Country's oldest jute mill closed after govt rolled back subsidy

BIRATNAGAR, Sept 6:

The historical Biratnagar Jute Mills located at Rani Mills in Biratnagar (BJM) has closed after the government withdrew subsidy given to the mills. According to BJM´s General Manager Shyam Poudel, the mill shut down from Thursday after the oldest jute mill could not compete with the Indian factories.

Earlier, the government had been providing 70 percent discount on electricity tariff, customs discount while importing spare parts and relatively more electricity supply to the jute mills. However, through the budget announcement, the government withdrew the facilities.

BJM´s general manager Poudel blamed policy flaws and the lack of cooperation by the Nepal Electricity Authority for the closure of the jute mill. “The government withdrew subsidies while the NEA never supplied electricity to the mill as per the demand,” said Poudel.

He told Republica load-shedding schedule was irregular and the low voltage supply has affected production of the mill. “We have been demanding with the NEA for uninterrupted supply and voltage improvement. However, the power utility is turning deaf ears to our demands,” he added.

He also lamented that voltage fluctuation has often created problems in equipment. “If NEA fails to improve its voltage and the government does not resume subsidy, all the jute companies will close at some point,” he warned.

BJM had resumed its operation in December last year under the management of Indian company Winsome International after closure for five years .

The Kolkata-based Winsome International had won the contract to reopen the BJM on condition to pay Rs 13.5 million annually to the government.

However, the mill has shut down after operation for nine months.

Four hundred workers of the mill have now become jobless with the closure of the jute mill. Despite the mill´s capacity to run in three shifts, it was operating only one shift due to short supply of the electricity. The mill was producing 107 tons of jute products a day. Fabric and yarn produced in the mills is consumed in nearby Indian markets.

The government´s decision to roll back subsidies and facilities to the jute mills has not only led to the shutdown of BJM in Morang, but Katahari-based Baba Jute Mill was also closed three weeks ago. Out of 11 jute mills that were in operation at Sunsari-Morang industrial corridor, six mills have already closed, according to Jute Industry Association (JIA).

Though two mills were shut after the government stopped providing facilities and subsidies, Guheswori Turbine Mill, CM Jute Mill, Pathibhara Jute Mill, Nicky Jute Mill had closed despite the government´s support.

Ramesh Rathi, vice president of JIA, told Republica that if the government does not review its decision, rest of the mills will also face the fate similar to BJM. He said the closure of the mills will reduce Rs 5 billion of export income and leave 15,000 employees jobless.

The jute operators have been demanding formation of Jute Development Board, concessional loans, uninterrupted electricity supply, discount on electricity tariff and 10 percent cash subsidy on the export of jute products, among others.

Source: Republica