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With reference to our news story "No railway track repairs - over 30,000 lives in danger" in the Sunday Observer of August 7, 2005, State Timber Corporation Chairman M. F. Ghany has sent us a letter, clarifying the transaction between the State Timber Corporation and the Railway Department.

He says: "The outstanding payments due to the State Timber Corporation from the Railway Department were - (i) Year ended 31.12.2002 - Rs. 561,248,204, (2) Year ended 31.12.2003 - Rs. 546,510,378 and (iii) year ended 31.12.2004 - Rs. 401,222,280.

"The State Timber Corporation had recurrent cash flow problems due to these large amounts outstanding annually and during the year 2005 the STC requested the Railway Department to kindly consider the State Timber Corporation Cash flow problems and also additional cash requirements to meet salary increases, which were affected from January 2005. Hence we requested the Railway Department to settle outstanding bills to the STC, as much as possible.

"It must also be mentioned that the State Timber Corporation was in arrears of Stumpage payments to the Forest Department amounting to Rs. 351 million as at year ended 2003 due to cash requirements and this created a situation where the Forest Department even refused to release forest harvesting areas to the State Timber Corporation due to the non payment of the said stumpage fees. Thus the money that was received from the Railway Department to a great extent was helpful in settling the stumpage payment so that there would be continuity in the STC business.

"With regard to the money received from the Railway Department, I wish to mention that for the year 2004 Rs. 287 million was received in cash and there was a set off of Rs. 200 million from the CGR dues to the stumpage account.

"During the year 2005 from January to 1st week of August Rs. 406 million was received from the Railway and the balance dues, as at 01.08.2005 was Rs. 156,485,322. Thus the Railway Department by paying up has to a great extent helped the State Timber Corporation to settle the stumpage payments, which was in arrears over a period of time.

"With regard to the supply of Timber, the Railway Department placed an order in September 2004 for 150,000 sleepers to be supplied during the year 2005. There was no time specification placed on this order. Up to July 2005 we have supplied 40,000 sleepers and there is a balance of 110,000 to be supplied by the end of this year. We have already prepared a schedule of delivery and hope to complete this order by end of this year.

"It also should be mentioned that during the year 2004 the Railway Department was given 105,197 sleepers.

"Further more these sleepers are made from Eucalyptus Grandis and Micro timber and during the 1st half of this year we had a tremendous problem in obtaining Grandis and Micro timber from the Private Land owners as various NGOs and Private Organisations constructing houses for tsunami relief work purchased this timber paying higher prices and thus the State Timber Corporation lost its regular suppliers of Timber.

In fact to get back to the business we are now paying higher prices for timber requirements and have to compete with the Private Dealers to ensure continuity of our supplies.

The Minister of Environment & Natural Resources, A. H. M. Fowzie has specifically instructed us to meet National requirements in the best way possible."

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