up for the period in which they could not operate due to Covid-19 restrictions. “Due to that manufacturing loss, the amount of paper initially brought to Sri Lanka has been reduced compared to pre-Covid,” he said. Further, he noted that failure to develop the local paper manufacturing over the years and the dollar shortage had added to the current paper shortage in the country. Jayasekara said the shortage had shot up demand as paper products that were purchased by suppliers through the tender process had increased from Rs. 186,000 to Rs. 500,000  The SPC annually purchases the required stocks of paper at the beginning of every year through a tender process while additional tenders are also called for additional manufacturing requirements. SPC is responsible for the printing of text and exercise books for Government schools, lotteries, university certificates, annual reports of State institutions, and some Government-issued licences. However, Jayasekara said the four units which were responsible for printing had been impacted immensely by the paper shortage in the market. “We are in a huge crisis,” he asserted. He said SPC had managed to prepare 100 million books to be distributed among Government schools for the new year beginning after April. Although SPC is purchasing paper from the National Paper Company, Jayasekara said there was an issue relating to quality. He said if the shortage continued, SPC was expecting to manufacture its own paper.