Jute mills face closure amid power crunch

BIRATNAGAR, APR 29 -

Jute mills in the Sunsari-Morang industrial corridor in eastern Nepal have warned that they may have to close down as they have not been able to pay their workers for failure to operate in full swing due to longer load-shedding.

Factory owners said that they had been forced to cut production by 40 percent due to power cuts lasting 14 hours daily.

There are nine jute mills operating in the corridor. About 20,000 workers will be out of a job if the mills are shut down. The jute industry is a labour-intensive industry.

“We need electricity to run our factories. Moreover, the government has not provided discounts on our power bills as promised,” said Raj Kumar Golchha, president of the Nepal Jute Industry Association. “The factories cannot be run under the current situation of power cuts.”

According to entrepreneurs, 5 MW of electricity is sufficient for the nine jute mills located here. The supply amounts to 3.5 MW these days. Golchha said, “If 1.5 MW more is supplied, we can operate the jute factories regularly.”  

The local jute industry imports 70 percent of its raw materials from India and Bangladesh, and exports 98 percent of its production to India. The raw jute required by the mills here is not available locally.

“The government has not been able to ensure regular power supply nor has it provided any support for export, which has hit the factories badly,” complained Prakash Mundara, first vice-president of the association.

The jute factories here pay a daily minimum wage of Rs 231 to Rs 260. Their outlay for salaries amounts to Rs 1.5 billion monthly.  

According to mill owners, Bangladesh provides a 10 percent cash grant on exports of jute products and a discount on electricity charges. India provides grants for electricity, fertilizers and seeds and buys the produced materials itself. “For this reason, Nepali jute products are finding it hard to compete with jute products produced in India and Bangladesh,” said Mundara.

The nine jute mills here export jute products worth Rs 5 billion annually. “These mills need 85,000 tonnes of raw jute annually and import 70 percent of their requirement from India and Bangladesh,” said Ramesh Rathi, second vice-president of the association.

Meanwhile, eight trade unions and five major political parties of Morang, issuing separate press statements on Friday, asked the government to ensure electricity supply, provide export subsidies and create an environment for smooth operation of the factories to save the jobs of a large number of workers.

Source: The Kathmandu Post