Industrial capacity utilization below 50%: NRB
KATHMANDU, July 9 :
Nepali industries failed to utilize even half of their installed capacity in the first six months of the current fiscal year, according to a study report unveiled recently by the Nepal Rastra Bank (NRB).
The Economic Activities Study 2013/14 carried out by the central bank in 47 districts in the first six months of 2013/14 shows average capacity utilization of the industrial sector stood at 49.9 percent. The capacity utilization is higher than the corresponding period of the last fiscal year. The average industrial capacity in the first half of 2012/13 was 44.7 percent.
Industrialists have attributed the underperformance of their industries to lengthy power cuts. “Industries have not been able to utilize capacity to their fullest for the past few years.
This year it went below 50 percent as the industries were severely hit by load-shedding,” Pashupati Murarka, senior vice president of the Federation of Nepalese Chambers of Commerce and Industry (FNCCI), said. “As industries are forced to use generators due to routine power cut, we cannot expect better productivity from them.”
Hari Bhakta Sharma, senior vice president of the Confederation of Nepalese Industries (CNI), told Republica that local community is not receptive toward industrial growths. “Rise in cost of production due to various reasons, including power cuts, is reducing competitiveness of Nepali products in the market which ultimately discourages maximum utilization of the industry´s capacity,” argued Sharma who runs Deurali-Janta Pharmaceuticals.
According to the report, noodle industry had the highest capacity utilization of 84.6 percent in the review period while sugar industry had the least with 10 percent.
“Many farmers didn´t sell sugarcane to mills due to low price offered by the latter. Also, sugarcane harvesting had not completed when the study was carried out. This explains low capacity utilization of sugar mills,” the report said.
The report says production of soybean oil, rubber products, beverages, fabricated metal products, processed milk and readymade garment increased in the review period, while the output of food products, wood and wooden products, paper, processed leather and plastic products went down in the review period.
Despite dismal performance of the industrial sector, lending of banks and financial institutions (BFIs) to the sector, however, increased by 9.5 percent to Rs 335.90 billion in the review period.
The central bank, however, has projected a positive outlook for the industrial sector in the coming months. “Since Constituent Assembly (CA) has been already elected and the elected government is already in place which may ensure political stability and increased power supply as well as improvement in industry-labor relation, it can be expected that all these factors can make positive impact in the industrial sector,” states the report
Source: Republica
